Consequence of Termination or Modification of Certain Agreements                                                                                                                                  Notified Date of Section : 01/06/2016

243. (1)Where an order made under section 242 terminates, sets aside or modifies an agreement such as is referred to in sub-section (2) of that section,—
(a)such order shall not give rise to any claims whatever against the company by any person for damages or for compensation for loss of office or in any other respect either in pursuance of the agreement or otherwise;
(b) no managing director or other director or manager whose agreement is so terminated or set aside shall, for a period of five years from the date of the order terminating or setting aside the agreement, without the leave of the Tribunal, be appointed, or act, as the managing director or other director or manager of the company:

1[(1A) The person who is not a fit and proper person pursuant to sub-section (4A) of section 242 shall not hold the office of a director or any other office connected with the conduct and management of the affairs of any company for a period of five years from the date of the said decision:

Provided that the Central Government may, with the leave of the Tribunal, permit such person to hold any such office before the expiry of the said period of five years.

(1B) Notwithstanding anything contained in any other provision of this Act, or any other law for the time being in force, or any contract, memorandum or articles, on the removal of a person from the office of a director or any other office connected with the conduct and management of the affairs of the company, that person shall not be entitled to, or be paid, any compensation for the loss or termination of office.]

Provided that the Tribunal shall not grant leave under this clause unless notice of the intention to apply for leave has been served on the Central Government and that Government has been given a reasonable opportunity of being heard in the matter.

(2) Any person who knowingly acts as a managing director or other director or manager of a company in contravention of clause (b) of sub-section (1) 2[or sub-section (1A)], and every other director of the company who is knowingly a party to such contravention, shall be punishable ³[with imprisonment for a term which may extend to six months or] with fine which may extend to ⁴[five lakh rupees].

Amendment

1. Omitted by The Companies (Amendment)Act, 2019 - Effective From 15th August 2019  [Companies (Amendment) Second Ordinance 2019 is repealed on 31st July 2019]

2. Omitted by The Companies (Amendment)Act, 2019 - Effective From 15th August 2019  [Companies (Amendment) Second Ordinance 2019 is repealed on 31st July 2019]

3.  Omitted by the Companies (Amendment) Act, 2020. Notification dated 28th September, 2020   Amendment Effective from 21st December 2020

4.   Substituted by the Companies (Amendment) Act, 2020. Notification dated 28th September, 2020    Amendment Effective from 21st December 2020

in sub-section (2),—

for the words,

five lakh rupees, or with both

The following words  shall be substituted :-

"five lakh rupees"