The Companies Act, 1956
319. PAYMENT TO DIRECTOR, ETC., FOR LOSS OF OFFICE ETC., IN CONNECTION WITH TRANSFER OF UNDERTAKING OR PROPERTY.
(1) No director of a company shall, in connection with the transfer of the whole or any part of any undertaking or property of the company, receive any payment, by way of compensation for loss of office, or as consideration for retirement from office, or in connection with such loss or retirement -(a) from such company; or(b) from the transferee of such undertaking or property or from any other person (not being such company), unless particulars with respect to the payment proposed to be made by such transferee or person (including the amount thereof) have been disclosed to the members of the company and the proposal has been approved by the company in general meeting.(2) Where a director of a company receives payment of any amount in contravention of sub-section (1), the amount shall be deemed to havebeen received by him in trust for the company.
(3) Sub-sections (1) and (2) shall not affect in any manner the operation of section 318.