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Judgment
K.P. Radhakrishna Menon, J.—The orders of the Central Government, the first respondent, refusing to approve the appointment of the petitioner in O. P. No. 112 of 1986 as the managing director of the company, the petitioner in the other original petition, namely, the one dismissing the application seeking approval and the other dismissing the petition seeking review of the first mentioned order are under challenge in these original petitions.
The application seeking approval of the appointment of the petitioner in O. P. No. 112 of 1986 as the managing director of the company for the period from January 31, 1990, to January 30, 1985, was filed on March 21, 1980. To the show-cause notice calling upon the company to show cause why the request for approval shall not be rejected, the company gave its explanation in time, as is seen from exhibit P-2 marked in 0. P. No. 4759 of 1985. The first respondent was not prepared to accept the explanation and, consequently, the request was rejected by the order, the review of which was sought for by the petitioner by filing a separate petition. This petition for review was rejected by the order which was served on the company on March 28, 1985.
From the facts stated above, it is clear that the final order rejecting the application of the company seeking approval of the order appointing the petitioner in O. P. No. 112 of 1986 as the managing director of the company was served on the company after the expiry of the period for which the petitioner in O. P. No. 112 of 1986 was appointed as the managing director. The order which was sought to be reviewed no doubt had been served on the company on May 10, 1984.
Learned counsel for the petitioners argues that the orders under challenge are of no consequence at all and that that is the position in law can be seen from the provisions contained in Section 269 of the Companies Act as it stood at the relevant time. Relevant parts of this Section I shall read now :
"269. Appointment or reappointment of managing or whole-time director to require Government approval in certain cases.--(1) In the case of a public company or a private company which is a subsidiary of a public company, whether such public company or private company is an existing company or not, the appointment of a person as a managing or whole-time director shall not have any effect unless approved by the Central Government ....
(5) If the appointment of a person as a managing or whole-time director is not approved by the Central Government, the person so appointed shall vacate his office as such managing or whole-time director on the date on which the decision of the Central Government is communicated to the company, and if he omits or fails to do so he shall be punishable with fine which may extend to five hundred rupees for every day during which he omits or fails to vacate such office".
Sub-section (1) provides that, in the case of a public company or a private company which is a subsidiary of a public company, whether such public company or private company is an existing company or not, the appointment of a person as a managing or whole-time director shall not have any effect unless approved by the Central Government. This sub-section thus suggests that the order appointing a person as the managing or whole-time director will have effect only if the same is approved by the Central Government. But, at the same time, Sub-section (5) provides that, if the appointment of a person as a managing or whole-time director is not approved by the Central Government, the person so appointed shall vacate his office on the date on which the decision of the Central Government is communicated to the company and, in case he omits or fails to do so, he shall be punishable with fine which may extend to five hundred rupees for every day during which he omits or fails to vacate such office. The last limb of Sub-section (5) would indicate that the refusal to grant approval is of no consequence at all and the person appointed as managing or whole-time director, at the risk of his being punished, can continue in office even after the date on which the order rejecting approval is communicated to the company. In other words, even after the said date, the person can continue as managing or whole-time director provided he pays the fine.
It can be seen from the above discussion that there is an apparent conflict between the two sub-sections. Under such circumstances, how to find out the intention of the legislature is the question before us. We should, in this connection, keep in mind the well-established canons of interpretation of statutes, namely : (1) to ascertain the meaning of a section, it is not permissible to omit any part of it ; the whole Section must be read together and an attempt should be made to reconcile both the parts ; (2) when reconciliation, however, is not possible, we have to determine which is the leading provision and which is the subordinate provision and which must give way to the other. (See Institute of Patent Agents v. Lockwood [1894] AC 347 at page 360 ; and (3) if the second method also is not possible then, we shall have resort to yet another well-established rule, namely, if two Sections are repugnant, the known Rule is that the last must prevail (See Wood v. Riley [1867] 3 CP 26 per Keating J. and K.M. Nanavati Vs. The State of Bombay, . Reading these two sub-sections side by side, I am of the opinion that, not only are these two sub-sections is irreconcilable but it is also not possible to determine which is the leading provision and which is the subordinate provision so as to say which should give way to the other. That means Sub-section (5) shall prevail. These provisions, to my mind, therefore, are not capable of making any order appointing a person as the managing or whole-time director ineffective for any period. That means, whether approval is granted or not, the order appointing a person as managing or whole-time director will be valid within the meaning of the Companies Act.
Learned counsel for the petitioners further contended that the irregularities pointed out in the show-cause notice at best can be said to be irregularities committed by the subsidiary companies. Assuming that these irregularities were committed by the company, even then these are irregularities which can be dealt with under provisions other than Section 269 of the Companies Act. No such proceedings, however, have so far been initiated either against the company or the subsidiary company, is the submission of learned counsel for the petitioner. If that be so, the finding based on such irregularities is liable to be vacated, counsel submits. It is relevant, in this context, to note that these matters are being agitated in the proceedings now pending before the Supreme Court, namely, SLP Nos. 7634, 7635 and 7636 of 1983. On going through the records, I am of the opinion that learned counsel is well-founded in this argument.
In the light of the above discussion, there will be a declaration that the petitioner in 0. P. No. 112 of 1986 has validly been appointed as the managing director of the company and hence he is entitled to draw his salary for the period in dispute.
The original petitions for the reasons stated above are allowed to the extent indicated above. Accordingly, exhibits P-3 and P-5 (in both the original petitions) are quashed.
Issue photostat copy on usual terms.