TaxTMI 
TaxTMI 
TaxTMI 
2015 (8) TMI 90
X X X X Extracts X X X X
X X X X Extracts X X X X
....ay 1998, the Plaintiff was appointed a Director of the 1st Defendant. On 1st August 2012, the 2nd Defendant was reappointed Chairman and Managing Director of the 1st Defendant-Company for a further five year term till 2017. On that date, the Plaintiff was also appointed a Joint Managing Director of the 1st Defendant-Company. 3. On 1st April 2014, the Companies Act, 2013 ("the 2013 Act") was brought into force. It introduced a new clause in Section 196(3)(a), one that did not have a corresponding equivalent in Section 267 of the Companies Act, 1956 ("the 1956 Act"). That clause apparently sets a lower and upper age limit of 21 years and 70 years respectively on the appointments and 'continued employment' of Managing Directors, Whole Time Directors and Managers. The entire matter turns on an interpretation of this newly introduced statutory provision. For, it is the Plaintiff's case that since the 2nd Defendant attained the age of 70 years on 11th November 2014, his five year term as Managing Director, one that commenced on 1st August 2012, came to an end by operation of law on 11th November 2014. In Mr. Mylsamy's words, on his 70th birthday, the 2nd Defendant earned....
X X X X Extracts X X X X
X X X X Extracts X X X X
....n (3) and specifically with sub-section section (3)(a). This introduces an upper and lower age limit in regard to the appointments of Managing Director, any Whole Time Director or Manager of a public limited company. As regards persons who are below the age of 21 years, they may not hold or ever be appointed to any of these three positions. For them, there is no exception. The position is, however, slightly different for persons who attain the age of 70, for there the statute has a proviso. 6. The question is how should that proviso be read? Mr. Mylsamy says that once the 2013 Act came into force, even existing appointments of Managing Directors would effectively be interrupted mid-tenure should the holders of these offices cross the age of 70. It would then, according to Mr. Mylsamy, require a special resolution by the Company in general meeting to reappoint the person in question as Managing Director. Mr. Mylsamy submits that the statutory intent is that the shareholders of the Company should know and be informed of the reasons why somebody over the age of 70 should hold office as a Managing Director. Some compelling reasons must be shown. Any other interpretation, according to ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....teresting argument made is that such Regulations should not be given retrospective effect so as to prejudicially affect the interests of any person to whom such Regulation may be applicable. In order to appreciate this contention, it is necessary to distinguish between an existing right and a vested right. This distinction was made with great felicity in Trimbak Damodhar Rajpurkar v. Assaram Hiraman Patil, 1962 Suppl. 1 SCR 700. In that case a question arose as to whether an amendment made to Section 5 of the Bombay Tenancy and Agricultural Lands Amendment Act could be said to be retrospective because its operation took within its sweep existing rights. A bench of five Hon'ble Judges of this Court held that Section 5 had no retrospective operation. This Court held: ... ... In this connection it is relevant to distinguish between an existing right and a vested right. Where a statute operates in future it cannot be said to be retrospective merely because within the sweep of its operation all existing rights are included. As observed by Buckley, L.J. in West v. Gwynne [(1911) 2 Ch 1 at pp 11, 12] retrospective operation is one matter and interference with existing rights is anot....
X X X X Extracts X X X X
X X X X Extracts X X X X
....o more than this that it imposed a new and additional limitation on the right of the landlord to obtain possession from his tenant. It was observed in that judgment that "a notice Under Section 34(1) is merely a declaration to the tenant of the intention of the landlord to terminate the tenancy; but it is always open to the landlord not to carry out his intention. Therefore, for the application of the restriction Under Sub-section 2(a) on the right of the landlord to terminate the tenancy, the crucial date is not the date of notice but the date on which the right to terminate matures; that is the date on which the tenancy stands terminated. 15. Similar is the case on facts here. A vested right would arise only if any of the Appellants before us had actually been appointed to the post of Lecturer/Assistant Professors. Till that date, there is no vested right in any of the Appellants. At the highest, the Appellants could only contend that they have a right to be considered for the post of Lecturer/Assistant Professor. This right is always subject to minimum eligibility conditions, and till such time as the Appellants are appointed, different conditions may be laid down at different ....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... is entirely distinct from the three situations contemplated under Section 267 of the 1956 Act, the same as those in sub-section 196(3)(b), (c) and (d) of the 2013 Act. Those provided for eventualities that must result in an instantaneous cessation of Managing Directorship. If a person, appointed as a Managing Director, Whole Time Director or Manager, is an undischarged insolvent, or is so adjudged; or if he suspends payment to or makes a composition with his creditors; or is convicted of an offence involving moral turpitude, he cannot be allowed to occupy that position for a minute longer. Evidently, none of these three situations could ever admit of an exception by means of a proviso or otherwise. That person cannot, in those situations, be allowed to 'continue'; and there can be no exception to this. This is very different from an age bar. That can always be relaxed subject to certain conditions. This is precisely what the proviso to Section 196(3)(a) does. It, therefore, operates very differently from the other sub-sections of Section 196(3). 13. Does Mr. Mylsamy's interpretation withstand testing against various alternative scenarios, some that lie perhaps at the ....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... Central Government unless such appointment is made in accordance with the conditions specified in Parts I and II of Schedule XIII (the said Parts being subject to the provisions of Part III of that Schedule) and a return in the prescribed form is filed within ninety days from the date of such appointment. (Emphasis supplied) 15. The relevant part of Schedule XIII of the 1956 Act said this: SCHEDULE XIII [See sections 198, 269, 310 and 311] CONDITIONS TO BEFULFILLED FOR THE APPOINTMENT OF A MANAGING OR WHOLE-TIME DIRECTOR OR A MANAGER WITHOUT THE APPROVAL OF THE CENTRAL GOVERNMENT PART I APPOINTMENTS No person shall be eligible for appointment as a managing or whole-time director or a manager (hereinafter referred to as managerial person) of a company unless he satisfies the following conditions, namely:- (a) ... (b) ... (c) he has completed the age of twenty-five years and has not attained the age of 70 years Provided that where- (i) he has not completed the age of 25 years, but has attained the age of majority; or (ii) he has attained the age of 70 years; and where his appointment is approved by a special resolution passed by the company in general meeting, no furthe....