Madras HC Upholds Constitutional Validity of Proviso to Section 167 (1) (a) of the Companies Act
The Madras High Court has upheld the constitutionality of section 167 (1) (a) of the Companies Act that mandates defaulting companies’ directors to vacate their office in other companies where they hold directorships except the company which had defaulted.
The first bench of chief justices AP Sahi and Subramonium Prasad upheld that the proviso to section 167(1)(a) was neither arbitrary nor does it violate any of the fundamental rights provided under the Constitution of India.
The high court order came in response to a petition filed by a company secretary challenging the proviso. According to the petitioner, the proviso to section 167 (1) (a) violated Article 14 that guarantees the fundamental right of equality.
It was also contended that the proviso is detrimental to non-defaul...
