Appointment of Sole Buying Agent

If the sole selling agency is vacated fornon-compliance of Section 314 provisions, then, even if there be no default on the part of the sole selling agent, claim for compensation will be out of question. According to Sec. 314, certain categories of persons, i.e., Directors or their relatives, cannot be appointed to any office or place of profit (naturally including the appointment as a sole selling agent) without a special resolution in that regard.
Amount of Compensation
Sub-section (2) puts a ceiling on the amount of compensation, where payable. It provides that the remuneration paid for loss of office must no~ exceed the remuneration that he would have received for the unexpired term of his office or 3 years, whichever is shorter, calculated on the basis of average remuneration of 3 years. immediately preceding the date on which his office ceased or was terminated or where he held office for a lesser period than three years, during such period.

~ 5. Randhir was appointed as the sole selling agent of S Ltd. for a period of five years in a general meeting ofthe Gompany. Exactly after one and half years, S. Ltd. was amalgamated with another company A Ltd. Randhir was not appointed as the sole selling agent of A Ltd. S Ltd. paid Randhir Rs. 6 lacs as selling agency commission during the said one half years. Is randhir entitled to any compensation and if yes, what
is the quantum? IC.A. (Final) November, 2000J

flLns. For the provisions regarding payment of compensation to a sole-selling agent. Please see under answer to question 4.ln the given case, Mr. Randhir having not been appointed as the sole-selling agent of the amalgamated company, namely, A Ltd., he is entitled to be paid compensation. As per Sub-section 2 of Section 294A, the amount of compensation must not exceed the remuneration which he would have earned if he had been in office for unexpired residue period of his term or for three years, whichever is shorter calculated on the basis of the average remuneration actually earned by him during a period of three immediately preceding the date on which his office ceased or terminated, or where he held his office for a lesser period than three years then remuneration earned during 5uch period.
On the basis of aforesaid provision, the compensation should be payable to Mr. Randhir for three years period (being less than unexpired period of 3k years). The average commission earned by him during It years being Rs. 6 lakhs,' it works out to Rs. i2 lakhs for a period of three years. Accordingly, Mr. Randhir is entitled to a compensation of Rs. 121akhs.
~ 6. Write a short note on Appointment of 'Sole Buying Agent'. flLns .

Appointment of Sole Buying Agent
The provisions of Sections 294 and 294-AA as discussed under answer to Q. 1 in relation to sole selling agents are applicable to sole buying agents also except the provision stated under (3) of that answer.
~ 7. Draft a resolution for appointment of sole selling agent under Section 294-AA.