DIVESH GOYAL

Mob: +918130757966
csdiveshgoyal@gmail.com

Practicing Company Secretary

GOYAL DIVESH& ASSOCIATES

Appoint & Continuation of Managerial Personnel above

age of 70:
Serieseries- 129

Provision:
As per 196(3) No company shall appoint or continue the employment of any person as
managing director, whole-time director or manager who is below the age to twenty-one years or
has attained the age of seventy years:
Provided that appointment of a person who has attained the age of seventy years may be made
by passing a special resolution in which case the explanatory statement annexed to the notice for
such motion shall indicate the justification for appointing such person;
Note:
As per proviso its clear that if at the time of appointment age of person is more than 70 year
then by passing of Special Resolution that person can be appoint as Managing Director. But now
question is IF person attain age of 70 after appointment during his tenure then what are the
consequences?

Hon'ble High Court of Bombay had decided following issues in case

of Ultramarine & Pigments Limited v/s Mr. Rangaswamy Sampath

Whether there would be a mid-stream disqualification for the Managing

Director on attaining the age of 70 years?
There is no mid-tenure cessation of Managing Directorship as a result of Section 196(3) (a).
All that Section 196(3) (a) does is to sound a note of caution in the public interest and to demand
from the company a special resolution when a person who has already crossed the age of 70 at
the date is proposed to be appointed or reappointed.
The impact of the word continue in Section 196(3)(a) is as regards cessation under section 196
(3) (b), (c) and (d) of CA, 2013 where there is immediate cessation on the happening of the
events in these clauses. As regards Section 196 (3) (a) of CA, 2013, the word continue in this
sense shall apply to appointment and reappointment.
Therefore, attainment of age of 70 year after appointment is not mid-stearm disqualification.

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DIVESH GOYAL

Mob: +918130757966
csdiveshgoyal@gmail.com

Practicing Company Secretary

GOYAL DIVESH& ASSOCIATES

The arguments of the counsel of the Plaintiff: Once person attain age of 70 year even

existing appointment of Managing Director would effectively be interrupted mid-tenure, since

the holder of this office had crossed the age limit of 70.
The statutory intent is that the shareholders of the Company should know and be informed of
the compelling reasons, why somebody over the age of 70 should hold office as a Managing
Director.
Any other interpretation would have the effect of nullifying the statutory and legal intent. Where
the words of a statute are plain and clear, the language of the statute should not be changed by
judicial interpretation, nor should words or meanings be imputed that plainly do not exist.

Observations of High Court:

2nd Defendant was already the Chairman and Managing Director of the 1st Defendant (the
company) when he turned 70. The CA 2013 cannot operate as an immediate termination of his
appointment.
Is the age of 70 an absolute bar? A public limited company may well appoint a person of 80
years of age as a Managing Director. All that is needed is a special resolution. That is what the
proviso plainly says. Therefore, its not a absolute bar.
In fact, it is the proviso that perhaps yields a clue to how the word 'continue' should be
interpreted in Section 196(3)(a). No special resolution would ever be required to 'continue' an
appointment. A special resolution is only required for an appointment or a reappointment. This
is entirely distinct from the three situations contemplated under Section 267 of the CA 1956, the
same as those in sub-section 196(3)(b the CA, 2013. Those provide for eventualities that must
result in an instantaneous cessation of Managing Directorship.
The only conclusion that one can draw is that the word 'continue' is correctly used in its strict
sense in relation to clauses (b), (c) and (d) of Section 196(3), i.e., as a cessation eo instante on
the occurrence of any of the events those sub-clauses contemplate, but in the context of Section
196(3)(a), it means, and can only mean 'appointment' and 'reappointment'.
It also does not interrupt the appointment of a Managing Director appointed after 1st April,
2014 where at the date of such appointment or re-appointment the Managing Director was
below the age of 70 years but crossed that age during his tenure.
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DIVESH GOYAL

Mob: +918130757966
csdiveshgoyal@gmail.com

Practicing Company Secretary

GOYAL DIVESH& ASSOCIATES
Comment:

According to the defendant if a person who is of the age of 68 years is appointed after 1st April
2014 for five years, he shall not continue after two years once he attains the age of 70 years. The
court did not agree to thisview either and gave a judgment that the age is relevant only on the
date of appointment and not anytimelater.
While conducting secretarial audit of a company, the practicing company secretary shall keep
this judgment inview while ascertaining compliance with provisions of Section 196 of CA, 2013
by the company.
My View:
As per the decision of Honble Bombay High court, attainment of age of 70 years
year after
appointment is not a result of mid
mid-term
term disqualification of Managerial Personnel.
But as per my understanding Company is required to pass Special resolution before attainment
of age of 70 year or subsequent General Meeting of Company held after attainment
attainmen of age of 70
year to continue as Managerial Personnel of the Company.
Company can also pass special resolution even at the time of appointment if the director who is
to appointed is going to attain age of 70 years during his tenure.

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