Section 284 (7) of the Companies Act, 1956 provides that a person removed under this Section is entitled to claim compensation or damages payable to
him in respect of termination of his appointment 3S director or of any appointment which terminates along with his directorship.
Under Section 318 of the Act, compensation for loss of office can be paid by the company to a managing director, or a wholetime director or a director
who is a manager of the company. Compensation for loss of office is not payable to any other director. Accordingly, B shall be entitled to claim
compensation for loss of office only, if:
(i) he were acting as Managing Director or holding the office of Manager or was in the wholetime employment of the company; and
(ii) his services had been terminated.
In the given case, the facts only indicate that he has been relieved of most of his
executive powers as a director. On the basis of the above, it is doubtful if he shall be entitled to any compensation for loss of office.
No comments:
Post a Comment