Mr. P who was a Managing Director of XYZ Ltd, was terminated from the position of Managing Director by virtue of an order passed by National Company Law Tribunal (NCLT) under Sec. 242(2)(e) of Companies Act, 2013. Discus

Consequence of Termination or Modification of Certain Agreements Section 243(1) of the Companies Act, 2013, states that where an order made under section 242, terminates, sets aside or modifies an agreement such as is referred to in sub-section (2) of that section, - (a) such order shall not give rise to any claims whatever against the company by any person for damages or for compensation for loss of office or in any other respect either in pursuance of the agreement or otherwise. (b) no managing director or other director or manager whose agreement is so terminated or set aside shall, for a period of five years from the date of the order terminating or setting aside the agreement, without the leave of the Tribunal, be appointed, or act, as the managing director or other director or manager of the company: Section 243 (1A) provides that the person who is not fit and proper person pursuant to section 242(4A) shall not hold office of directors or any other office connected with the conduct of management of affairs of company for a period of 5 years from the date of the said decision. Provided that the Central Government may, with the leave of the Tribunal, permit such person to hold any such office before the said period of five years. According to Section 243(1B), notwithstanding anything contained in any other provision of this Act, or any other law for the time being in force or any contract, memorandum or article, on the removal of a person from the office of a director or any other office connected with the conduct and management of the affairs of the company, that person shall not be entitled to, or be paid, any compensation for the loss or termination of office. Provided that the Tribunal shall not grant leave under this clause unless notice of the intention to apply for leave has been served on the Central Government and that Government has been given a reasonable opportunity of being heard in the matter. Further, Section 243(2) provides that any person who knowingly acts as a managing director or other director or manager of a company in contravention of clause (b) of sub-section (1), or sub-section (1A) and every other director of the company who is knowingly a party to such contravention, shall be punishable with fine which may extend to five lakh rupees.