Kerala High Court
T.K. Gopalakrishnan Nair vs State Of Kerala Represented By Chief ... on 12 April, 2024
Author: Amit Rawal
Bench: Amit Rawal
WP(C) No.15512/2023 1 / 18
IN THE HIGH COURT OF KERALA AT ERNAKULAM
PRESENT
THE HONOURABLE MR. JUSTICE AMIT RAWAL
Friday, the 12th day of April 2024 / 23rd Chaithra, 1946
WP(C) NO. 15512 OF 2023 (L)
PETITIONERS:
1. T.K. GOPALAKRISHNAN NAIR, AGED 64 YEARS, S/O KRISHNAN NAIR,
THADIYIL HOUSE, KUMBASHA P.O., PATHANAMTHITTA DISTRICT, PIN - 689
653.
AND ANOTHER
RESPONDENTS:
1. STATE OF KERALA, REPRESENTED BY CHIEF SECRETARY, GOVT. OF KERALA,
SECRETARIAT, THIRUVANATHAPURAM, PIN - 695 026.
AND 30 OTHERS
Writ petition (civil) praying inter alia that in the circumstances
stated in the affidavit filed along with the WP(C) the High Court be
pleased to direct respondents 4 to 31 from holding the Annual General
Meeting of 3rd Respondent Nair Service Society, without the participation
to the petitioners and the entire members of the Nair Service Society,
desirous of attending the AGM and further restrain respondents 4 to 31
from dissolving or dismissing the elected committees of Karayogams and
Karayoga Taluk Unions for demanding amendments in Exhibit P4 Articles of
Association, in tune with the provisions of Companies Act 2013 and Non
Trading Companies Act 1961, pending disposal of the above Writ Petition.
This petition again coming on for orders upon perusing the petition
and the affidavit filed in support of WP(C) and this Court's order dated
11.04.2024 and upon hearing the arguments of M/S P.CHANDY JOSEPH,
C.K.VIDYASAGAR, P.P.MADHUSUDANAN, Advocates for the petitioners,Government
Pleader for R1, M/S GOPIKRISHNAN NAMBIAR M, K.JOHN MATHAI, JOSON
MANAVALAN, KURYAN THOMAS, PAULOSE C. ABRAHAM, RAJA KANNAN, PRANOY HARILAL,
Advocates for respondents 3,4 and 7 and of M/S P.VISWANATHAN (SR.), SHIBU
JOSEPH, K.T.SEBASTIAN, Advocates for the 30th respondent, the court passed
the following:
WP(C) No.15512/2023 2 / 18
AMIT RAWAL, J.
=================
WP(C) No.15512 and 1717 of 2023
=====================
Dated this the 12th day of April, 2024
ORDER
Two writ petitions (WP(C) No.15512 of 2023 -first writ
petition and WP(C) No.1717 of 2023 - second writ petition) have
been filed on behalf of Sri.T.K Gopalakrishnan Nair and another
and Prof. V.P Haridas and Another respectively, against the
activities of respondent No.3, Nair Service Society (NSS). The 1 st
petitioner is the Director of the Board of Directors from 2002 to
2018 and 2nd petitioner is a life member of NSS in WP(C) No.1717
of 2023. Petitioners in other writ petition ie., WP(C) No.15512 of
2023 are also members of the Society representing different
areas situated in Kerala. The petitioners have sought indulgence
with the following prayers alleging malfunctioning of the 3 rd
respondent (NSS), in gross violation of statutory provisions and
adoption of practices, which are against the organization, much
less, violations of mandatory provisions of Indian Companies Act,
1956, Indian Companies Act, 2013 and Kerala Non Trading
Companies Act, 1961
1) Declare Exhibit P5 notification, SRO No. 959/1977
dated 14-10- 1977 issued by Government of Kerala null
and void.
ii) Issue necessary prohibitory orders against
respondents 4 to 31, from holding the Annual General
Meeting of the 3rd respondent Company without
restructuring Exhibit P4 Memorandum and Articles of
Associations of Respondent No.3 in tune with the
provisions of Indian Companies Act 2013 and the Kerala
Non Trading Companies Act 1961.
iii) Issue a writ of mandamus against 2nd respondent
Registrar, I.G. Registration to initiate penal actions
against the erring respondents 4 to 31, for the gross
violations of mandatory provisions in the Indian
Companies Act 2013, committed by the said
respondents after 01-04-2014.
iv) Directing respondent No. 2 not to receive to file any
statutory return or statement or other information
submitted by respondents 4 o 31 of 3rd respondent
company on behalf of the 3rd respondent unless they
are filed in compliance with the statutory provisions
mandated in the Indian Companies Act 2013 or the rules
framed there under and in the forms and manner
prescribed by the said rules
v) Direct the 2nd respondent to recommend the 1st
respondent State of Kerala to appoint required number
of directors to hold office to prevent the 3 rd respondent
company going into "status quo" in the event of the
entire directors of the 3rd respondent suffering
disqualification for the violations of mandatory
provisions of the Companies Act 2013.
1. Directing the 2nd respondent to consider and
pass appropriate orders declaring and notifying u_{1}
disqualifications of respondents 4 to 30 to continue an
directors of Respondent 3 Public Company by the
issuance of a writ of Mandamus or any other
appropriate writ, order or direction.
2. Directing the 2nd respondent to notify the
disqualifications ORIGI to respondents 4 30 to be
appointed as directors in any Indian Company for the
ensuing 5 years.
3. Directing the 2nd respondent to declare that the
office of the directorship of respondents 4 to 30 in 3rd
respondent public company have become vacant under
Section 167 of the Indian Companies Act 2013 and to
recommend the 1st respondent to appoint the required
number of directors to hold office till directors are
appointed by the 3rd respondent company in the
General Meeting.
2. It has been alleged that 3 rd respondent, (NSS) is a
Company registered under Section 26 of Travancore Companies
Regulation of 1092 (ME) as a company limited by gurantee under
the licence issued by the Government of Travancore dated
18.3.1925.
3. Owing to the promulgation of the Companies Act,
1956 and later Kerala Non Trading Companies Act, 1961,
respondent No3 is governed by the aforementioned provisions of
the Act. With effect from 1st April 2014, 1956 Act was repealed
and replaced with a new Companies Act 2013. 4 th respondent is
the General Secretary of the NSS and 5 th respondent is its
President whereas, 6th respondent is the Treasurer and 7 th
respondent is the Registrar of NSS. They are the Managerial
Personnel's at the helm of affairs of the 3 rd respondent Company.
There are about (600) individual members and (5400) members
consisting of Karayogam Units registered as members and Taluk
Unions. Ext.P3 is the certificate issued under the Travancore
Company Regulations bearing No.12/1100 and Memorandum
and Articles of Association of the 3 rd respondent is Ext.P4.
Respondents 4 to 30 are the Directors running the affairs of the
Company alleged to be in gross violation of the mandatory
provisions. As per Section 158 of the Companies Act, 2013,
every person or company, while furnishing any required, to be
furnished under this Act, shall mention the Director
Identification Number(DIN) in such return, information or
particulars in case such return, information or particulars relate
to the director, information or contain any reference of any
director. The 3rd respondent submitted annual returns for the
year 2018-19, 2019-2020 and 2020-21 under Section 92 of the
Companies Act, 2013. Copy of the same has been annexed as
Exts.P4 to P6 (second writ petition). The model form prescribed
for submitting Annual return under Section 92 namely MGT 7 is
marked as Ext.P7 and copy of the Model Form for submitting
Financial Statement under Section 137 as Ext.P8. The last page
of the return provides the space for DIN, AOC Form also provides
space for DIN. Section 152(3) of the Companies Act, 2013
mandates that no person shall be appointed as a Director of a
company unless allotted the DIN and as per Section 152(4),
every person proposed to be appointed as a director is required
to furnish an Identification Number, failing which, it will entail
into disqualification under Section 164.
4. In the first writ petition, it has been alleged that the
respondent Company is denying the rights conferred on the
members of the Company to attend the Annual General Meeting
of the company, right to vote and to contest for the post of
Director.
5. The Articles of Association of 3rd respondent is
couched in terms denying the rights guaranteed by the statute,
banking on Ext.P5 notification. 2nd Respondent Registrar of
Companies under the Non Trading Companies Act despite having
submitted representation, Ext.P6 in first writ petition, did not
take any action in accordance with law. As per the judgments
Exts.P8 to P10 in the first writ petition, it has been held by this
Court that Non Trading Companies in Kerala have to function
under the Companies Act of 2013 and cannot cling on to the
provisions of the repealed Act of 1956. There are other
inconsistencies and irregularities in the Articles of Association
whereby the strength of the AGM has been restricted to (300)
whereas the total number of members in the region are more
than (6000).
6. As regards the non reference of the DIN number in the
returns and other documents, representation dated 20.7.2022
has been submitted to the 2nd respondent but of no avail.
7. In respect of another non Trading Company registered
under the Non Trading Companies Act, this court vide judgment
dated 5.1.2021, Ext.P11 issued directions to the Inspector
General of Registrar to take a decision on the representation
within a reasonable period not less than three months and an
appeal preferred against the said judgment has also been
dismissed as evident from Ext. P12 in the second writ petition.
8. Mr.C.K Vidyasagar, learned counsel appearing for the
petitioner in support of the contentions submitted that Section 2
of the Non Trading Companies Act defines a company, other than
a trading corporation (including banking, insurance and financial
corporations), with objects confined to the State of Kerala formed
and registered under the Companies Act, 1956 (Central Act I of
1956), as modified by this Act, or an existing company as defined
in clause (2) whereas the existing company would mean a
company; other than a trading corporation(including banking,
insurance and financial corporations), with objects confined to
the State of Kerala formed and registered under any of the
companies laws. Reliance has also been laid to Section 3 of the
Act, 1961, which specifically provided, that the provisions of the
Companies Act, 1956 will be applicable to Non Trading
Companies with objects confined to the State of Kerala. As per
the notification dated 14.10.1977, Ext.P5 in the first writ
petition, Government of Kerala had granted exemption for
applicability of the various provisions of erstwhile Companies
Act, 1956 like Sections 171 to 186 and Sections 433 to 483.
9. The Companies Act, 2013 came into force with effect
from 1.4.2014. Thereafter was amended and the provisions of
the Companies Act, 1956 were repealed. Reliance has also been
laid to the provisions of Section 465 of the 2013 Act, dealing with
repealing and saving.
10. On the other hand, learned senior counsel Mr Nanda
Kumar, for the respondent submitted that the respondent No.3
Company would not be governed by the provisions of 2013 Act in
view of notification 1977. In the absence of any new notification
issued by the Government granting exemption from the
applicability of the Act. Section 3 of the Non Trading Companies
Act, 1961 apply only to the applicability of the provisions of the
repealed Companies Act, 1956. The 3 rd respondent was a
Company which was registered under Section 26 of the
Travancore Companies Regulation, 1 of 1092, which was
repealed by the Travancore Companies Act 1114 and thereafter,
by virtue of Section 8 of the Kerala Non Trading Companies Act,
1961, the Travancore Companies Act, 1114 was repealed and the
3rd respondent came to be governed under the 1961 Act. The 3 rd
respondent is a company limited by guarantee with charitable
objects and is a 'Non-Trading Company' with its objects confined
to the State of Kerala. The legislative power or competence to
make laws governing non-trading companies or companies other
than trading companies, banking and other financial institutions
with objects confined to one State, is by virtue of Entry 32 of the
State List under the 7th Schedule to the Constitution of India.
The Union of India or the Parliament has absolutely no power to
make any law in respect of non-trading corporations or
companies falling within Entry 32 of List II in view of the
provisions of Article 246(3) of the Constitution of India. On
account of repealment of the Companies Act, 1956 by the
Companies Act, 2013 would not in any manner affect the
provisions of the Kerala Act, which has merely copied some
provisions of the Companies Act, 1956. With reference to the
allegations regarding 'DIN' viz, Sections 152 to 158 of the 2013
Act much less 164 of the Act, 2013 Act would not applicable to
the 3rd respondent. Therefore, there is no question of any
disqualification of the respondent-Directors. Ext.P11 judgment
is also not applicable to the facts and circumstances of the case
rather would not come to the rescue of the petitioners, for the
reason that this Court did not have the occasion to consider the
question as to applicability of the 2013 Act to a non-trading
company governed under the Kerala Act.
11. Mr.C.K Vidyasagar has relied upon various judgments
ie., Manjo K. @ Kadakampalli Manoj and Another v. Sree
Narayana Dharma Paripalana Yogam, Kollam and others (2020 (4)
KHC 627), Vijayakumar V and Others v. S.N.D.P Yogam and
Others (2022 KHC 3436), Union Christian College, Aluva v. K.C
Eapen and Others (2020 (5) KHC 220) and Girnar Traders v. State
of Maharashtra and Others (2011 KHC 4032). Mr. Nanda Kumar
relied upon judgment of the Supreme Court in Bolani Ores Ltd v.
State of Orissa (1974 KLT online 925) to contend that there is a
stark difference between legislation by incorporation or by
reference.
12. I have heard the learned counsel for the parties and
appraised the paper book. It would be appropriate to reproduce
Section 2 and 3 of the 1961 Act as well as 465 of the 2013 Act.
SECTION 2 OF NON TRADING COMPANIES ACT 1961
2.Definitions.--In this Act and in the Companies Act,
1956 (Central Act I of1956), as applied to the State of
Kerala by section 3, unless the context otherwise
requires,--
(1)"company" means a company, other than a trading
corporation (including banking, insurance and financial
corporations), with objects confined to the State of
Kerala formed and registered under the Companies Act,
1956 (Central Act I of 1956), as modified by this Act, or
an existing company as defined in clause (2);
(2)"existing company" means a company; other than a
trading corporation(including banking, insurance and
financial corporations), with objects confined to the State
of Kerala formed and registered under any of the
companies laws, specified below:-
(i) Any Act or Acts relating to companies in force before
the IndianCompanies Act, 1866 (10 of 1866) and
repealed by that Act;
(ii) The Indian Companies Act, 1866 (10 of 1866);
(iii) The Indian companies Act, 1882 (6 of 1882);
(iv) The Indian Companies Act, 1913 (7 of 1913);
(v) The Registration of Transferred Companies
Ordinance 1942 (54 of1942);
(vi) The Travancore Companies Act, 1114 (IX of 1114);
(vii)The Cochin Companies Act, 1120 (XI of 1120);
(viii) The Companies Act, 1956 (I of 1956), before the
commencement of this Act;
3.Application of the Companies Act, 1956 (Central Act
I of 1956) to non-trading companies with objects
confined to the State of Kerala.-The Companies Act,
1956, (Central Act I of 1956), in so far as it is the law
relating to companies, other than trading corporations
(including banking, insurance and financial
corporations), with objects not confined to one State
shall, mutatis mutandis, and subject to the
modifications specified in the Schedule to this Act, be
applicable to the State of Kerala, and shall be the law
relating to companies, other than trading corporations
(including banking, insurance and financial
corporations, with objects confined to the State of
Kerala.
Section 465. Repeal of certain enactments and savings.
(1) The Companies Act, 1956 (1 of 1956) and the
Registration of Companies (Sikkim) Act, 1961 (Sikkim Act
8 of 1961) (hereafter in this section referred to as the
repealed enactments) shall stand repealed:
Provided that the provisions of Part IX A of the Companies
Act, 1956 (1 of 1956) shall be applicable mutatis mutandis
to a Producer Company in a manner as if the Companies
Act, 1956 has not been repealed until a special Act is
enacted for Producer Companies:
Provided further that until a date is notified by the
Central Government under subsection (1) of Section 434
for transfer of all matters, proceedings or cases to the
Tribunal, the provisions of the Companies Act, 1956 (1 of
1956) in regard to the jurisdiction, powers, authority and
functions of the Board of Company Law Administration
and court shall continue to apply as if the Companies Act,
1956 has not been repealed:
Provided also that provisions of the Companies Act, 1956
(1 of 1956) referred in the notification issued under
section 67 of the Limited Liability Partnership Act, 2008
(6 of 2009) shall, until the relevant notification under
such section applying relevant corresponding provisions
of this Act to limited liability partnerships is issued,
continue to apply as if the Companies Act, 1956 has not
been repealed.
(2) Notwithstanding the repeal under sub-section (1) of
the repealed enactments,--
(a) anything done or any action taken or purported to
have been done or taken, including any rule, notification,
inspection, order or notice made or issued or any
appointment or declaration made or any operation
undertaken or any direction given or any proceeding
taken or any penalty, punishment, forfeiture or fine
imposed under the repealed enactments shall, insofar as
it is not inconsistent with the provisions of this Act, be
deemed to have been done or taken under the
corresponding provisions of this Act;
(b) subject to the provisions of clause (a), any order, rule,
notification, regulation, appointment, conveyance,
mortgage, deed, document or agreement made, fee
directed, resolution passed, direction given, proceeding
taken, instrument executed or issued, or thing done under
or in pursuance of any repealed enactment shall, if in
force at the commencement of this Act, continue to be in
force, and shall have effect as if made, directed, passed,
given, taken, executed, issued or done under or in
pursuance of this Act;
(c) any principle or rule of law, or established
jurisdiction, form or course of pleading, practice or
procedure or existing usage, custom, privilege, restriction
or exemption shall not be affected, notwithstanding that
the same respectively may have been in any manner
affirmed or recognised or derived by, in, or from, the
repealed enactments;
(d) any person appointed to any office under or by virtue
of any repealed enactment shall be deemed to have been
appointed to that office under or by virtue of this Act;
(e) any jurisdiction, custom, liability, right, title, privilege,
restriction, exemption, usage, practice, procedure or
other matter or thing not in existence or in force shall not
be revised or restored;
(f) the offices existing on the commencement of this Act
for the registration of companies shall continue as if they
have been established under the provisions of this Act;
(g) the incorporation of companies registered under the
repealed enactments shall continue to be valid and the
provisions of this Act shall apply to such companies as if
they were registered under this Act;
(h) all registers and all funds constituted and established
under the repealed enactments shall be deemed to be
registers and funds constituted or established under the
corresponding provisions of this Act;
(i) any prosecution instituted under the repealed
enactments and pending immediately before the
commencement of this Act before any Court shall, subject
to the provisions of this Act, continue to be heard and
disposed of by the said Court;
(j) any inspection, investigation or inquiry ordered to be
done under the Companies Act, 1956 (1 of 1956) shall
continue to be proceeded with as if such inspection,
investigation or inquiry has been ordered under the
corresponding provisions of this Act; and
(k) any matter filed with the Registrar, Regional Director
or the Central Government under the Companies Act,
1956 (1 of 1956) before the commencement of this Act
and not fully addressed at that time shall be concluded by
the Registrar, Regional Director or the Central
Government, as the case may be, in terms of that Act,
despite its repeal.
(3) The mention of particular matters in sub-section (2)
shall not be held to prejudice the general application of
section 6 of the General Clauses Act, 1897 (10 of 1897)
with regard to the effect of repeal of the repealed
enactments as if the Registration of Companies (Sikkim)
Act, 1961 (Sikkim Act 8 of 1961) were also a Central Act.
13. Reliance to Section 465 of 2013 Act dealing with
repealing and saving clauses, particularly sub clauses, (c), (e), (f)
and (g) of sub Section 465 of 2013 Act, as per the contention of
the learned counsel for the petitioner requires a deliberation by
an expert with whom representations in both the writ petitions,
as indicated above, have been submitted to the respondent No.2,
Inspector of General of Registration, Registrar of Non Trading
Companies as per the notification. Time and again, the scope of
judicial review has been pondered by the Supreme Court and
various courts and it has been consistently held that the court
should be circumspect to assume the role of an expert when the
controversy as noticed above ie., regarding applicability of the
provisions of the Company Act, 2013 or otherwise would be the
domain of the competent authority ie., the Deputy Inspector
General of Registration (license) as Registrar. For the time
being without commenting upon the merit and demerits of the
matters, I as an interim measure, issue directions to the Deputy
Inspector General of Registration (license) acting as Registrar of
the Company as per the Kerala Non Trading Companies Act,
1961 to take a call on the representations Ext.P6 in first writ
petition and Ext.P9 in the second writ petition by affording an
opportunity of hearing to the petitioners or representatives as
well as the contesting respondents as to whether the returns
which are being filed by the respondent companies, Directors are
required to have DIN number and whether there have been
irregularities in the Articles of Association and Memorandum of
Association as claimed in the prayers (supra) within a period of
one month from the date of receipt of a copy of this order. Post
on 31.5.2024 to await the report of Deputy Inspector General of
Registration (license).
Sd/-
sab AMIT RAWAL, JUDGE
sa/131219sassssabs10.
12-04-2024 /True Copy/ Assistant Registrar
APPENDIX OF WP(C) 15512/2023
Exhibit P3 TRUE PHOTOCOPY OF THE CERTIFICATE OF INCORPORATION OF
N.S.S. NO BEING 12/1100M.E.
Exhibit P4 TRUE PHOTOCOPY OF THE MEMORANDUM AND ARTICLES OF
ASSOCIATION OF N.S.S.
Exhibit P5 TRUE PHOTOCOPY OF THE GAZETTE NOTIFICATION (SRO NO.
959/1977)DATED 14-10-1977.
Exhibit P6 TRUE PHOTOCOPY OF THE REPRESENTATION SUBMITTED BY 1ST
PETITIONER TO I.G. REGISTRATION DATED 25-02-2023.
Exhibit P7 TRUE PHOTOCOPY OF THE ACKNOWLEDGMENT RECEIPT DATED
03-03-2023
Exhibit P8 TRUE PHOTOCOPY OF THE JUDGMENT IN WP (C) NO. 8382/2020
DATED 24-01-2022.
Exhibit P9 TRUE PHOTOCOPY OF THE ORDER IN CRP 248/2019 DATED
30.01.2020
Exhibit P10 TRUE PHOTOCOPY OF THE JUDGMENT IN WRIT APPEAL
NO.1365/2020 DATED 08.03.2022.
Exhibit P11 TRUE PHOTOCOPY OF THE NOTICE OF ANNUAL GENERAL MEETING
DATED 23.06.2023 ISSUED BY THE 3RD RESPONDENT TO THE
PETITIONERS
12-04-2024 /True Copy/ Assistant Registrar
