24 February 2012
Section 5 of the Companies Act provides a list of officers of a company who are defined as "officers in default" so that those in charge of management or who have been charged with the responsibility of complying with any of the provisions of the Act are held responsible for any contravention of the Act. A Managing Director of a company is also included in this list of officers who are liable for the defaults and lapses of the company. The other officers in this list are Whole-time Directors, Manager, Company Secretary and certain other specified persons
In case a company does not have any Managing Director, Whole-time Directors or Manager, then any director or directors specified by the board of directors will be liable as officers in default. If no director has been specified then all the directors of the company will be liable as officers in default. In the case of Ravindra Narayan v. Registrar of Companies, Rajasthan it was held by the high court of Rajasthan that ordinary directors of a company will be liable as "officers in default" only if the company does not have any Managing Director or whole time directors or managers or a company secretary. The DCA has by a circular indicated that this interpretation given by the High Court of Rajasthan is correct. This position has also been reaffirmed by a decision of the Andhra Pradesh High Court in which it was held that the criminal liability of ordinary directors would arise only in respect of a company which has no Managing Director or a Whole-time Director or a Manager and where particular Directors are not specified to be liable by the company.
24 February 2012
The Company whose paid up capital is or more than 5 crores is required to appoint Managing Director or WTD or Manager and Company Secretary.
If the Company have MD , WTD or Manager and CS, then the abovementioned officers sahll be the officer in default..
otherwise directors shall be officers in default....
CAclubindia
