Board of Directors

The company can recover the amount of Rs. 5 lakhG paid on the ground that
Mr. Doubtful is not entitled to any compensation, because he is guilty of corrupt
practices
According to Section 318, compensation can be paid for loss of office but only to a managing director or manager-director or a whole-time director. The compensation payable is limited to the average remuneration actually earned by such director during the three years period immediately preceding the date on which he ceased to hold the office and multiplied for the unexpired period of his term or for three years, whichever is shorter. Further, no compensation will be payable to such a director if the company goes into winding up within a period of 12 months from the date of cessation of his office.
Proviso to sub-section (4) of Section 318] Again, the company is not bound to pay compensation to Mr. Doubtful if he had been found guilty of any fraud or breach of trust or gross negligence and mismanagement of the affairs of the company [Section 318 (3) (e)]. However, it is not proper for the company to withhold the payment of compensation on the basis of allegations alone unless there is a proper
Deepika, one of the directors in XYZ Company Limited, did not attend the Board of Directors’ meetings from January 1 to March 31, 1992, without obtaining leave from the Board, though the company had sent her notices for the meetings. Two meetings were held between, 1st January 1992 and 31st March, 1992. There were five meetings of the Board of Directors, held during the financial year 1991-92, out of which Deepika had attended three meetings. The last meeting attended by her was held on 1st December, 1991. There were no further meetings of the Board of Directors in Derember, 1991. After the commencement of the new financia year 1992-93 (commencing 1st April 1992), the company called a meeting of the Board of Directors on 1st May, 1992, for which no notice was sent to Deepika, on the ground that she had ceased to be a director under the Companies Act. The meeting was held as scheduled and certain important decisions were taken thereat. Deepika, on coming to know of the meeting on 1st May, 1992, challenges the company’s calling of the Board of Directors’ meeting and decisions taken thereat, on the ground of omission on the part of the company to send notice for the meeting to her, and wants to restrain fuecompany from implementing the decisions taken at the meeting. Decide, giving reasons:
(i)Whether Deepika would succeed in restraining the company from im
plementing the decisions taken at the meeting of the Board of Directors?
(ii)Would your answer be still the same in case Deepika had attended only
two of the five meetings prior to 1st }anu:uy, 1992? (May, 1992)
XYZ Company Limited calls a meeting of the Board of Directors without giving notice to Directors as required under the Companies Act, 1956. The meeting is attended by all the Directors. None of the Directors of the company objected to the absence of notice. The proceedings of the meeting are ratified later”by the Board of Directors at a regularly constituted meeting.
Decide giving reasons for your answer whether:
(i)The meeting and the proceedings are valid?
(ii) The Board of Directors is competent to ratify at a later meeting the above