Managing Director holding office beyond 70 years!

Jaber Abdul Wahab & Ors. v. T.P. Anilkumar & Ors. — NCLAT, Chennai Bench (2026)

The principle in brief

A party may have paid money under an NCLT order, but that order is still under appeal. The findings behind it are not yet final, and the appeal is a continuation of the original proceedings. So the NCLAT may allow the party to take the cash back and give an unconditional, irrevocable bank guarantee instead, provided three things hold:

• the substitution does not delay or interfere with the hearing of the appeal;

• the company's financial position is not put at risk; and

• the company is fully protected, including against the interest it would lose on the money.

Nor does an earlier interim order that was silent on the deposit stand in the way. The question of substituting it was simply never before the Tribunal at that stage.

The background, briefly

In a Section 241 petition for oppression and mismanagement, the NCLT, Kochi found on 3 September 2025 that the company's Managing Director had continued in office for about four years after turning 70. Section 196(3) of the Companies Act, 2013 required a special resolution for this, and none had been passed. The NCLT ordered him to refund all remuneration and benefits received after 1 July 2020, with 6% interest. It also made other directions, including appointing an Administrator.

The former MD deposited about ₹29.63 crore with the company on 3 December 2025 and pursued his appeal. On 9 March 2026, the NCLAT stayed only the appointment of the Administrator. The Supreme Court later directed the NCLAT to hear the appeals finally, and the final hearing is fixed for 26–30 October 2026. The former MD then asked to replace his cash deposit with a bank guarantee, citing the strain of high-interest loans taken to raise the money.

The respondents objected. They called the application an attempt to get around the NCLT order and said the deposit fell short of a true liability exceeding ₹45 crore. They also argued that amounts found to have been wrongfully taken cannot be swapped for a guarantee.

The reasoning: what drives the decision

An order under appeal is not the last word. The Tribunal's central reason was that the NCLT's findings have not attained finality. It treated the appeal as a continuation of the original proceedings, in which the facts remain open. This answers the respondents' strongest objection. Calling the money "misappropriated" presumes the very findings that are still under challenge. Until the appeal is decided, the refund is a liability to be secured, not a settled wrong.

A useful test: what if he never had the cash? The Tribunal asked whether the NCLT itself would have accepted a bank guarantee if the appellant had not had the money when the order was passed. The answer is plainly yes, so a party who paid promptly should not be worse off than one who could only offer security. Compliance should not be penalised.

No harm to the appeal. The hearing dates were fixed and unchanged, and no one showed how the substitution would affect them. So the objection that the application was a delaying tactic failed.

No harm to the company. The company's profit of about ₹30 crore in the last financial year was not disputed. Releasing the cash, backed by a guarantee, would not endanger it.

A silent stay order is not a bar. The March 2026 stay order did not touch the refund direction. The deposit had been made months earlier, so the question never arose then. An interim order speaks only to what the Tribunal actually had occasion to consider. Its silence on a question never raised cannot be read as a refusal. Likewise, the Supreme Court had only directed a final hearing and said nothing on the merits.

Protecting the company: the conditions attached

The Tribunal recognised that substitution still costs the company the interest it would have earned. It therefore allowed the application only in part:

• The appellant may withdraw ₹29 crore. The balance of about ₹63.5 lakh stays with the company to cover the loss of interest.

• He must furnish an unconditional and irrevocable bank guarantee for ₹29 crore from State Bank of India, Federal Bank, or both.

• He must indemnify the company against any loss arising from the arrangement.

• Everything remains subject to the final outcome of the appeals.

Why this matters

For appellants, the order confirms that complying with an order does not lock money away for the life of the appeal. Substitution with a bank guarantee is available, but the appellant must show that the appeal will not be delayed and that the company will not suffer.

For companies and respondent shareholders, the order shows what protection to insist on: a bank guarantee from a sound bank, a cushion for lost interest, and an indemnity.

This is an interlocutory order that turns on its own facts. Its reasoning is nonetheless a useful guide wherever monetary directions under Sections 241–242 are carried in appeal.

A reminder on Section 196(3)

The underlying dispute also carries a lesson. Continuing a Managing Director beyond 70 without a special resolution is not a technical lapse. It can lead to an order to return everything paid during that period, with interest.