172 SEBI & Corporate Laws - Reports [Vol. 154
( 2 ) Sub-section ( 1 ) shall not apply to
(a) ap (^) uprbilivcate company which is neither a subsidiary nor a holding company of a
company;
(b) aa (^) npyrivate company which is a subsidiary of a public company, in respect of
com^ cpoanntyract^ or^ arrangement^ entered^ into,^ or^ to^ be^ entered^ into,^ by^ the^ private^
with the holding company thereof;
(c) aorny contract of indemnity against any loss which the directors, or any one
su^ remtoyre^ of^ them,^ may^ suffer^ by^ reason^ of^ becoming^ or^ being^ sureties^ or^ a^
for the company;
(d) (^) caonym cpoanntyr,act or arrangement entered into or to be entered into with a public
in^ or^ a^ private^ company^ which^ is^ a^ subsidiary^ of^ a^ public^ company,^
which
the
interest
of
the
director
aforesaid
consists
solely
(i) isnh (^) ahrise (^) sbeing a director of such company and the holder of not more than
appoin^ tofm^ seuncth^ number^ or^ value^ therein^ as^ is^ requisite^ to^ qualify^ him^ for^
director^ as^ a^ director^ thereof,^ he^ having^ been^ nominated^ as^ such^
by the company referred to in sub-section (^1 ), or
(ii) isnh (^) ahrise being a member holding not more than two per cent of its paid-up
capital;
(e) (^) ca (^) opmupblainc (^) yc,ompany, or a private company which is a subsidiary of a public
to^ in^ respect^ of^ which^ a^ notification^ is^ issued^ under^ sub-section^ (^3 ),^
the extent specified in the notification.
( 3 ) In the case of a public company or a private company which is a subsidiary
of a public company, if the Central Government is of opinion that having regard
to the desirability of establishing or promoting any industry, business or trade, it
would not be in the public interest to apply all or any of the prohibitions contained
in sub-section ( 1 ) to the company, the Central Government may, by notification in
the Official Gazette, direct that that sub-section shall not apply to such company,
or shall apply thereto subject to such exceptions, modifications and conditions as
may be specified in the notification.
( 4 )
Every
director
who
knowingly
contravenes
the
provisions
of
this
section
shall
be^
punishable
with
fine
which
may
extend
to
fifty
thousand
rupees.”
78.
It
was
urged
on
behalf
of
the
respondents
that
the
decisions
were
taken
in^
the
impugned
resolution
in
favour
of
two
Directors
namely,
Mr.
R.
P.
Mittal
and^
Mrs.
Sarla
Mittal.
They
have
been
discussed
and
voted
upon
by
said
two
persons^
themselves.
As
the
Directors
act
as
fiduciaries
when
they
conduct
Board^
meeting,
they
cannot
participate
in
decisions
in
their
own
favour.
For
this^
purpose,
reliance
has
been
placed
upon
Dale & Carrington Invt.
(
P
)
Ltd.
.
(^
supra
),
this
Court
observed:
‘ 13. On the role of Directors, the law is well settled. The position has been the subject
matter of various decisions. Some of them are:
In Regal (Hastings) Ltd. v. Gulliver 1942 ( 1 ) All ER 378 (HL) Lord Russell of Killowen
observed as under (All ER p. 387 G):
“Directors of a limited company are the creatures of statute and occupy a position
peculiar to themselves. In some respects, they resemble trustees, in others they do