RAMANARANG versus RAMESH NARANG AND ORS.

RAMANARANG versus RAMESH NARANG AND ORS.

Disqualification under Section 267 of the Companies Act operates upon conviction by a competent court, regardless of stay of sentence, unless stay of conviction for the purpose of avoiding disqualification is specifically sought and granted; in absence of such, company commits infraction by appointing or continuing a Managing Director after conviction.

Parties
Appellant: Rama Narang; Respondent No.1: Ramesh Narang; Respondent No.2: Rajesh Narang; Respondent No.4: Narang International Hotels Private Limited; Respondent No.5: Arvind Ghei
Jurisdiction
India
Judgment Date
19 January 1995
Procedural Posture
Civil Appeal / Appeal From Division Bench Judgment of Bombay High Court
Outcome
Appeal dismissed
Legal Topics
Companies Act—disqualification of Managing Director Upon Conviction, Suspension of Sentence and Conviction—code of Criminal Procedure, Clean Hands Doctrine—practice and Procedure
Company Law Criminal Law Practice and Procedure Companies Act—disqualification of Managing Director Upon Conviction Suspension of Sentence and Conviction—code of Criminal Procedure Clean Hands Doctrine—practice and Procedure

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Parties

Rama Narang

Appellant

Ramesh Narang

Respondent No.1

Rajesh Narang

Respondent No.2

Narang International Hotels Private Limited

Respondent No.4

Arvind Ghei

Respondent No.5

Procedural Posture

Civil Appeal / Appeal From Division Bench Judgment of Bombay High Court

Legal Issues

  1. 1 Whether appointment of Managing Director after conviction is void under Section 267 of the Companies Act, 1956
  2. 2 Effect of stay of sentence under Section 389(1) CrPC on operation of Companies Act disqualification
  3. 3 Scope of power of appellate court and High Court to stay conviction for purposes of avoiding statutory disqualification

Ratio Decidendi

Disqualification under Section 267 of the Companies Act operates upon conviction by a competent court, regardless of stay of sentence, unless stay of conviction for the purpose of avoiding disqualification is specifically sought and granted; in absence of such, company commits infraction by appointing or continuing a Managing Director after conviction.

Court Disposition

Appeal dismissed

Orders

  • Appellant to pay costs of Rs. 25,000/-