A is managing director of APAR Ltd He gave his resignation letter to the Chairman of the Board of directors on 31st December, 2005 and requested that he should be relieved immediately. When does the resignation of Mr. A take effect?
In the given problem, the managing director, Mr. A has submitted his resignation to the Chairman of the Board The Chairman of the Board has the ostensible authority to act on behalf of the company. Thus, it can be said that Mr. A has submitted his resignation to the company. The words 'resignation letter' implies that his resignation is in writing, and so his intention to resign is clear.
As per the decision in Achutha Pai v ROC, the resignation of Mr. A does not take effect immediately on submission of resignation. Thus, Mr. A shall continue as managing director until his resignation is accepted. Accordingly, Mr. A can be compelled to continue as managing director until his resignation is accepted. But, he must be relieved within a reasonable time.
After submission of resignation letter, Mr. A cannot withdraw his resignation except with the consent of the shareholders or the Board.
