Best memorial- 4th KIIT National Moot Court Competition, 2016

Team Code: R 426 4th KIIT UNIVERSITY NATIONAL MOOT COURT COMPETITION, 2016

BEFORE THE HON’BLE SUPREME COURT OF ISLANDIA

SPECIAL LEAVE PETITION

SLP (CIVIL) NO. _________ OF 2016 UNDER ARTICLE 136 OF THE CONSTITUTION OF ISLANDIA

James McLinder ……………………………………………...…………….………….. APPELLANT v. Christopher Ryland ………................………………………………………….…...… RESPONDENT

UPON SUBMISSION TO THE HON’BLE CHIEF JUSTICE AND HIS COMPANION JUSTICES OF THE SUPREME COURT OF ISLANDIA

WRITTEN SUBMISSION ON BEHALF OF THE RESPONDENT

4th KIIT UNIVERS ITY NATIONAL MOOT COURT COMPETITION, 2016

TABLE OF CONTENTS

TABLE OF CONTENTS ……………………………………………………………………………. I LIST OF ABBREVIATIONS ………………………………………………….....…………………. III INDEX OF AUTHORITIES ………………………………………………………..……………..... IV STATEMENT OF JURISDICTION ……………………………………………...………………. … X STATEMENT OF FACTS …………………………………………………………………….……. XI STATEMENT OF ISSUES

…………………………………………………………….…….....… XII

SUMMARY OF ARGUMENTS ………………………………………………………...………... XIII ARGUMENTS ADVANCED …………………………………………………………………..…... 1

I.

THE ISSUE OF LIMITATION WAS NOT REQUIRED TO BE HEARD AS A PRELIMINARY ISSUE IN TERMS OF § 9A OF THE CODE OF CIVIL PROCEDURE, 1908 ………………………………………………………..……………………………..…... 1 A. The issue of limitation is not a facet of jurisdiction ………………………….....…... 1 B. The issue of limitation is a mixed question of law and fact ………………………… 3 C. Mixed question of law and fact cannot be considered as preliminary issue ………… 4 D. The bar of limitation is not applicable in petitions filed under Art 226 of the Constitution …….……………………………………………………………………. 5

II.

§ 196(3)(a) OF THE COMPANIES ACT, 2013 OPERATES AS AN IMMMEDIATE DISQUALIFICATION ON THE APPOINTMENT AND CONTINUATION OF A PERSON AS A WHOLE-TIME DIRECTOR AND THERE IS DISTINCTION BETWEEN ELIGIBILITY CRITERIA AND CONDITION FOR DISQUALIFICATION …………………………………………………………………………………………………

6

A. There is a distinction between eligibility criteria and condition for disqualification …. 6 B. § 196(3)(a) of the Companies Act, 2013 operates as disqualification ……………...…. 7 1. The language in which the provision is couched is plain, simple and unambiguous …………………………………………………………………………… 7 I WRITTEN SUBM ISSION ON BEHA LF OF THE RESPONDENT


2. § 196(3) of the Companies Act, 2013 should be interpreted in the light of § 267 of Companies Act, 1956 ………………………………………………………. 8 III.

THE AGE LIMIT OF 70 YEARS UNDER § 196(3)(a) OF THE COMPANIES ACT 2013, CAN APPLY TO A WHOLE-TIME DIRECTOR VALIDLY APPOINTED PRIOR TO 01.04.2013 …………………………………………………………………………………….. 9 A. The legislators have the power to enforce a law retrospectively ……………………….. 9 B. The provision clearly reflects the legislative intent to apply § 196(3)(a) retrospectively …………………………………………………………….............................................. 10

IV.

THE WORD “CONTINUE” USED IN § 196(3) OUGHT TO BE CONSTRUED IN CONTEXT OF §§ 193(3)(a), (b), (c) AND (d) …………………………………………… 12 A. The word ‘continue’ used in § 196(3) ought to be construed in context of the whole Section ………………………………………………………………………………. 13

PRAYER ………………………………………………………………………..…………..……. XV

II WRITTEN SUBM ISSION ON BEHA LF OF THE RESPONDENT


LIST OF ABBREVIATIONS

&

And

§

Section

¶

Paragraph

§§

Sections

AIR

All India Reporter

Art

Article

A.P.

Andhra Pradesh

Co.

Company

CONST

Constitution

CPC

Civil Procedure Code or Code of Civil Procedure

ed.

Edition

Hon’ble

Honorable

Ltd.

Limited

Or.

Order

Ors.

Others

Para

Paragraph

Pg. No.

Page Number

R.

Rule

S. No.

Serial Number

SC

Supreme Court

SCC

Supreme Court Cases

SCR

Supreme Court Reporter

SLP

Special Leave Petition

U.P.

Uttar Pradesh

v.

Versus

WTD

Whole – Time Director

III WRITTEN SUBM ISSION ON BEHA LF OF THE RESPONDENT


INDEX OF AUTHORITIES

STATUTES REFERRED  Code of Civil Procedure (1908).  The Companies Act (1956).  The Companies Act (2013).  The Constitution of Islandia (1950).  The Limitation Act (1963).  Winchester Act 25 of 1950, the Code of Civil Procedure (Winchester Amendment) (1970).  Winchester Act 65 of 1977, the Code of Civil Procedure (Winchester Amendment) (1977)

TABLE OF CASES

SUPREME COURT CASES S. No.

Referred Cases

Pg. No.

1.

A.R. Antulay v. R.S. Nayak, AIR 1531 SC 1988.

1

2.

Amrit Bhikaji Kale v. Kashinath Janardhan Trade, AIR 643 SC 1983.

2

3.

Anil Kumar v. Krishan Chand, 13 SCC 492 (2007).

11

4.

Arun Kumar & Ors. v. Union of India & Ors., 1 SCC 732 (2007).

3

5.

Bachu Bhai Patel v. Harihar Behera, AIR 1341 SC 1999.

4

6.

Balasaria Construction (P) Ltd. v. Hanuman Seva Trust & Ors., 5 SCC 658 310 (2006).

7.

Bhubaneshwar Singh v. Union of India, 6 SCC 77 (1994).

13

8.

Chief Justice of A.P. v. L.V.A. Dixitulu, AIR 193 SC 1979.

2

9.

Chiranjilal v. Jasjit Singh, 2 SCC 507 (1993).

2

10.

Chittori v. Kudappa, AIR 1325 SC 1965.

3

11.

CIT Agri v. Keshab Chandra Mandal, AIR 265 SC 1950.

7

12.

Dental Council of India v. Hari Prakash, AIR 3303 SC 2001.

11

13.

Dhirendra Nath v. Sudhir Chandra, AIR 1300 SC 1964.

2

14.

Emperor v. Benoari Lal Sharma, AIR 48 PC 1945.

7

IV WRITTEN SUBM ISSION ON BEHA LF OF THE RESPONDENT


15.

Govt. of A.P. v. Kollutla Obi Reddy, 6 SCC 493 (2005).

5

16.

Gurmej Singh v. S. Pratap Singh, AIR 122 SC 1960.

13

17.

Gurudevdata VKSS Maryadit v. State of Maharashtra, AIR 1980 SC 2001.

7, 13

18.

Gwalior Rayon Silk Mfg. Co. Ltd. v. Custodian of Vested Forests, AIR 1747

11

SC 1990. 19.

Hira Lal v. Kali Nath, AIR 199 SC 1962.

2

20.

ITO v. M.C.Pannoose, 2 SCC 351 (1969).

10

21.

Ittyavira Mathai Mathai v. Varkey Varkey, AIR 907 SC 1964.

2, 3

22.

J.K. Jute Mills Co. Ltd. v. State of U.P., AIR 1534 SC 1961.

10

23.

J.P. Basnal v. State of Rajasthan, AIR 1405 SC 2004.

11

24.

Jitendra Tayagi v. Delhi Administration, AIR 487 SC 1890

7

25.

K.C. Arora v. State of Haryana, 3 SCC 281 (1984).

10

26.

Kesavananda Bharati v. Union of India, 4 SCC 225 (1973).

5

27.

Kiran Singh v. Chaman Paswan, AIR 340 SC 1954.

1

28.

L. Chandra Kumar v. Union of India, 1 SCC 400 (1995).

5

29.

M.V. Elisabeth v. Harvan Investment & Trading (P.) Ltd., Goa, AIR 1014 SC

4

1993. 30.

Madanlal Fakirchand v. Shree Changdeo Sugar Mills Ltd., AIR 1543 SC 1962.

31.

Mahalaxmi Mills Ltd., Bhaunagar v. CIT, Bombay, AIR 266 SC 1967.

32.

Mayak (HK) Ltd. v. Owners and Parties, Vessel M.V. Fortune Express, AIR 4

7

1828 SC 2006. 33.

Minerva Mills Limited v. Union of India, AIR 1789 SC 1980.

5

34.

Mohammad Alikhan v. Commissioner of Wealth Tax, AIR 1165 SC 1997.

11

35.

Nai Babu v. Lala Ramnarayan, AIR 22 SC 1979.

2

36.

Narne Rama Murthy v. Ravula Somasundram and Ors, 6 SCC 614 (2005).

3

37.

Nasiruddin v. Sita Ram Agarwal, 2 SCC 577 (2003).

7

38.

Nasiruddin v. State Transport Appellate Tribunal, AIR 331 SC 1976.

7

39.

Nathi Devi v. Radha Devi Gupta, AIR 648 SC 2005.

7

40.

Nation Agriculture Cooperative Marketing Federation of India Ltd. Union of 10 India, AIR 1329 SC 2005.

41.

Nelson Motis v. Union of India, AIR 1981 SC 1992. V WRITTEN SUBM ISSION ON BEHA LF OF THE RESPONDENT

7


42.

Om Prakash Gupta v. Dig Vijendrapal Gupta, AIR 1230 SC 1980.

7

43.

P. Suseela and Ors. v. University Grants Commission and Ors, 8 SCC 129 6 (2015).

44.

Precidion Steel and Engineering Works v. Premdeva, AIR 1518 SC 1982.

7

45.

R.L. Arora v. State of U.P., AIR 1230 SC 1964.

7

46.

Rai Ramkrishna v. State of Bihar, AIR 1667 SC 1963.

10

47.

Raja Anand Brahma Shah v. State of U.P. & Ors., AIR 1081 SC 1967.

3

48.

Raja Soap Factory v. Shantharaj, AIR 1449 SC 1965.

1

49.

Ram Krishna v. State of Bihar, AIR 1667 SC 1963.

10

50.

Rama Narang v. Ramesh Narang and Ors., 2 SCC 513 (1995).

7, 8, 11

51.

Ramesh B. Desai v. Bipin Vadilal Mehta, AIR 3672 SC 2006.

3, 4

52.

S. Narayanswami v. G. Panneerselvam, AIR 2284 SC 1972.

11

53.

S.A. Vankataraman v. State, AIR 107 SC 1958.

5

54.

S.S. Khanna v. E.J. Dillon, AIR 497 SC 1964.

4

55.

Shayam Kishori Deci v. Patna Municipal Corporation, AIR 1678 SC 1966.

11

56.

Sri Ram Daya Ram v. State of Maharashtra, AIR 674 SC 1961.

7

57.

State of Bihar v. Hiralal Kejriwal, AIR 47 SC 1960.

13

58.

State of Gujarat v. Raman Lal Keshav Lal Soni, AIR 161 SC 1984.

10

59.

State of Jharkhand v. Govind Singh, AIR 294 SC 2005

7, 11

60.

State of Tamil Nadu v. Arooran Sugars Ltd., AIR 1815 SC 1997

10

61.

State of Uttar Pradesh v. Vijay Anand Maharaj, AIR 946 SC 1963.

7

62.

Sundararmier v. State of A.P., AIR 468 SC 1958.

10

63.

Tahsildar Singh v. State of U.P., AIR 1012 SC 1959.

XIV, 13

64.

Tamil Nadu State Electricity Board v. Central Electricity Regulatory 7 Commission, AIR 1711 SC 2007.

65.

Tarapore & Company v. Cochin Shipyard Ltd., Cochin & Anr., AIR 1072 SC

3

1984. 66.

Thakur Amar Singhji v. State of Rajasthan, AIR 504 SC 1955.

7

67.

Ujjam Bai v. State of U.P., AIR 1621 SC 1962.

3

68.

Union of India v. Hansoli Devi, AIR 3240 SC 2002.

7

69.

Union of India v. Shankalchand, AIR 2328 SC 1977.

11

VI WRITTEN SUBM ISSION ON BEHA LF OF THE RESPONDENT


70.

United Provinces v. Atiqa Begum, AIR 16 FC 1941.

10

71.

Vijay v. State, 6 SCC 289 (2006).

10

72.

Zile Singh v. State, 8 SCC 1 (2004).

11

HIGH COURT CASES 73.

A.K. Appanna Sethy & Sons v. Malimath, AIR 108 Mys 1962.

4

74.

Alban D‟Souza v. Land Tribunal, 1 Kant LJ 209 (1999)

4

75.

Amritrav v. Balkrishna, 11 Bom 488 (1887).

1

76.

Angsley Investment Ltd. v. Turus Shipping Services, AIR 23 Guj 2007.

4

77.

Aruna Kumari v. Ajay Kumar, AIR 14 J&K 1991.

4

78.

B. N. Das v. Bijay Ketan Mohanty, AIR 145 Ori 1982.

4

79.

Basti Ram Roopchand v. Radha Shyam, AIR 499 All 1973.

4

80.

Branch Manager, Oriental Insurance Co. Ltd. v. Ram Babu s/o Sri Pandhami & 4 Sri Satya Narayan Gupta s/o Sri Siyaram Gupta, ACJ 1406 2007.

81.

Champa Devi v. Sat Narain, AIR 35 Del 1973.

4

82.

Cheni Ram v. Shanti Devi, AIR 192 Raj 1980.

4

83.

Daljit Singh v. Joginder Singh, AIR 184 P&H 1985.

4

84.

Estrela Batteries Ltd. v. Modi Industries Ltd., AIR 201 All 1976.

4

85.

Fazlehussein Haiderbhoy v. Yusufally Adamji And Ors., AIR 55 Bom 1955.

4

86.

Ganapathia Pillai v. Somasundaram Pillai, AIR 230 Mad 1950.

4

87.

Gurram Satyaseshamamba V. Gurram Krishnavenamma, 4 ALD 787 (2004).

5

88.

Hriday Nath v. Ramchandra, AIR 34 Cal 1921.

1

89.

Madhabananda Ray and Anr. v. Spencer and Company Ltd., AIR 35 Ori 1988.

4

90.

Major S.S. Khanna v. Brig. F.J. Dillon, AIR 497 SC 1964.

4

91.

Naresh Chandra Das v. Gopal Chandra Das, AIR 237 Cal 1991.

4

92.

Praduman Kumar v. Girdhari Singh & Ors., AIR 131 Raj 1970.

4

93.

Purnima Sahu v. Snehadhara Industries Ltd., AIR 58 Ori 2003.

3

94.

Rajlakshmi v. Katyayani, 38 Cal 639 (1913).

2

95.

Ramdayal Umraomal v. Pannalal Jagannathji, AIR 16 MP 1978.

4

96.

Sandhya R.R. Choudhary v. Hiramani S.D. Astopati, 3584 AIHC (Gau) 2005.

4

97.

Shyam Dutt v. Ashok Kumar, AIR 93 HP 2007.

4

98.

Shyam Sunder v. J.B. Patnaik, AIR 23 Ori 1990.

4

VII WRITTEN SUBM ISSION ON BEHA LF OF THE RESPONDENT


99.

Sidh Nath v. District Judge Mirapur, AIR 356 All 2002.

4

100. Sridhar Sundararajan v. Ultramarine & Pigments Limited, [Notice of Motion 6, 12 (L) No. 434 of 2015 in Suit (L) No. 146 of 2015 decided on July 16, 2015]. 101. State of Mizoram v. Sanglawma, AIR 178 Gau 2011.

4

FOREIGN CASES 102. A.M. Meads v. Emperor, AIR 21 FC 1945.

7

103. Commissioners for Special Purposes of the Income-tax v. John Frederick 7 Pamsel, AC 531 [1891]. 104. Heydon case, 76 ER 637 [1584].

13

105. IRC v. Hinchy, 1 All ER 505 [1945].

7

106. Jennings v. Kelly, AC 206 [1940].

XIV, 13

107. Johnston v. Moreton, 3 All ER 37 [1978].

7

108. London Brick Co. Ltd. v. Robinson, 1 All ER 23 [1943].

7

109. Smith v. East Elloe RDC, 1 All ER 855 [1956].

7

110. Sussex Peerage case, 11 Cl & F 85 [18444].

7

BOOKS REFERRED  A. RAMAIYA , A G UIDE TO THE COM PANIES ACT, 2 (18th ed. 2015).  A. RAMAIYA, A G UIDE TO THE COMPANIES ACT, 3 (18th ed. 2015).  A.K. MAJUMDA R & G.K. K APOOR, TAXMANN’S COMPA NY LAW (16th ed. 2011).  A.R. BISWAS & S.P. S EN GUPTA , P RINCIPLES OF INTERPRETATION OF STATUTES (2010).  BHA RAT, COMPANIES ACT W ITH RULES (24th ed. 2015).  C.K. TAKWANI, CIVIL P ROCEDURE CODE WITH LIM ITATION ACT, 1963 (17th ed. 2014)  I.P. MASSEY, ADMINISTRATIVE LAW (8th ed. 2012).  JUSTICE G.P. S INGH , PRINCIPLES O F STATUTORY INTERPRETATION (13th ed. 2012).  M.P. JAIN, I NDIAN C ONSTITUTIONA L LAW (7th ed. 2014).  MULLA , THE C ODE OF C IVIL P ROCEDURE ABRIDGED (16th ed. 2014).  P.M. BAKSHI, THE CONSTITUTION OF I NDIA (12th ed. 2013).  VEPA P. SARATHI, I NTERPRETATION OF STATUTES (5th ed. 2013).

VIII WRITTEN SUBM ISSION ON BEHA LF OF THE RESPONDENT


 T.R. DESAI, C OMM ENTARY O N THE LIMITATION ACT (10th ed. 2011).  K.M. GHOSH & K.R. CHANDRATRE, C OM PANY LAW (14th ed. 2013).  C.R. DATTA, THE COM PANY LAW (6th ed. 2009).  M.P. JAIN, THE CODE OF CIVIL P ROCEDURE (2nd ed. 2010).  JUSTICE. T.S. DOA BIA, CODE O F CIVIL P ROCEDURE, 1 (13th ed. 2009).  SUDIPTO SARKAR & V.R. MANOHA R, SARKAR’S CODE O F CIVIL P ROCEDURE, 1 (11th ed. 2010).  C.K.THAKKER, CODE OF CIVIL P ROCEDURE, 1 (2011).  MAHENDRA P. SINGH, V,N, SHUKLA’S CONSTITUTION O F INDIA (12th ed. 2016).  DURGA DAS BASU, C OMM ENTA RY O N THE CONSTITUTION OF I NDIA (8th ed. 2008).

IX WRITTEN SUBM ISSION ON BEHA LF OF THE RESPONDENT


STATEMENT OF JURISDICTION

THE RESPONDENT HUMBLY SUBMITS TO THE JURISDICTION OF THE HON’BLE SUPREME COURT OF ISLANDIA UNDER ARTICLE 136 1 OF THE CONSTITUTION OF ISLANDIA 2 , INVOKED BY THE APPELLANT. THE PARTIES SHALL ACCEPT ANY JUDGMENT OF THE COURT AS FINAL AND BINDING FOR THEM AND SHALL EXECUTE IT IN ITS ENTIRETY AND IN GOOD FAITH.

1 2

ISLA NDIAN CONST. art 136 deals with special leave to appeal by the Supreme Court. ‘Constitution of Islandia’ or ‘Islandian Constitution’ hereinafter has been referred to as ‘Constitution’.

X WRITTEN SUBM ISSION ON BEHA LF OF THE RESPONDENT


STATEMENT OF FACTS The Respondent humbly states before the Hon’ble Supreme Court: 1. That, Goodenough Limited is a public limited company registered under the law of the Republic of Islandia. Goodenough has been listed on various stock exchange since 1997 and has more than 250,000 public shareholders on date. 2. That, the Appellant, James McLinden was appointed as Whole – Time Director of Goodenough for a period of 5 years with effect from 12 th February 2013 by an ordinary resolution passed by the shareholders of Goodenough at the Annual Ge neral Meeting held on 25th March 2013. On 15th April 2013, Mr. McLinden attained the age 70 years. 3. That, the Respondent, Mr. Christopher Ryland (a shareholder of Goodenough) on 12 th May 2016, filed a suit before the High Court of the State of Winchester challenging the continuation of Mr. McLinden as WTD under § 196(3)(a) of the 2013 Act along with a Notice of Motion of the same date seeking urgent interim relief restraining Mr.McLinden from functioning or continuing to exercise powers as WTD, pending disposal of the Suit. 4. That, in response to the Notice of Motion, the Appellant, Mr. McLinden filed reply dated 19 th May 2016. 5. That, by an order dated 13th June 2016, a Single Judge of the High Court of Essos held that the issue of limitation was not required to be heard as a preliminary issue in terms of § 9A of the CPC. On the merits, the learned Single Judge held that after the commencement of the 2013 Act, no person who has suffered one of the disqualifications there in, can be appointed or continued in appointment as a WTD. 6. That, accordingly, the learned Single Judge allowed the Notice of Motion and issued an interim injunction restraining the Appellant, Mr. McLinden from continuing as WTD of Goodenough pending disposal of the Suit. 7. That, the Appellant, Mr. McLinden challenged the judgment of learned Single Judge in an appeal before a Division Bench of the High Court of Winchester. 8. That, by an order dated 28th July 2016, the Hon’ble Division Bench upheld the order of the Single Judge and dismissed the appeal. 9. That, being aggrieved, the Appellant, Mr. McLinden challenged the judgments of the High Court of Winchester before the Hon’ble Supreme Court of Islandia, by way of a special leave petition. XI WRITTEN SUBM ISSION ON BEHA LF OF THE RESPONDENT


STATEMENT OF ISSUES

I.

WHETHER THE ISSUE OF LIMITATION WAS REQUIRED TO BE HEARD AS A PRELIMINARY ISSUE IN TERMS OF § 9A OF THE CODE OF CIVIL PROCEDURE, 1908?

II.

WHETHER § 196(3)(a) OF THE COMPANIES ACT, 2013 OPERATES AS AN IMMMEDIATE

DISQUALIFICATION

ON

THE

APPOINTMENT

AND

CONTINUATION OF A PERSON AS A WHOLE-TIME DIRECTOR OR WHETHER THE SAME IS AN ELIGIBILITY CONDITION WHICH ONLY APPLIES AT THE TIME OF APPOINTMENT, AND WHETHER THERE IS ANY DISTINCTION BETWEEN THE TWO?

III.

WHETHER THE AGE LIMIT O 70 YEARS UNDER § 196(3)(a) OF THE COMPANIES ACT 2013, CAN APPLY TO A WHOLE-TIME DIRECTOR VALIDLY APPOINTED PRIOR TO 01.04.2013?

IV.

WHETHER THE WORD “CONTINUE” USED IN § 196(3) OUGHT TO BE CONSTRUED IN CONTEXT OF 193(3)(b), (c) AND (d) ALONE AND NOT 196(3)(a)?

XII WRITTEN SUBM ISSION ON BEHA LF OF THE RESPONDENT


SUMMARY OF ARGUMENTS

I.

THE ISSUE OF LIMITATION WAS NOT REQUIRED TO BE HEARD AS A PRELIMINARY ISSUE IN TERMS OF § 9A OF THE CODE OF CIVIL PROCEDURE, 1908.

It is humbly submitted that the High Court was justified in deciding that the issue of limitation was not a preliminary issue before proceeding to adjudicate the matters on merits because the issue of limitation is not a facet of jurisdiction as there is inherent difference between the issue of limitation and matter related to jurisdiction. Moreover, the issue of limitation is a mixed question of law and fact wherein a mixed question of law is neither a matter of law, nor of fact; but a compound of the two, which cannot be separated from each other and such a mixed question of law and fact cannot be decided as a preliminary issue. Further, the bar of limitation is not applicable in petitions filed under Art. 226 of the Constitution. Thus, the issue of limitation being a mixed question of law and facts cannot be decided as preliminary issue and the High Court of Winchester was justified in not holding issue of limitation as preliminary issue.

II.

§ 196(3)(a) OF THE COMPANIES ACT, 2013 OPERATES AS AN IMMMEDIATE DISQUALIFICATION ON THE APPOINTMENT AND CONTINUATION OF A PERSON AS A WHOLE-TIME DIRECTOR AND THERE IS DISTINCTION BETWEEN ELIGIBILITY CRITERIA AND CONDITION FOR DISQUALIFICATION.

It is humbly submitted that there is a distinction between eligibility criteria and condition for disqualification. The eligibility criteria operate only at the stage of appointment whereas clause related to disqualification operates both at the stage of appointment as well as during the continuation of the tenure. Moreover, § 196(3)(a) of the 2013 Act acts as disqualification which applies both at the time of appointment as well as continuation of the tenure of the Whole Time Director as the language in which the provision is couched is plain, simple and unambiguous and § 267 of the 1956 Act corresponds to § 196(3) of the 2013 Act.

XIII WRITTEN SUBM ISSION ON BEHA LF OF THE RESPONDENT


III.

THE AGE LIMIT OF 70 YEARS UNDER § 196(3)(a) OF THE COMPANIES ACT 2013, CAN APPLY TO A WHOLE-TIME DIRECTOR VALIDLY APPOINTED PRIOR TO 01.04.2013.

It is humbly submitted that the age limit of 70 years under § 196(3)(a) of the Companies act, 2013 can apply to a Whole Time Director validly appointed prior to 01.04.2013 as the legislators have the power to enact a law retrospectively. Retrospective law means a law which looks backward or contemplates the past; one which is made to affect acts or facts occurring, or rights occurring, before it come into force. Moreover, the Companies Act, 2013 has provisions that indicate the legislative intent regarding the retrospective effect of § 196(3). § 465(d) of the Companies Act 2013 states that 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. By incorporating this provision, the legislators have shown their legislative intent expressly to apply the 2013 Act retrospectively in matters related to appointment. Thus, the age limit of 70 years under § 196(3)(a) of the companies act 2013, can apply to a whole-time director validly appointed to 01.04.2013.

IV.

THE WORD “CONTINUE” USED IN § 196(3) OUGHT TO BE CONSTRUED IN CONTEXT OF §§ 193(3)(a), (b), (c) AND (d).

It is humbly submitted that the word continue used in § 196(3) is ought to be construed in context of §§ 196(3) (a), (b), (c) and (d), i.e. the word ‘continue’ used in § 196(3) is ought to be construed in context of the whole § and no sub-§ can be excluded from this purview because according to the general rule of interpretation, a § must be construed as a whole and sub-§s, saving clause or a proviso 3 in a Section must be read as parts of an integral whole. It is a cardinal principle of interpretation of statute that the words of a statute must be understood in their natural, ordinary or popular sense and construed according to their grammatical meaning. § 196(3) is plain, clear and unambiguous and cannot be interpreted in more than one way, the plain meaning should be given effect to and the courts are bound to give effect to that meaning, irrespective of the consequences. Thus, the word continue used in § 196(3) is ought to be construed in context of §§ 196(3) (a), (b), (c) and (d).

3

Jennings v. Kelly, A C 206 [1940]; Tahsildar Singh v. State of U.P., AIR 1012 SC 1959.

XIV WRITTEN SUBM ISSION ON BEHA LF OF THE RESPONDENT


ARGUMENTS ADVANCED

I.

THE ISSUE OF LIMITATION WAS NOT REQUIRED TO BE HEARD AS A PRELIMINARY ISSUE IN TERMS OF § 9A OF THE CODE OF CIVIL PROCEDURE, 1908.

1.

It is most humbly submitted before the Hon’ble Supreme Court of Islandia that the High Court of Winchester was justified in deciding that the issue of limitation was not a preliminary issue before proceeding to adjudicate the matters on merits because the issue of limitation is not a facet of jurisdiction [A]. Further, issue of limitation is a mixed question of law and fact [B]; and such an issue is not considered as a preliminary issue as per Order XIV Rule 2 4 of Code of Civil Procedure, 1908 [C]. Moreover, the bar of limitation is not applicable in petitions filed under Art 226 5 of the Constitution [D].

A. THE ISSUE OF LIMITATION IS NOT A FACET OF JURISDICTION 2.

It is humbly submitted that the issue of limitation is not a facet of jurisdiction. By jurisdiction is meant the authority with which the court has to decide matters that are litigated before it or to take cognizance of matters presented in a formal way for its decision. 6 It is the power to entertain, deal with and decide a suit, an action, petition or other proceeding. 7 The limits of this authority are imposed by the statute, charter, or commission under which the court is constituted, and may be extended or restricted by like means. If no restriction or limit is imposed, the jurisdiction is said to be unlimited. 8

3.

The word ‘jurisdiction’ in matters concerning authority to decide connotes the pecuniary, territorial and subject- matter only. 9 In the case of Kiran Singh v. Chaman Paswan, 10 while observing the fact that “it is a fundamental principle well established that a decree passed by a court without

4

CPC Or. XIV R. 2 (1908). I SLANDIAN CONST . art 226 deals with ‘Power o f High Court to issue certain writs’. 6 M ULLA, THE CODE OF CIVIL PROCEDURE A BRIDGED, 186 (16th ed. 2014). 7 C.K. TAKWANI , CIVIL PROCEDURE CODE W IT H LIMITATION A CT 1963, 42 (17th ed. 2014). 8 Hriday Nath v. Ramchandra, AIR 34 Cal 1921; A mritrav v. Balkrishna, 11 Bo m 488 (1887); Raja Soap Factory v. Shantharaj, AIR 1449 SC 1965. 9 As provided under CPC §§ 6, 15, 16, 17, 18, 19, 20 & 21A. 10 AIR 340 SC 1954. 5

1 WRITTEN SUBM ISSION ON BEHA LF OF THE RESPONDENT


jurisdiction is a nullity and that its invalidity could be set up whenever and wherever it is sought to be enforced or relied upon, even at the stage of execution and even in collateral proceedings” used the term ‘jurisdiction’ to connote pecuniary, territorial and subject- matter and not the matter related to limitation. 4.

A defect of jurisdiction, whether it is pecuniary or territorial or whether, it is in respect of the subject – matter of action, strikes at the very authority of the Court to pass any decree, and such a defect cannot be cured even by consent of parties.

5.

The Respondent further submits that there is inherent difference between the issue of limitation and matter related to jurisdiction. In cases where the suit is barred by time, the Court can condon the delay if the appellant or the applicant satisfies the court that he had sufficient cause for not preferring the appeal or making the application within such period. 11 However, it is a fundamental rule that a judgment of a court without jurisdiction is a nullity. 12 In the leading case of A.R. Antulay v. R.S. Nayak 13 , Mukherji, J. stated, “this court, by its directions, could not confer jurisdiction on the High Court of Bombay to try any case for which it did not possess…”

6.

It was further stated:

“The power to create or enlarge jurisdiction is legislative in character, so also the power to confer a right of appeal or to take away right of appeal. Parliament alone can do it by law and no court, whether superior or inferior or both combined, can enlarge the jurisdiction of a court or divest a person of his rights of revision and appeal. ” 7. Thus, if the court has no inherent jurisdiction, neither acquiescence nor waiver nor estoppel can create it. 14 In other words, if there is inherent lack of jurisdiction, the decree passed by a civil court is a nullity and that nullity can be set up in any collateral proceedings. 15 However, if a court has jurisdiction but it is irregularly exercised, the defect does not go the root of the matter, and the error, if any, in exercising the jurisdiction can be remedied in appeal or revision and when there is no such remedy or is not availed of, the decision is final. 8. Further, in Ittyavira Mathai Mathai v. Varkey Varkey 16 , it was contented that the decree passed by the court was a nullity since the suit was time barred. Negativing that contention, the Supreme Court observed: 11

As provided under Limitation Act § 5 (1963), ‘Extension of prescribed period in certain cases’. Rajlakshmi v. Katyayani, 38 Cal 639 (1913). 13 AIR 1531 SC 1988. 14 Dhirendra Nath v. Sudhir Chandra, AIR 1300 SC 1964; Nai Babu v. Lala Ramnarayan, AIR 22 SC 1979; Hira Lal v. Kali Nath, AIR 199 SC 1962; Chiranjilal v. Jasjit Singh, 2 SCC 507 (1993); Chief Justice of A.P. v. L.V.A. Dixitulu, AIR 193 SC 1979. 15 Amrit Bh ikaji Kale v. Kashinath Janardhan Trade, AIR 643 SC 1983. 16 AIR 907 SC 1964. 12



“If the suit was barred by the time and yet, the court decreed it, the court would be committing an illegality and therefore the aggrieved party would be entitled to have the decree set aside by preferring an appeal against it. But it is well – settled that a court having jurisdiction over the subject – matter of the suit and over parties thereto though bound to decide right may decide wrong; and that even though it decided wrong it would not be doing something which it had no jurisdiction to do …. If the party aggrieved does not take appropriate steps to have that error corrected, the erroneous decree will hold good and will not be open to challenge on the basis of being a nullity.” 17 9. Thus, it can be inferred that if a suit is time barred and a decree is passed by the court, then that decree will be regarded as illegal leaving room for correcting that illegality, but on the other hand, if the court does not have the jurisdiction to decide the subject matter of a particular suit and yet it decides upon it, then it would amount to nullity.

B. THE ISSUE OF LIMITATION IS A MIXED QUESTION OF LAW AND FACT. 10. A matter may be considered as a mixed question of law and fact where the court needs to investigate into the facts in order to deal with the matters relating to laws. 18 A mixed question of law is neither a matter of law, nor of fact; but a compound of the two, which cannot be separated from each other. 19 If the facts are disputed or possible of different deductions, both laws and facts must be determined as per the modern concept of mixed question of law. 20 Jurisdiction, when dependent upon the facts and law, the court has to assess the facts first and the issue of jurisdiction can be dealt only after that. 21 11. Further, in the case of Balasaria Construction (P) Ltd. v. Hanuman Seva Trust & Ors., 22 the Supreme Court observed that question of limitation is a mixed question of law and fact. The same principle was reiterated in the case of Ramesh B. Desai v. Vipin Vadilal Mehta, 23 where it was held that “a plea of limitation is a mixed question of law and fact.” 12. Thus, applying the above observations, it can be concluded that the issue of limitation is a mixed question of law and fact.

17

Ittyavira Mathai Mathai v. Varkey Varkey, AIR 907 SC 1964. Also see Ujjam Bai v. State of U.P., AIR 1621 SC 1962; Chittori v. Kudappa, AIR 1325 SC 1965. 18 Tarapore & Co mpany v. Cochin Sh ipyard Ltd., Cochin & Anr., AIR 1072 SC 1984. 19 JUST ICE. T.S. DOABIA, CODE OF CIVIL PROCEDURE , 671 (13th ed. 2009). 20 Id. at 672. 21 Raja Anand Brahma Shah v. State of U.P. & Ors., AIR 1081 SC 1967; Arun Ku mar & Ors. v. Union of India & Ors., 1 SCC 732 (2007); Purnima Sahu v. Snehadhara Industries Ltd., A IR 58 Ori 2003. 22 5 SCC 658 (2006). 23 5 SCC 638 (2006); Narne Rama Murthy v. Ravula So masundram and Ors, 6 SCC 614 (2005).



C. MIXED QUESTION OF LAW AND FACT CANNOT BE CONSIDERED AS A PRELIMINARY ISSUE 13. A mixed question of law and fact cannot be decided as a preliminary issue. 24 The issue of jurisdiction cannot be decided as a preliminary issue, when it is a question of fact or a mixed question of law and fact, 25 rather it should be decided on merits along with the othe r issues.26 Moreover, where factual questions based on evidence 27 had to be dealt with to decide jurisdiction, or calls for investigation into facts, 28 it would be a mixed question of law and fact, and cannot be tried first. 29 Where such a question is involved, 30 it cannot be tried as a preliminary issue

31

and the

court’s refusal to decide it as a preliminary issue is proper 32 and it had to be decided at the end of the case. 33 14. Further, in the case of State of Mizoram v. Sanglawma 34 , the court held that preliminary issues relating to non- joinder 35 or misjoinder 36 of the necessary party and limitation are neither relating to jurisdiction of court nor a bar to suit created by any law for the time in force. Hence such issues cannot be decided as preliminary issues. Further, in the case of Cheni Ram v. Shanti Devi, 37 court held that where issues as to limitation are to be considered on facts, there is no provision that evidence should be recorded on them first and they must be decided as preliminary issues.

24

Naresh Chandra Das v. Gopal Chandra Das, AIR 237 Cal 1991; Ramesh B. Desai v. Bip in Vadilal Mehta, AIR 3672 SC 2006; Sandhya R.R. Choudhary v. Hiramani S.D. Astopati, 3584 AIHC (Gau) 2005; Daljit Singh v. Joginder Singh, AIR 184 P&H 1985. 25 Bachu Bhai Patel v. Harihar Behera, AIR 1341 SC 1999; Angsley Investment Ltd. v. Turus Shipping Services, AIR 23 Gu j 2007; M.V. Elisabeth v. Harvan Investment & Trading (P.) Ltd., Goa, AIR 1014 SC 1993; Mayak (HK) Ltd. v. Owners and Parties, Vessel M.V. Fortune Express, AIR 1828 SC 2006; Ramesh B. Desai v. Bip in Vadilal Mehta, AIR 3672 SC 2006; S.S. Khanna v. E.J. Dillon, AIR 497 SC 1964. 26 Madhabananda Ray and Anr. v. Spencer and Company Ltd., AIR 35 Ori 1988; B. N. Das v. Bijay Ketan Mohanty, AIR 145 Ori 1982; M ithlesh Ku mari v. Gaon Sabha, AIR 304 All 1999; Alban D‟Souza v. Land Tribunal, 1 Kant LJ 209 (1999) 27 Aruna Ku mari v. A jay Ku mar, AIR 14 J&K 1991. 28 Fazlehussein Haiderbhoy v. Yusufally Adamji And Ors., AIR 55 Bo m 1955. 29 Aruna Ku mari v. A jay Ku mar, AIR 14 J&K 1991; Praduman Ku mar v. Girdhari Singh & Ors., AIR 131 Raj 1970. 30 Ramdayal Umraomal v. Pannalal Jagannathji, AIR 16 M P 1978; Naresh Chandra Das v. Gopal Chand ra Das, AIR 237 (DB) Cal 1991; Shyam Sunder v. J.B. Patnaik, AIR 23 Ori 1990; Aruna Kumari v. Ajay Ku mar, AIR 1 J&K 1991; Branch Manager, Oriental Insurance Co. Ltd. v. Ram Babu s/o Sri Pandhami & Sri Satya Narayan Gupta s/o Sri Siyaram Gupta, ACJ 1406 2007; Ramesh B. Desai v. Bip in Vad ilal Mehta, AIR 3672 SC 2006. 31 CPC Or. XIV R. 2 (1908); See also A.K. Appanna Sethy & Sons v. Malimath, AIR 108 Mys 1962; Major S.S. Khanna v. Brig. F.J. Dillon, AIR 497 SC 1964; Shyam Dutt v. Ashok Kumar, AIR 93 HP 2007; Ba sti Ram Roopchand v. Radha Shyam, AIR 499 A ll 1973; Estrela Batteries Ltd. v. Modi Industries Ltd., AIR 201 All 1976. 32 Sidh Nath v. District Judge Mirapur, AIR 356 All 2002; Fazlehussein Haiderbhoy v. Yusufally Adamji And Ors., AIR 55 Bo m 1955; Ganapathia Pillai v. So masundaram Pillai, AIR 230 Mad 1950. 33 Champa Devi v. Sat Narain, AIR 35 Del 1973. 34 AIR 178 Gau 2011. 35 CPC Or. I R. 9 (1908). 36 Id. 37 AIR 192 Raj 1980.



15. Thus, the issue of limitation being a mixed question of law and facts cannot be decided as preliminary issue under Order XIV Rule 2 of the CPC, 1908 and the High Court of Winchester was justified in not holding issue of limitation as preliminary issue.

D. THE BAR OF LIMITATION IS NOT APPLICABLE IN PETITIONS FILED UNDER ART 226 OF THE CONSTITUTION. 16. It is humbly submitted that the bar of limitation is not applicable in petitions filed under Art 226 of the Constitution. A writ petition under Art 226 of the Constitution is neither a suit, nor an appeal, nor an application within the meaning of the Limitation Act, 1963. The provisions of the Limitation Act, 1963 therefore, do not apply to writ petitions filed in the High Courts under Art 226. 17. The position has been explained by the Supreme Court in Shrivallabh Glass Works Ltd v. Union of India, 38 where the court observed that Art 226 prescribes no period of limitation. What relief should be granted to a petitioner under Art 226 where the cause of action arose in the past is a matter of sound judicial discretion. Further, in the case of Gurram Satyaseshamamba v. Gurram Krishnavenamma, 39 while dealing with Article 226 of the Constitution of India and period of limitation the Court observed that: The journey of law from Kesavananda Bharati v. Union of India, 40 Minerva Mills Limited v. Union of India 41 to L. Chandra Kumar v. Union of India 42 would clearly go to show that power of judicial review under Articles 226 and 227 43 of the Constitution of Islandia is a part of the basic structure of the Constitution of Islandia. In the light of the same, can there by imposition of any fetter on this power of Constitutional Courts by importing ordinary Rules of limitation specified by the Rules? No doubt, for practice and procedure such Rules may be there, but they can neither control nor over-ride the Constitutional power vested in High Courts by virtue of either Article 226 or 227 of the Constitution of Islandia. 18. Thus, after extrapolating the above observation, it can be inferred that there is no bar of limitation applicable to the inherent power of the High Court provided under Art 226 of the Constitution.

38

AIR 971 SC 1984; Govt. of A.P. v. Kollutla Obi Reddy, 6 SCC 493 (2005). 4 A LD 787 (2004). 40 4 SCC 225 (1973). 41 AIR 1789 SC 1980. 42 1 SCC 400 (1995). 43 I SLANDIAN CONST . art 226 deals with ‘Power o f superintendence over all courts by the High Court’. 39



II.

§ 196(3)(a) OF THE COMPANIES ACT, 2013 OPERATES AS AN IMMMEDIATE DISQUALIFICATION ON THE APPOINTMENT AND CONTINUATION OF A PERSON AS A WHOLE-TIME DIRECTOR AND THERE IS DISTINCTION BETWEEN

THE

ELIGIBILITY

CRITERIA

AND

CONDITION

FOR

DISQUALIFICATION.

19. It is humbly submitted that there is distinction between eligibility criteria and condition for disqualification [A] and § 196(3)(a) 44 of the 2013 Act operates as disqualification which applies both at the time of appointment as well as continuation of the tenure of the W hole Time Director45 [B].

A. THERE IS A DISTINCTION BETWEEN ELIGIBILITY CRITERIA AND CONDITION FOR DISQUALIFICATION. 20. It is humbly submitted that there is a distinction between eligibility criteria and condition for disqualification. The eligibility criteria operates only at the stage of appointment whereas clause related to disqualification operates both at the stage of appointment as well as during the continuation of the tenure. 21. The Supreme court in the case of P. Suseela and Ors. v. University Grants Commission and Ors,46 held that that a new eligibility condition would only be prospective and it would apply only at the stage of appointment. The division bench in the case of Sridhar Sundararajan v. Ultramarine & Pigments Limited, 47 in which the facts were almost similar to the case in hand, reiterated the same principle and held that there is a distinction between the disqualification which is added after the appointment and the eligibility criteria which is added after the appointment. In the former case, disqualification would operate even after appointment but in the latter case, it would operate prospectively. 22. In the case at hand, § 196 (3)(a) of the 2013 Act prima facie operates as condition for disqualification and hence can disqualify the appellant upon attaining the age of 70 years from continuing as WTD of the company.

44

As provided under Co mpanies Act § 196 (2013), ‘Appointment of managing director, whole-t ime d irector or manager’. ‘Whole Time Director’ hereinafter has been referred to as ‘WTD’. 46 8 SCC 129 (2015). 47 [Notice of Motion (L) No. 434 o f 2015 in Suit (L) No. 146 of 2015 decided on July 16, 2015]. 45



B. § 196(3)(A) OF THE COMPANIES ACT, 2013 OPERATES AS DISQUALIFICATION. 23. It is humbly submitted that § 196(3)(a) of the 2013 Act operates as disqualification which applies both at the time of appointment as well as continuation of the tenure of the WTD as the language in which the provision is couched is plain, simple and unambiguous [1]; and § 267 48 of the 1956 Act corresponds to § 196(3) of the 2013 Act [2] .

1. The language in which the provision is couched is plain, simple and unambiguous. 24. It is humbly submitted that when the words of a statute are clear, plain or unambiguous, i.e., they are reasonably susceptible to only one meaning, the courts are bound to give effect to that meaning irrespective of consequences. 49 If the words of the statute are in themselves precise and unambiguous, then no more can be necessary than to expound those words in their natural and ordinary sense. The words themselves do alone in such cases best declare the intent of the lawgiver. 50 25. In other words, when a language is plain and unambiguous and admits of only one meaning, no question of construction of a statute arises, for the Act speaks for itself. 51 The results of the construction are then not a matter for the court, 52 even though they may be strange or surprising,53 unreasonable or unjust or oppressive. 54 26. The Apex Court in Rama Narang v. Ramesh Narang and others 55 while interpreting § 267 of the 1956 Act which corresponds to § 196(3) of 2013 Act held that the language in which the provision is couched is plain, simple and unambiguous and does not admit of more than one meaning viz.

48

As provided under Co mpanies Act § 267 (1956), ‘Certain persons not to be appointed managing directors’. Nelson Motis v. Union of India, AIR 1981 SC 1992; Gurudevdata VKSS Maryadit v. State of Maharashtra, AIR 1980 SC 2001; State of Jharkhand v. Govind Singh, AIR 294 SC 2005; Nathi Dev i v. Radha Dev i Gupta, AIR 648 SC 2005. 50 Sussex Peerage case, 11 Cl & F 85 [18444]. See further Co mmissioners for Special Purposes of the Income -tax v. John Frederick Pamsel, AC 531 [1891]; Sri Ram Daya Ram v. State of Maharashtra, AIR 674 SC 1961; R.L. Aro ra v. State of U.P., AIR 1230 SC 1964; Union of India v. Hansoli Devi, AIR 3240 SC 2002. 51 State of Uttar Pradesh v. Vijay Anand Maharaj, AIR 946 SC 1963. See further Thakur A mar Singhji v. State of Rajasthan, AIR 504 SC 1955; Om Prakash Gupta v. Dig Vijendrapal Gupta, AIR 1230 SC 1980; Jitendra Tayagi v. Delhi Admin istration, AIR 487 SC 1890; Nelson Motis v. Union of India, AIR 1981 SC 1992. 52 A.M. Meads v. Emperor, AIR 21 FC 1945; CIT Agri v. Keshab Chandra Mandal, AIR 265 SC 1950; Johnston v. Moreton, 3 All ER 37 [1978]; Emperor v. Benoari Lal Sharma, AIR 48 PC 1945; Tamil Nadu State Electricity Board v. Central Electricity Regulatory Co mmission, AIR 1711 SC 2007. 53 London Brick Co. Ltd. v. Robinson, 1 All ER 23 [1943]; Smith v. East Elloe RDC, 1 A ll ER 855 [1956]. 54 IRC v. Hinchy, 1 All ER 505 [1945]; Mahalaxmi M ills Ltd., Bhaunagar v. CIT, Bo mbay, AIR 266 SC 1967; Nasiruddin v. State Transport Appellate Tribunal, AIR 331 SC 1976; Nasiruddin v. Sita Ram Agarwal, 2 SCC 577 (2003); Precid ion Steel and Engineering Works v. Premdeva, AIR 1518 SC 1982. 55 2 SCC 513 (1995). 49



that after the commencement of the Amendment Act, no person who has suffered disqualification can be appointed or continue in appointment as Managing Director of the Company. 27. In the instant matter, a bare reading of § 196(3) in the light of above observation makes it clear that the word ‘continue’ incorporated in this § through amendment signifies only one meaning that if a WTD attains the age of 70 years in the midway of his tenure, then he would be disqualified from continuing his tenure irrespective of the fact that he has not completed his designated tenure. 28. Thus, the words of this provision are simple, plain, unambiguous and admits only one meaning that it operates

as disqualification which applies both at the time of appointment as well as

continuation of the tenure of the WTD and according to general principle of interpretation, the court is bound to give effect to this meaning irrespective of its consequences.

2. § 196(3) OF THE COMPANIES ACT, 2013 SHOULD BE INTERPRETED IN THE LIGHT OF § 267 OF COMPANIES ACT, 1956. 29. It is humbly submitted that § 196(3) of the 2013 Act should be interpreted in the light of § 267 of 1956 Act. § 267 of the 1956 Act states that no company shall, after the commencement of this Act, appoint or employ, or continue the appointment or employment of, any person as its managing or whole- time director who(a) is an undischarged insolvent, or has at any time been adjudged an insolvent; (b) suspends, or has at any time suspended, payment to his creditors, or makes, or has at any time made, a composition with them; or (c) is or has at any time been, convicted by a Court 1 of an offence involving moral turpitude. 30. Further § 196(3) states that, “no company shall appoint or continue the employment of any person as managing director, whole time director or manager…”. Reading the bare language of § 267 of the 1956 Act and § 196(3) of the 2013 Act, it can be understood that both these provisions states about the same fact, that no company shall appoint or continue the employment of any person as managing director, whole time director or manager who are disqualified as per the conditions laid down in these Sections. 31. The Apex Court in Rama Narang v. Ramesh Narang and Ors., 56 had an occasion to interpret § 267 of the Comapnies Act, 1956. The Apex Court in the said case was called upon to decide the question whether the Managing Director was liable to be removed upon his conviction and sentence by Additional Sessions Judge, Delhi 1 (1995) 2 SCC 513 notwithstanding the admission 56

2 SCC 513 (1995).



of the appeal by the Delhi High Court and notwithstanding the stay granted by the Delhi High Court to the order of conviction and sentence. The Court after analyzing § 267 of the Companies Act held that this § not only prohibits appointment or employment after conviction but also exercises discontinuance of appointment or employment made prior to his conviction. 32. Thus, it can be inferred from the above mentioned judgment that § 267 of the 1956 Act not only operates at the time of appointment but also during the continuation of the tenure of a WTD which makes it clear that this § operates as an immediate disqualification for a person appointed as WTD because eligibility condition operates only at the stage of appointment whereas clause related to disqualification operates both at the stage of appointment as well as during the continuation of the tenure. 33. Moreover, the provisions for disqualification as mentioned in § 267 of the 1956 Act corresponds to § 196(3) of the 2013 Act wherein only one additional disqualification was added in the form of clause (a). And since § 267 (b) and (c) of the 1956 Act corresponds exactly to §§ 196(3) (a), (b), (c) and (d), so § 196 can also be said to be operating as immediate disqualification for a person appointed as WTD and mere adding of an additional clause, i.e. clause (a) in the § will not change the nature of the whole §. Thus, it can be inferred that § 196(3)(a) of the 2013 Act acts as disqualification which applies both at the time of appointment as well as continuation of the tenure of the WTD.

III.

THE AGE LIMIT OF 70 YEARS UNDER § 196(3)(a) OF THE COMPANIES ACT 2013, CAN APPLY TO A WHOLE-TIME DIRECTOR VALIDLY APPOINTED PRIOR TO 01.04.2013.

34. It is humbly submitted that the age limit of 70 years under § 196(3)(a) of the Companies act, 2013 can apply to a Whole Time Director validly appointed prior to 01.04.2013 as the legislators have the power to enforce a law retrospectively [A]; and the provision clearly reflects the legislative intent to that effect [B].

A. THE

LEGISLATORS

HAVE

THE

POWER

TO

ENFORCE

RETROSPECTIVELY.


A

LAW


35. It is humbly submitted that the legislators have the power to enforce a law retrospectively. Retrospective law means a law which looks backward or contemplates the past; one which is made to affect acts or facts occurring, or rights occurring, before it come into force. 57 The Union Parliament and State Legislatures have under Art 245 58 of the Constitution plenary powers of legislation within the fields assigned to them and subject to certain constitutional and judicially recognized restrictions 59 can legislate prospectively as well as retrospectively. 60 36. In Rai Ramkrishna v. State of Bihar 61 , it was held that “the point on which there is no dispute before us is that the legislative power conferred on the appropriate legislators to enact law in respect of topics covered by the several entries in the three lists can be exercised both prospectively and retrospectively. Where the legislature can make a valid law, it may provide not only for the prospective operation of the material provisions of the said law but it can also provide for the retrospective operation of the said provision.” Further, in the case of ITO v. M.C.Pannoose 62 , the Court held that it is open to a sovereign legislature to enact laws which have retrospective operation. 37. Thus, the legislators have the power to enforce law retrospectively.

B. THE PROVISION CLEARLY REFLECTS THE LEGIS LATIVE INTENT TO APPLY § 196(3)(a) RETROSPECTIVELY. 38. It is humbly submitted that the Companies Act, 2013 has provisions that indicate the legislative intent regarding the retrospective effect of § 196(3). The respondent humbly accepts the fact that it is a cardinal principle of construction that every statute is prima facie prospective. However, this cardinal principle has two exceptions: firstly, there should be expressed or necessary implication to indicate that the Act operates retrospectively 63 and secondly, that the statute enacted for the benefit of the community as a whole may be construed to have retrospective application. 64

57

JUST ICE G.P. SINGH, P RINCIPLES OF STAT UTORY INT ERPRET ATION, 532 (13th ed. 2012). I SLANDIAN CONST . art 245 deals with ‘Extent of laws made by Parliament and by the Legislatures of States’. 59 State of Gujarat v. Raman Lal Keshav Lal Soni, AIR 161 SC 1984; State of Tamil Nadu v. Arooran Sugars Ltd., AIR 1815 SC 1997; Nation Agricu lture Cooperative Market ing Federation of India Ltd. Union of India, AIR 1 329 SC 2005. 60 United Provinces v. Atiqa Begum, AIR 16 FC 1941; Sundararmier v. State of A.P., AIR 468 SC 1958; J.K. Jute M ills Co. Ltd. v. State of U.P., AIR 1534 SC 1961; Ram Krishna v. State of Bihar, AIR 1667 SC 1963; K.C. Arora v. State of Haryana, 3 SCC 281 (1984); Bhubaneshwar Singh v. Un ion of India, 6 SCC 77 (1994). 61 AIR 1667 SC 1963. 62 2 SCC 351 (1969). 63 Vijay v. State, 6 SCC 289 (2006). 64 Id. 58



39. In Zile Singh v. State 65 , the Apex Court held that the rule against retrospective application is a presumption only, and as such it ‘may be overcome, not only by express words in the Act, b ut also by circumstances sufficiently strong to displace it. In the matter of substantive right, the Apex Court in the case of Anil Kumar v. Krishan Chand 66 , held that all laws that affect substantive rights generally operate prospectively and there is a presumption against their retrospectivity if they affect vested rights and obligations unless the legislative intent is clear and compulsive. Such retrospective effect may be given where they are express words giving retrospective effect or where the language used necessarily implies that retrospective operation is intended. 40. The intention of the legislature is primarily to be gathered from the language used, which means that attention should be paid to what has been said as also to what has not been said. 67 As a consequence, a construction which requires for its support addition or substitution of words or which results in rejection of words as meaningless has to be avoided. 68 41. § 465(d) 69 of the Companies Act 2013 states that 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. By incorporating this provision, the legislators have shown their legislative intent expressly to apply the 2013 Act retrospectively in matters related to appointment. 42. Further, § 267 of the 1956 Act clearly states that “no company shall after the commencement of this Act…” whereas on the other hand § 196(3) states that “ no company shall appoint or continue the employment of any person…”. By reading both these provisions together, it can be implied that the legislators have not barred the application of § 196(3) retrospectively and the inclusion of the word ‘continue’ in § 196(3) further makes it clear that this § can be applied retrospectively. 43. The Apex Court in Rama Narang v. Ramesh Narang and others 70 while interpreting § 267 of the 1956 Act which corresponds to § 196(3) of 2013 Act held that the language in which the provision is couched is plain, simple and unambiguous and does not admit of more than one meaning viz. that after the commencement of the Amendment Act, no person who has suffered disqualification can be appointed or continue in appointment as Managing Director of the Company. 65

8 SCC 1 (2004). 13 SCC 492 (2007). 67 Gwalior Rayon Silk Mfg. Co. Ltd. v. Custodian of Vested Forests, AIR 1747 SC 1990; Mohammad Alikh an v. Co mmissioner of Wealth Tax, A IR 1165 SC 1997; Dental Council of India v. Hari Prakash, AIR 3303 SC 2001; J.P. Basnal v. State of Rajasthan, AIR 1405 SC 2004; State of Jharkhand v. Govind Singh, AIR 294 SC 2005 68 Shayam Kishori Deci v. Patna Municipal Corporation, AIR 1678 SC 1966; Union of India v. Shankalchand, AIR 2328 SC 1977; S. Narayanswami v. G. Panneerselvam, AIR 2284 SC 1972; J.P. Basnal v. State of Rajasthan, AIR 1405 SC 2004; State of Jharkhand v. Gov ind Singh, AIR 294 SC 2005. 69 As provided under Co mpanies Act § 465 (2013), ‘Repeal of certain enact ments and savings’. 70 2 SCC 513 (1995). 66



44. On the same principle, Hon’ble High Court in the case of Sridhar Sundararajan v. Ultramarine & Pigments Limited 71 , held that the concerned managing director completed the age of 70 years on 11.11.2014 and therefore from that date, he was disqualified from continuing as managing director, unless he fulfilled the requirements of the proviso viz. that the company has to continue his appointment by a special resolution and, §ondly, that the resolution must state the reason why the continuation is necessary. The Court based its judgment on the reasoning that the language of § 196 (3)(a) is plain, simple and unambiguous and it applies to all the managing directors who have attained the age of 70 years and this § does not make any difference between the appointment made prior to 1.04.2014 and after this date. 45. Thus, in the present case, the appellant completed the age of 70 years on 15.04.2013 72 and therefore from that date, he was disqualified from continuing as WTD, unless he fulfilled the requirements of the proviso viz. that the company has to continue his appointment by a special resolution and secondly, that the resolution must state the reason why the continuation is necessary. 46. The respondent further submits that the purpose of incorporating § 196(3)(a) with proviso is not to punish those who are so disqualified but to save the community from the consequences of mismanagement and also to prescribe some standards of corporate management. With regard to the age limit, Schedule XIII Clause (C) 73 of the 1956 Act stated that approval of shareholders by special resolution was required only in matters when a person who had already attained the age of 70 years needed to be appointed as a WTD and not in matters when a WTD in continuance of his tenure attains the age of 70 which seemed to be defeating the very purpose of the proviso attached to Schedule XIII Clause (C), i.e. to maintain the standards of corporate management. Since, § 196(3)(a) of the 2013 Act is incorporated to benefit the community of shareholders, hence it can be applied retrospectively.

IV. THE WORD “CONTINUE” USED IN § 196(3) OUGHT TO BE CONSTRUED IN CONTEXT OF §§ 193(3)(a), (b), (c) AND (d).

71

[Notice of Motion (L) No. 434 o f 2015 in Suit (L) No. 146 of 2015 decided on July 16, 2015]. ¶4, Moot Problem. 73 As provided under Schedule XIII of the Co mpanies Act (1956), ‘Conditions to be fulfilled for the appointment of a managing or whole-t ime d irector or a manager without the approval of the central government’ 72



47. It is humbly submitted that the word continue used in § 196(3) ought to be construed in context of §§ 196(3) (a), (b), (c) and (d), i.e. the word ‘continue’ used in § 196(3) is ought to be construed in context of the whole Section [A]. A. THE WORD ‘CONTINUE’ USED IN § 196(3) IS OUGHT TO BE CONSTRUED IN CONTEXT OF THE WHOLE SECTION. 48. It is humbly submitted that the word ‘continue’ used in § 196(3) is ought to be construed in context of the whole § and no sub-§ can be excluded from this purview because according to the general rule of interpretation, a § must be construed as a whole and sub-§s, saving clause or a proviso 74 in a § must be read as parts of an integral whole. 49. In the case of State of Bihar v. Hiralal Kejriwal75 , Subbarao, J. observed that “it is an elementary rule that construction of a § is to be made of all the parts together,”76 and that ‘it is not permissible to omit any part of it; the whole § should be read together”. 77 Sub-§s in a § must be read as parts of an integral whole and as being interpreted, “each portion throwing lights, if need be, on the rest”. 78 Moreover, in the case of Gurmej Singh v. S. Pratap Singh 79 , it was held that it is an elementary rule that construction of a § is to be made of all parts together and not of one part only by itself.” 50. The Respondent further submits that when the meaning of a Section is clear and unambiguous and cannot be interpreted in more than one way, the plain meaning should be given effect to. In Gurudevdatta VKSSS Maryadit v. State of Maharashtra 80 , the Apex Court held that: “It is a cardinal principle of interpretation of statute that the words of a statute must be understood in their natural, ordinary or popular sense and construed according to their grammatical meaning, unless such construction leads to some absurdity or unless there is something in the object of the statute to suggest to the contrary. The golden rule is that words of a statute must prima facie be given their ordinary meaning. It is yet another rule of construction that when the words of the statute are clear, plain and unambiguous, then the courts are bound to give effect to that meaning, irrespective of the consequences. It is said that the words themselves best declare the intention of the law giver.” 51. Moreover, applying the observations made in Heydon case 81 the Supreme Court in the case Kanai Lal v. Paramnidhi Sadhukhan, 82 observed that, “while interpreting any statute, it must 74

Jennings v. Kelly, A C 206 [1940]; Tahsildar Singh v. State of U.P., AIR 1012 SC 1959. AIR 47 SC 1960. 76 Gurmej Singh S. v. Sardar Pratap SinghKairon, AIR 122 SC 1960. 77 AIR 47 SC 1960. 78 Jennings v. Kelly, A C 206 [1940]; Madanlal Fakirchand v. Shree Changdeo Sugar Mills Ltd., AIR 1543 SC 1962. 79 AIR 122 SC 1960. 80 4 SCC 534 (2001). 75



always be borne in mind that the first and primary rule of construction is that the intention of the legislature must be found in the words used by the legislature itself. If the words used are capable of one construction, only then it would not be open to the courts to adopt any other hypothetical construction on the ground that such hypothetical construction is more consistent with the alleged object and policy of the Act.” Further, in the case of S.A. Vankataraman v. State 83 , it was held that in construing the provisions of the statute it is essential for a court, in the first instance, to give effect to the natural meaning of the words used therein, if those words are clear enough. It is only in the case of ambiguity that a court is entitled to ascertain the intention of the legislature by construing the provisions of the statute as a hole and taking into consideration other matters and circumstances which led to the enactment of the statute. 52. In the instant petition, § 196(3) of the 2013 Act clearly states without any ambiguity that the word ‘continue’ used in § 196(3) is ought to be construed in context of the whole § and no sub-section can be excluded from this purview and had there be any intention on the part of the legislature to infer that the word “continue” used in § 196(3) ought to be construed in context of 196(3)(b), (c) and (d) alone and not 196(3)(a), then sub clause (a) would not have been included under the purview of § 196(3). Thus, analyzing the above mentioned judgments, it can be inferred that since § 196(3) is plain, clear and unambiguous and cannot be interpreted in more than one way, the plain meaning should be given effect to and the courts are bound to give effect to that meaning, irrespective of the consequences.

81

76 ER 637 [1584]. AIR 907 SC 1957. 83 AIR 107 SC 1958. 82



PRAYER

It is hereinafter most humbly prayed before this Hon’ble Supreme Court that, in the light of the facts stated, issues raised, argume nts advanced and authorities cited, the Court may be pleased to uphold the contentions of the Respondent ; and hold that,

1. The issue of limitation was not required to be heard as a preliminary issue in terms of Section 9A of the Civil Procedure Code, 1908. 2. Section 196(3)(a) of the Companies Act,2013 operates as condition for disqualification on the appointment and continuation of a person as Whole- Time Director. 3. The age limit of 70 years under Section 196(3)(a) of the Companies Act, 2013 can apply to a whole time director validly appointed prior to 01.04.2013. 4. The word ‘continue’ used in Section 196(3) of the Companies Act, 2013 ought to be construed in context of 196(3)(a), (b), (c) and (d).

And Pass any other Orde r or Direction, that it may deem fit in the Best Interest of Justice, Fairness, Equity and Good Conscience. For This Act of Kindness, the Respondent Shall Be Duty Bound For Ever Pray.

Sd/-

(Counsel for Respondent)

XIV WRITTEN SUBM ISSION ON BEHA LF OF THE RESPONDENT

Best memorial- 4th KIIT National Moot Court Competition, 2016

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