CENTRAL GOVERNMENT THROUGH DEPARTMENT OF COMPANY AFFAIRS Vs. AUROFOOD LIMITED

JUDGEMENT

(1.) THE central Government has filed this reference under Section 269(7) of the Comapnies Act, 1956("the Act") alleging that in the appointment of the joint Managing Director and whole-time director, M/s Aurofood Limited has failed to obtain the approval of the Central Government when these appointments were not in accordance with Part I & II of Schedule XIII of the Act.

(2.) According to the Central Government, the Company had reappointed S/Shri S.M. Patel, B.M. Patel and M.M. Patel as the Managing Director, Joint Managing Director and Whole-time Director respectively for a period of five years with effect from 1.10.92 in terms of resolution of the Board of Directors passed on 27.3.1993. As per this schedule in existence at that time, the Company should have had adequate net profits during the financial year immediately preceding the financial year in which the appointment was made and also to have adequate net profits in any of the three financial years in four financial years immediately preceding the preceding financial year. However, in this Company, these conditions were not satisfied and therefore, in terms of Section 269(2) the Central Government approval should have been obtained in regard to the appointment. Accordingly, this petition has been filed for an appropriate decision and orders under Section 269(9) of the Act.

(3.) SHRI T.V. Padmanabhan, Advocate appearing for the respondent submitted as follows:-