Ahuja, Managing Director of PQR Limited is convicted and sentenced to pay fine for violation of the provisions of the Factories Act, 1948. A shareholder has filed a petition seeking directions that Ahuja should vacate hi

The relevant provisions of the Companies Act, 2013 (the Act) are given as under. As per Section 167(1)(f) the office of director shall become vacant in case he is convicted by a court of any offence, whether involving moral turpitude or otherwise, and sentenced in respect thereof to imprisonment for not less than six months. As per Section 196(3)(d) no company shall appoint or continue the employment of any person as managing director, whole-time director or manager who has at any time been convicted by a court of an offence and sentenced for a period of more than six months. According to Part I of Schedule V, No person shall be eligible for appointment as a managing director or whole-time director or manager of a company if he has been sentenced to imprisonment for any period or to a fine exceeding ₹1,000/- for the conviction of an office under any of 19 Acts mentioned therein. It needs to be noted that in 19 Acts mentioned in Schedule V Part I, the Factories Act, 1948 or other labour legislations are not included. Opinion Hence, in view of the provisions of the Companies Act, 2013 and Schedule V discussed as above, it can be said that Ahuja, has not incurred any disqualification as Managing Director when he is convicted and sentenced to pay fine for violation of the provisions of the Factories Act, 1948 and therefore he will not be required to vacate his office. Therefore in the petition filed by the shareholder, no such orders will be passed for his vacating of office as Managing Director.