Section 282(2)(b) of the Companies Act applies to cases where the age disqualification invalidates the appointment or terminates an otherwise valid appointment.

This revision case is filed by M. Ramachandra Bail, who was the second accused in C.C. No. 3475 of 1965 on the file of the learned Third Presidency Magistrate, Madras. He was prosecuted under section 282(2)(b)of the Indian Companies Act (I of 1956) (hereinafter called the Act), convicted and sentenced to pay a fine of Rs. 200, or in default, to suffer simple imprisonment for two months. Along with him, one other person was prosecuted as the first accused, but he was found not guilty and acquitted.

The question for consideration in this case, relates to the proper interpretation of the rule of retirement of directors in section 256 of the Act, in relation to the rule for the retiring age for directors prescribed in section 280, and finally the penal provision enunciated in section 282 of the Act. The circumstances of the case are briefly the following.

The petitioner, Dr. M. Ramachandra Bail, was born on 8th February, 1899. He completed 65 years on 8th February, 1964. He was elected as a director of the Mylapore Hindu Permanent Fund, Limited, which is a company as defined in the Act, at a General Body Meeting held on 28th July, 1962. At that time, he was less than 65 years old and, therefore, he was within the age-limit prescribed for the directors of companies, namely, 65 years, in section 281 of the Act. Under section 256 of the Act, which provides for the retirement of directors by rotation at one-third of the strength at every annual general meeting, his turn to retire came atthe General Body Meeting (92nd) which was scheduled to be held, after the proper prior notice to shareholders, on 24th April, 1965. Three other directors, namely, M/s. Ramaswami Iyer, Shanmugam and Balasundaram, were also due to retire on that date. But since the petitioner had completed 65 years of age on 8th February, 1964, his re-appointment as director had to depend upon a special resolution being passed, granting him exemption under section 281 of the Act. There was also a special resolution brought for the consideration at the General Body Meeting to be held on 24th April, 1965, for granting such exemption to the petitioner. In the meantime,some other shareholder (other than the complainant in this case) filed a suit in the City Civil Court, for stay of election, and the City Civil Court issued an ad interim injunction order only for that purpose, at the meeting scheduled to be held on 24th April, 1965. Item III in the Agenda for that meeting was the consideration of the election of directors in place of the retiring directors. In consequence of the injunction order granted by the City Civil Court, at the meeting held on 24th April, 1965, item III in the agenda regarding the election of directors alone was not taken up for consideration; the other items were all taken up and considered; and the General Body Meeting was adjourned to 1st May, 1965 for consideration of the abovementioned item III. At the time of the adjourned meeting on 1st May, 1965, the stay ordered by the City Civil Court continued, and, therefore, the meeting was adjourned sine die without considering item III in the agenda.

On 6th May, 1965, the Board of Directors of the Fund, at a meeting of the Board, recorded that the three other persons mentioned above, who were due to retire on the 1/3rd rotation rule, would be deemed to have been appointed as directors by virtue of the provision in section 256(4)(b) of the Act. They also made a note at the same time that the petitioner “continued as director”. The reason apparently was that since the petitioner had completed 65 years on 8th February, 1964, and since there was no special resolution under section 281 in his case, he could not claim the benefit of being deemed to have been re-appointed, within the meaning of section 256(4)(b) of the Act. This last-mentioned section provides that if, at the original meeting as well as at the adjourned meeting the place of the retiring director is not filled up, and that meeting also has n