S. Labh Singh and Others vs Paneser Mech. Works Pvt. Ltd. and Others

S.P. Goyal, J.—This application has been filed with two prayers that the terms and conditions for conducting the affairs of the company may be settled by the court and that the petitioners be allowed to function as directors of the company, but at the time of the arguments, the claim was confined to the second relief only. Learned counsel for the respondents has opposed the prayer on the ground that the petitioners'' term having expired after one year, they cease to be directors and unless they were reappointed in the general meeting, they cannot act as such. Reliance for this contention was placed on the provisions of Section 255(2) of the Companies Act. The contention is wholly misconceived. The provisions of Sub-section (2) of Section 255 only provide that the directors have to be appointed in a general meeting. So far as the term of a director once appointed is concerned, this provision has nothing to do with it. Under Sub-section (1) of the said section, two-thirds of the total number of the directors retire in rotation in the case of a public company or a private company which is a subsidiary of a public company. There is no provision for retirement of any director periodically of a company, which is neither a public company nor a private company which is a subsidiary of a public company. Their retirement entirely depends on the provisions of the articles of association of the company. As no fixed period has been provided for the retirement of directors in the articles of association of the present company, a director appointed is entitled to continue till he is removed in accordance with the provisions of Section 284. The petitioners, therefore, still continue to be directors and, accordingly, the respondents are directed not to interfere with their right to function as such till they are removed in accordance with law.