Companies Act Section 417 — Removal of Members
CHAPTER XXVII NATIONAL COMPANY LAW TRIBUNAL AND APPELLATE TRIBUNAL
Commercial / Corporate
Summary
Sub-section (1) allows the Central Government, after consulting the Chief Justice of India, to remove the President, Chairperson, or any Member from office on any of the listed grounds. These grounds are: being declared insolvent; being convicted of an offence that the Central Government considers to involve moral turpitude; becoming physically or mentally incapable of performing their duties; acquiring a financial or other interest that is likely to affect their functions prejudicially; or abusing their position in a way that makes their continued presence in office harmful to the public interest.
The proviso to sub-section (1) states that the President, Chairperson, or Member cannot be removed on the grounds mentioned in clauses (b) to (e) unless they are given a reasonable opportunity to be heard.
Sub-section (2) says that, apart from what is covered in sub-section (1), the President, Chairperson, or Member cannot be removed from office except by an order from the Central Government. This order must be based on proved misbehaviour or incapacity, after an inquiry conducted by a Judge of the Supreme Court nominated by the Chief Justice of India. The inquiry happens on a reference made by the Central Government, and the person concerned must have been informed of the charges and given a reasonable opportunity to be heard.
Sub-section (3) allows the Central Government, with the agreement of the Chief Justice of India, to suspend the President, Chairperson, or Member from office while a reference is pending before the Supreme Court Judge under sub-section (2). This suspension lasts until the Central Government passes orders after receiving the Judge's report on the reference.
Sub-section (4) requires the Central Government to make rules, after consulting the Supreme Court, to regulate the procedure for the inquiry on the ground of proved misbehaviour or incapacity as referred to in sub-section (2).
Official Text
(1) The Central Government may, after consultation with the Chief Justice of India, remove from office the President, Chairperson or any Member, who—
(a) has been adjudged an insolvent; or
(b) has been convicted of an offence which, in the opinion of the Central Government, involves moral turpitude; or
(c) has become physically or mentally incapable of acting as such President, the Chairperson, or Member; or
(d) has acquired such financial or other interest as is likely to affect prejudicially his functions as such President, the Chairperson or Member; or
(e) has so abused his position as to render his continuance in office prejudicial to the public interest:
Provided that the President, the Chairperson or the Member shall not be removed on any of the grounds specified in clauses
(b) to
(e) without giving him a reasonable opportunity of being heard.
(2) Without prejudice to the provisions of sub-section (1), the President, the Chairperson or the Member shall not be removed from his office except by an order made by the Central Government on the ground of proved misbehaviour or incapacity after an inquiry made by a Judge of the Supreme Court nominated by the Chief Justice of India on a reference made to him by the Central Government in which such President, the Chairperson or Member had been informed of the charges against him and given a reasonable opportunity of being heard.
(3) The Central Government may, with the concurrence of the Chief Justice of India, suspend from office, the President, the Chairperson or Member in respect of whom reference has been made to the Judge of the Supreme Court under sub-section (2) until the Central Government has passed orders on receipt of the report of the Judge of the Supreme Court on such reference.
(4) The Central Government shall, after consultation with the Supreme Court, make rules to regulate the procedure for the inquiry on the ground of proved misbehaviour or incapacity referred to in sub-section (2). 1[