Important Point – Distinction will have to be made between addition of eligibility criteria to existing provision and addition of disqualification to continue in that post after initial appointment.

V.M. Kanade, J.

1. Appellant is the original Plaintiff. He has challenged the order passed by the learned Single Judge dated 16th July, 2015. By the said order, the learned Single Judge dismissed the Notice of Motion taken out by the Plaintiff and refused to grant an order of injunction, restraining Respondent No.2/Original Defendant No.2 from functioning or continuing to exercise his powers as Chairman and Managing Director of the 1st Defendant-Company.

2. Brief facts which are relevant for the purpose of deciding this appeal are as under:-

3. For the purpose of convenience, parties shall be referred to as “Plaintiff” and “Defendant”.

4. Appellant is the original Plaintiff. Respondent No.1 is the original Defendant No.1. Respondent No.2 is the original Defendant No.2 who was appointed as Chairman and Managing Director (“MD”) of the 1st Defendant-Company. On 1st August, 2012 the 2nd Defendant was reappointed as Chairman and Managing Director of the 1st Defendant-Company for a period of further five years till 2017 and the Plaintiff was appointed as Joint Managing Director of the 1st Defendant-Company.

5. On 1st April 2014, Companies Act was amended and by the Amendment Act of 2013, a new clause was introduced in Section 196(3)(a). By virtue of the said amendment vide sub-clause (3)(a), additional disqualification was added to the disqualifications which already existed in the said provision namely a Managing Director could not be appointed or continued after he had attained the age of 70 years. The said amendment admittedly came into force on 01/04/2014. Defendant No.2 was appointed for a period of five years as MD on 01/08/2012, prior to the amendment. The contention of the Plaintiff is that in view of the incorporation of the said clause in section 196(3)(a), Defendant No.2 could not continue as MD and, therefore, he has sought an order of injunction, restraining him from functioning or continuing to exercise his powers as Chairman and MD of the 1st Defendant-Company.

6. On the other hand, it was contended by the learned Counsel appearing on behalf of Respondent No.2/Original Defendant No.2 that the said amendment could not operate retrospectively. The learned Single Judge accepted the contention of Defendant No.2 and dismissed the Notice of Motion. Hence, the appeal.

7. We have heard both the learned Senior Counsel at length.

8. The short question which falls for consideration before this Court is : whether, after the amendment of the Companies Act in 2013 which was brought into force with effect from 01/04/2014, any Managing Director who was appointed prior to the Amendment Act i.e. before 01/04/2014 would have a right to continue to act as Managing Director after his attaining the age of 70 years without special general resolution being passed by the Company in its general meeting?

9. Section 267 of the Companies Act, prior to amendment, reads as under:-

“267. Certain persons not to be appointed managing directors.- No company shall, after the commencement of this Act, appoint or employ, or continue the appointment or employment of, any person as its managing or whole-time director who -

(a) is an undischarged insolvent, or has at any time been adjudged as an insolvent,

(b) suspends, or has at any time suspended, payment to his creditors, or makes, or has at any time made, a composition with them; or

(c) is, or has at any time been convicted by a Court of an offence involving moral turpitude.”

10. Prior to the Amendment Act of 2013, Section 267 provided that certain persons could not be appointed as Managing Directors and no Company shall continue the appointment or employment of any person as its Managing Director who is (a) an undischarged insolvent or has been adjudged as an insolvent, (b) suspends or has suspended payment to his creditors and (c) is convicted by a Court for an offence involving moral turpitude. The said section obviously provided for cesession or non-continuation of appointment of a person as Managing Directo