law: Companies Act, 2013 
  202.
  
    Compensation
  
  for loss of office of managing or whole-time director or manager.
  1.      A company may make
  
  payment to a managing or whole-time director or manager, but not to any other
  
  director, by way of compensation for loss of office, or as consideration for
  
  retirement from office or in connection with such loss or retirement.
  2.      No payment shall be
  
  made under sub-section (1 ) in the following cases, namely:—
  a.     
  
    where
  
  the director resigns from his office as a result of the reconstruction of the
  
  company, or of its amalgamation with any other body corporate or bodies
  
  corporate, and is appointed as the managing or whole-time director, manager or
  
  other officer of the reconstructed company or of the body corporate resulting
  
  from the amalgamation;
  b.    
  
    where
  
  the director resigns from his office otherwise than on the reconstruction of
  
  the company or its amalgamation as aforesaid;
  c.     
  
    where
  
  the office of the director is vacated under sub-section (1 ) of section
  
  167;
  d.    
  
    where
  
  the company is being wound up, whether by an order of the Tribunal or
  
  voluntarily, provided the winding up was due to the negligence or default of
  
  the director;
  e.     
  
    where
  
  the director has been guilty of fraud or breach of trust in relation to, or of
  
  gross negligence in or gross mismanagement of, the conduct of the affairs of
  
  the company or any subsidiary company or holding company thereof; and
  f.     
  
    where
  
  the director has instigated, or has taken part directly or indirectly in
  
  bringing about, the termination of his office.
  1.     
  2.     
  3.      Any payment made to a
  
  managing or whole-time director or manager in pursuance of sub-section (1 )
  
  shall not exceed the remuneration which he would have earned if he had been in
  
  office for the remainder 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 years immediately preceding the date on which he
  
  ceased to hold office, or where he held the office for a lesser period than
  
  three years, during such period:
  Provided
  
  that no such payment shall be made to the director in the event of the
  
  commencement of the winding up of the company, whether before or at any time
  
  within twelve months after, the date on which he ceased to hold office, if the
  
  assets of the company on the winding up, after deducting the expenses thereof,
  
  are not sufficient to repay to the shareholders the share capital, including
  
  the premiums, if any, contributed by them.
  4.      Nothing in this
  
  section shall be deemed to prohibit the payment to a managing or whole-time
  
  director, or manager, of any remuneration for services rendered by him to the
  
  company in any other capacity.