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Sec 164(2) & sec 167

Shreyansh ( ) (33 Points)

24 March 2015

According to Sec 167 of the companies act 2013 A director has to vacate his office if he is disqualified under sec 164(2). But while reading the Practice Manual of The ICAI they are answering that the director is not required to vacate. Please help

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12 Replies

ankita agrawal (article student) (133 Points)
Replied 24 March 2015

Practice manual this tym contains lot of wrong answers ...i suggest u nt to refer pm....it vl only create cnfusns

CA Rajat Bajaj (Job) (1042 Points)
Replied 24 March 2015

it is a question of interpretation of act. sec 167 says to vacate office in case of disqualification, while IcAi say not to vacate office. Icai is right in this point, because sec 164 says director will NOT be eligible for APPOINTMENT. if the Act has to provide vacation of office in sec 164 then parliament was having option to directly provide it in sec 164, but it has not. and also sec 167 has not only provided the single condition, others conditions are also there. So for this we have to through sec 164 not through 167, so ICAI is right.

Shreyansh ( ) (33 Points)
Replied 24 March 2015

Originally posted by : Rajat Bajaj
	it is a question of interpretation of act. sec 167 says to vacate office in case of disqualification, while IcAi say not to vacate office. Icai is right in this point, because sec 164 says director will NOT be eligible for APPOINTMENT. if the Act has to provide vacation of office in sec 164 then parliament was having option to directly provide it in sec 164, but it has not. and also sec 167 has not only provided the single condition, others conditions are also there. So for this we have to through sec 164 not through 167, so ICAI is right.

But what the use of sec 167 then? since it is directly refers to disqualification u/s 164?

ankita agrawal (article student) (133 Points)
Replied 24 March 2015

No.u hv to give a cmbined reading to both sectns na....

ankita agrawal (article student) (133 Points)
Replied 24 March 2015

Appointmnt includes reappointmnt and whenevr diaqualificatn attracts director has to vacate under 167

CA Rajat Bajaj (Job) (1042 Points)
Replied 24 March 2015

as i said earlier, 167 has many other points regarding vacation of office not just one. and answer first why parliament has prescribed in 164 about Not Appointed, why not about vacation. ?

CA Rajat Bajaj (Job) (1042 Points)
Replied 24 March 2015

again i am saying this is point of deep thinking.

CA Rajat Bajaj (Job) (1042 Points)
Replied 24 March 2015

he is not eligible for appointment, but if already appointed need not to vacate office.

CA Rajat Bajaj (Job) (1042 Points)
Replied 24 March 2015

i had already discuss about this point with an Advocate also, argument on argument for 3-4 days, he said "bhaiya ye law CA k bas ki baat nahi hai, aap plain reading kar sakte hai sirf, deep understanding k liye LLB kijiye"

ankita agrawal (article student) (133 Points)
Replied 24 March 2015

Bcoz 167 is specifically for vacatn..where it cvrs all grounds for vacatn ....u may observe that no othr sectn in dirctr talks abt vacatn..nd u hv to read whole co. Act...cmply with all sectns...it is called harmonious rule

govind (Student CA IPC / IPCC) (38 Points)
Replied 25 March 2015

According to me section 164 speaks about the provisions which disqualify a person from being appointed as director i.e.before appointment but whereas 167 speaks of provision which disqualifies the director after being appointed and the office of director should be made vacant if I am wrong please do correct me

Jithin (Learner) (1057 Points)
Replied 25 March 2015

Hi all, there are people who argue that section 167 covers the points only under section 164(1) and excludes 164(2) from its purview. Hv a look at this article https://indiacorplaw.blogspot.in/2014/12/disqualification-of-directors-dichotomy.H T M L

P.S. Copy the above link to your address bar and delete everything starting from 'H T M L'. Afterwards write H T M L in small letters and your link is ready. Sorry for such instructions but I actually had given the correct link. Unfortunately it appears with Large Cap 'H T M L' whenever one share a link containing 'H T M L' in caclubindia.

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