Minimum directors

If a company makes default in complying with the provisions under this section, the company and every officer of the company, who is in default, shall be punishable with fine, which may extend to five hundred rupees for every day, during which the default continues.

The minimum number of directors has been stipulated in Sec 252 of the Act. Thers is no specific penalty clause for the contravention of the said clause.

Hence, a general penalty clause Sec 629A will be applicable,a ccording to which the Company and every officer of he Compay who is in default shall be punishable with a fine which may extend to Rs. 5,000 and if the deafult is continuiong one, penalty of Rs. 500 will be levied for each day, after the first day, during which default continues.

The provision as to the minimum number of directors are mandatory and consequently any businesstransacted after the number fell below the minimum, will held to be invalid.

Thanks Sonam for the detailed answer, but i dont think your 2nd part "Any business transacted after the number fel below the stat min will be invalid" is correct. What is business transaction here ? and I think outsiders can protect themselves by doctrine of indoor management.

Yes, it is true that the any business transaction by the Directors will be valid in reference to outsiders to the extent to which they fall within the scope of Sec 290.