G. P. SHIVAPRAKASH, J. ( 1 ) THIS IS A PETITION PRESENTED BY A PUBLIC LIMITED COMPANY IN CORPORATED UNDER THE mysore COMPANIES ACT, 1938 HAVING ITS REGISTERED OFFICE AT SAGAR, SHIMOGA DISTRICT. ( 2 ) AT THE ANNUAL GENERAL MEETING OF THE COMPANY HELD ON 30-12-1983, THE FOLLOWING RESOLUTION WAS PASSED:"resolved THAT PURSUANT TO THE PROVISIONS OF SECTIONS 309 (1) AND 310 AND other APPLICABLE PROVISIONS (IF ANY) OF THE COMPANIES ACT, 1956 AND SUBJECT TO the APPROVAL OF THE CENTRAL GOVERNMENT BEING OBTAINED, AND SUBJECT TO SUCH modifications AS THE CENTRAL GOVERNMENT MAY DIRECT AND AGREED TO BY THE BOARD (WHICH THE BOARD IS HEREBY AUTHORISED TO AGREE TO), THE COMPANY HEREBY accords ITS APPROVAL TO THE PAYMENT FOR A PERIOD OF FIVE YEARS FROM JULY 1, 1983 OF professional FEES, APPROVED BY THE BOARD SUBJECT TO A MAXIMUM OF RS. 15,000/- per YEAR, TO SRI AMARNATH KAMATH, DIRECTOR OF THE COMPANY, FOR PROFESSIONAL services BEING RENDERED BY HIM TO THE COMPANY. " ( 3 ) THE SECOND RESPONDENT, WHO IS A CHARTERED ACCOUNTANT BY PROFESSION, IS A share HOLDER OF THE COMPANY. HE WAS APPOINTED AS A DIRECTOR OF THE COMPANY IN the YEAR 1972. HE HAS BEEN RENDERING PROFESSIONAL SERVICES ALSO TO THE COMPANY since 1-7-1973. WITH A VIEW TO SECURE HIS PROFESSIONAL SERVICES FOR A FURTHER PERIOD OF five YEARS FROM 1st JULY, 1983, THE AFORESAID RESOLUTION WAS PASSED AT THE ANNUAL general MEETING HELD ON 30-12-1983. THE SAID RESOLUTION WAS REQUIRED TO BE PASSED in VIEW OF CERTAIN PROVISIONS OF THE COMPANIES ACT, 1956, HEREINAFTER REFERRED TO AS 'the ACT'. SECTION 198 OF THE ACT, PRESCRIBES OVERALL MAXIMUM MANAGERIAL remuneration PAYABLE BY A PUBLIC COMPANY OR A PRIVATE COMPANY WHICH IS A subsidiary OF A PUBLIC COMPANY, TO ITS DIRECTORS, SECRETARIES, TREASURERS ETC. SECTION 309 PROVIDES FOR PAYMENT OF REMUNERATION TO DIRECTORS. THE RELEVANT PART OF section 309 IS SET OUT BELOW:"309. SECTION 198 OF THE ACT, PRESCRIBES OVERALL MAXIMUM MANAGERIAL remuneration PAYABLE BY A PUBLIC COMPANY OR A PRIVATE COMPANY WHICH IS A subsidiary OF A PUBLIC COMPANY, TO ITS DIRECTORS, SECRETARIES, TREASURERS ETC. SECTION 309 PROVIDES FOR PAYMENT OF REMUNERATION TO DIRECTORS. THE RELEVANT PART OF section 309 IS SET OUT BELOW:"309. (1) THE REMUNERATION PAYABLE TO THE DIRECTORS OF A COMPANY INCLUDING any MANAGING OR WHOLE-TIME DIRECTOR, SHALL BE DETERMINED, IN ACCORDANCE WITH and SUBJECT TO THE PROVISIONS OF SECTION 198 AND THIS SECTION, EITHER BY THE ARTICLES of THE COMPANY, OR BY A RESOLUTION OR, IF THE ARTICLES SO REQUIRE, BY A SPECIAL resolution, PASSED BY THE COMPANY IN GENERAL MEETING AND THE REMUNERATION payable TO ANY SUCH DIRECTOR DETERMINED AS AFORESAID SHALL BE INCLUSIVE OF THE remuneration PAYABLE TO SUCH DIRECTOR FOR SERVICES RENDERED BY HIM IN ANY OTHER capacity: provided THAT ANY REMUNERATION FOR SERVICE RENDERED BY ANY SUCH DIRECTOR IN any OTHER CAPACITY SHALL NOT BE SO INCLUDED IF (A) THE SERVICE RENDERED ARC OF A PROFESSIONAL NATURE, AND (B) IN THE OPINION OF THE CENTRAL GOVERNMENT, THE DIRECTOR POSSESSES THE requisite QUALIFICATION FOR THE PRACTICE OF THE PROFESSION. XX XX"after THE AFORESAID RESOLUTION WAS PASSED, THE SAME WAS FORWARDED TO THE RESPONDENT requesting IT TO EXPRESS ITS OPINION IN TERMS OF THE PROVISO TO SECTION 309 (1) OF the ACT INDICATING THAT THE SECOND PETITIONER POSSESSES THE REQUISITE QUALIFICATIONS for FUNCTIONING AS A LEGAL ADVISER OF THE COMPANY. THE RESPONDENT AFTER OBTAINING the NECESSARY PARTICULARS FROM THE COMPANY SENT A REPLY, COPY OF WHICH IS MARKED AS anncxure-D, EXPRESSING ITS OPINION IN TERMS OF THE PROVISO TO SUB-SECTION (1) OF SECLION 309 OF THE ACT, THAT THE SECOND PETITIONER POSSESSED THE REQUISITE QUALIFICATIONS for FUNCTIONING AS LEGAL ADVISER OF THE COMPANY FOR RENDERING PROFESSIONAL SERVICES. HOWEVER, THE RESPONDENT HAS FURTHER DIRECTED THAT THE REMUNERATION PAYABLE TO THE second RESPONDENT SHALL NOT EXCEED RS. 7,000/- PER ANNUM FOR A PERIOD OF FIVE YEARS with EFFECT FROM 1-7-1983. ( 4 ) AGGRIEVED BY THE IMPOSITION OF THIS RESTRICTION REGARDING PAYMENT OF remuneration TOWARDS THE PROFESSIONAL SERVICES TO BE RENDERED BY THE SECOND petitioner TO THE COMPANY THIS PETITION IS PRESENTED. 7,000/- PER ANNUM FOR A PERIOD OF FIVE YEARS with EFFECT FROM 1-7-1983. ( 4 ) AGGRIEVED BY THE IMPOSITION OF THIS RESTRICTION REGARDING PAYMENT OF remuneration TOWARDS THE PROFESSIONAL SERVICES TO BE RENDERED BY THE SECOND petitioner TO THE COMPANY THIS PETITION IS PRESENTED. ( 5 ) SRI K. S. RAMABHADRAN, LEARNED COUNSEL APPEARING FOR THE PETITIONERS, submitted THAT IN TERMS OF THE PROVISO TO SUB-SECTION (1) OF SECTION 309, A. 11 THAT THE respondent IS REQUIRED TO DO SO IS TO EXPRESS ITS OPINION THAT THE SAID DIRECTOR possesses THE REQUISITE QUALIFICATIONS FOR THE PRACTICE OF THE PROFESSION AND TO render PROFESSIONAL SERVICES TO THE COMPANY; AND WHEN ONCE THE CENTRAL government IS SATISFIED REGARDING THE REQUISITE QUALIFICATIONS POSSESSED BY director AND EXPRESSES THE OPINION UNDER THE PROVISO TO SUB-SEELION (1) OF SECTION 309 OF THE ACT THAT THE SECOND PETITIONER POSSESSES THE REQUISITE QUALIFICATIONS FOR functioning AS LEGAL ADVISER OF THE COMPANY AND RENDER PROFESSIONAL SERVICES, THE respondent CANNOT PUT A CEILING ON THE REMUNERATION PAYABLE TO THE SAID DIRECTOR for HIS PROFESSIONAL SERVICES. ( 6 ) THE LEARNED COUNSEL SUBMITTED THAT THE REMUNERATION PAYABLE TO THE SECOND petitioner FOR THE SERVICES RENDERED BY HIM AS A PROFESSIONAL IS INDEPENDENT OF THE remuneration PAYABLE TO HIM AS A DIRECTOR. THEREFORE, THE CEILING PRESCRIBED UNDER section 198 OF THE ACT HAS NO APPLICATION TO THE REMUNERATION PAYABLE TO THE SECOND petitioner TOWARDS HIS PROFESSIONAL SERVICES. ( 7 ) THE PROVISO TO SECTION 309 (1) OF THE ACT MAKES IT CLEAR THAT THE REMUNERATION for SERVICES RENDERED BY A DIRECTOR IN ANY OTHER CAPACITY SHALL NOT BE INCLUDED IN THE remuneration PAYABLE TO THE DIRECTOR IN THAT CAPACITY, PROVIDED THE SERVICES SO rendered BY HIM ARE OF A PROFESSIONAL NATURE. IN ORDER TO ENSURE THAT THE OVERALL maximum ON MANAGERIAL REMUNERATION PAYABLE TO THE DIRECTORS DOCS NOT EXCEED the LIMIT PRESCRIBED UNDER SECTION 198, THE PROVISO TO SECTION 309 (1) OF THE ACT stipulates THAT THE CENTRAL GOVERNMENT SHOULD EXPRESS ITS OPINION REGARDING THE requisite QUALIFICATIONS POSSESSED BY THE DIRECTOR TO RENDER SUCH PROFESSIONAL services. THERE IS NOTHING IN SECTION 309 OF THE ACT WHICH EMPOWERS THE CENTRAL government TO RESTRICT THE REMUNERATION PAYABLE TO A DIRECTOR FOR SERVICES rendered BY HIM IN A PROFESSIONAL CAPACITY. THERE IS NOTHING IN SECTION 309 OF THE ACT WHICH EMPOWERS THE CENTRAL government TO RESTRICT THE REMUNERATION PAYABLE TO A DIRECTOR FOR SERVICES rendered BY HIM IN A PROFESSIONAL CAPACITY. ONCE THE CENTRAL GOVERNMENT IS satisfied THAT THE DIRECTOR POSSESSED THE REQUISITE QUALIFICATIONS TO RENDER professional SERVICES, IT IS NOT PERMISSIBLE FOR THE CENTRAL GOVERNMENT TO PUT ANY restriction ON THE REMUNERATION PAYABLE TO HIM BY THE COMPANY IN RESPECT OF THE professional SERVICES. ( 8 ) THE DECISIONS IN SHIP CONSULTANTS LTD. V UNION OF INDIA, (1987)61 COMP. CASES 784; RUBY MILLS LTD. and ANOTHER V UNION OF INDIA, (1985)57 COMP. CASES 193 AND R. GAC ELECTRODES LTD. and ANOTHER V UNION OF INDIA and OTHERS, (1982)52 COMP. CASES 288 on WHICH THE LEARNED COUNSEL RELIED SUPPORT THE SUBMISSION MADE BY HIM THAT THE central GOVERNMENT ACTED BEYOND ITS POWERS IN FIXING AN UPPER LIMIT OF RS. 7,000/- per ANNUM TOWARDS THE FEE PAYABLE TO A PROFESSIONAL FOR SERVICES OF A PROFESSIONAL nature RENDERED BY A DIRECTOR, WHILE EXPRESSING ITS OPINION THAT THE DIRECTOR concerned POSSESSES THE REQUISITE QUALIFICATIONS FOR THE PRACTICE OF THE PROFESSION. ( 9 ) THIS PETITION, THEREFORE, SUCCEEDS. IN THE RESULT, I MAKE THE FOLLOWING ORDER: (I) RULE MADE ABSOLUTE, (II) THAT PART OF THE IMPUGNED COMMUNICATION CERTIFICATE DATED 2-7-1984, ANNEXURE-D, which RESTRICTS IHE REMUNERATION PAYABLE TO THE SECOND petitioner FOR RENDERING PROFESSIONAL SERVICES TO THE FIRST PETITIONER COMPANY, is QUASHED. (III) NO COSTS. --- *** --- .