This is with reference to Bombay HC (Single Judge ruling), wherein it was held that MD turning 70 years is not attracted by automatic “mid-stream” disqualification. However, the Division Bench has quashed Single Judge orer, and held that automatic disqualification is triggered for MD turning 70 years, though such appointment was made pre-Cos Act, 2013. Following is the summary and ruling copy is attached for reference:
- Division Bench noted that Respondent No. 2 was appointed as Chairman & MD of Respondent Co. on August 13, 1990, the Cos. Act, 2013 came into force in April 1, 2014, and MD completed 70 years on Nov. 11, 2014, and held that “Respondent No. 2 was disqualified from continuing as MD, unless he fulfilled the requirements of the proviso i.e. company has to continue his appointment by a special resolution and, secondly, that resolution must state the reason why the continuation is necessary”;
- Division Bench held that legislative intent in introducing Sec. 196(3)(a) of Cos. Act, 2013 is quite clear, stated that “intention was to change earlier position by providing that person who has been appointed as Managing Director before he was 70 years old is prohibited from continuing as Managing Director once he has attained the age of 70”;
- Rejected respondent’s contention that Sec. 196(3)(a) is not applicable to MD’s appointment before April 1,2014, stated “it would otherwise retrospectively affect vested right of such Managing Directors and, secondly, that there is presumption against legislation operating retrospectively”: HC
- HC also rejected Respondent’s reliance on MCA Circular clarifying conditions specified in Schedule XIII Part-1 of Cos. Act, 1956 (which were required to be satisfied only at the time of appointment): Bombay HC.
Division Bench of Bombay HC quashes Single Judge order, holds that disqualification for appointment of Managing Director (‘MD’) on the ground of age limit would act automatically, thus MD attaining 70 years would immediately be disqualified; Notes that Respondent No. 2 was appointed as Chairman & MD of Respondent Co. on August 13, 1990, the Cos. Act, 2013 came into force in April 1, 2014, and MD completed 70 years on Nov. 11, 2014, Division Bench HC holds “Respondent No. 2 was disqualified from continuing as MD, unless he fulfilled the requirements of the proviso i.e. company has to continue his appointment by a special resolution and, secondly, that resolution must state the reason why the continuation is necessary”; Holds that legislative intent in introducing Sec. 196(3)(a) of Cos. Act, 2013 is quite clear, states “intention was to change earlier position by providing that person who has been appointed as Managing Director before he was 70 years old is prohibited from continuing as Managing Director once he has attained the age of 70”; Rejects respondent’s contention that Sec. 196(3)(a) is not applicable to MD’s appointment before April 1,2014, states “it would otherwise retrospectively affect vested right of such Managing Directors and, secondly, that there is presumption against legislation operating retrospectively”; Agrees with appellant’s submission that amended Section, as a matter of public policy, contains mandatory prohibition/bar against any co. from continuing MD in employment once he has attained 70 years, states that language of Sec. 196(3)(a) is plain, simple and unambiguous and it applies to all MDs who have attained the age of 70 years and there is no distinction between MD who have been appointed before April 1, 2014 and those after April 1, 2014; Holds that Single Judge has failed to note the distinction between disqualification which is added after appointment and eligibility criteria which is added after his appointment, states that in former case, disqualification would operate even after appointment but in the latter case, it would operate prospectively; Rejects Respondent’s reliance on MCA Circular clarifying conditions specified in Schedule XIII Part-1 of Cos. Act, 1956 (which were required to be satisfied only at the time of appointment); Relies on SC ruling in Rama Narang Vs Ramesh Narang & others:Bombay HC
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