TMI Blog1977 (3) TMI 95X X X X Extracts X X X X X X X X Extracts X X X X ..... loyees' Provident Funds Act, Sales Tax Act, Employees' State Insurance Act, Indian Textiles (Control) Order, Essential Commodities Act and the Act, on the ground that since November 26, 1974, he ceased to be the director of the company; that he was a director of the company by virtue of being its legal adviser and never took any active part in the management and the affairs of the company; that he was on the board of a number of companies as such legal adviser but has not concerned himself with the day to day affairs of the company or its management; and that he has always acted honestly and reasonably and has given proper advice to the management to act in accordance with law in relation to matters that were brought before the board. The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 33 of the Act of liability on account of defaults and breaches of the company in respect of which proceedings are apprehended. Section 633 of the Act empowers the court to give relief where it is satisfied that the officer of a company, even though technically guilty of negligence, breach of duty, misfeasance or breach of trust or otherwise liable on account of any default or breach of the company, has nevertheless acted honestly and reasonably and that, having regard to all the circumstances of the case, "including those connected with his appointment", he ought fairly to be excused. The object of the section appears to be to provide against undue hardship in deserving cases and to give relief from liability to persons who, though liable ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e system by the institution of such directors becomes almost illusory. In the circumstances, it is necessary to make a distinction between the directors who are on the board, purely by virtue of their technical skill or because they represent certain special interests and those who are in the effective control of the management and affairs of the company, whether or not they have any financial stakes in it, in determining if relief from liability arising out of the breaches and defaults of the company should be granted or not. It cannot be denied that independent directors from the professions or from among the financial consultants or those that represent different interests, such as the financial institutions, have a salutary effect on th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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