4th KIIT National Moot Court Competition 2016

R415

4th KIIT UNIVERSITY NATIONAL MOOT COURT COMPETITION, 2016

BEFORE THE HONOURABLE SUPREME COURT OF THE REPUBLIC OF ISLANDIA

IN THE MATTER OF:

…PETITIONER

JAMES MCLINDEN v.

CHRISTOPHER RYLAND

…RESPONDENT

SPECIAL LEAVE PETITION NO. _________/2016

WRITTEN SUBMISSION OF THE COUNSELS APPEARING ON BEHALF OF THE RESPONDENT


TABLE OF CONTENTS

ABBREVIATIONS…………………………………………………………………...........IV INDEX OF AUTORITIES……………………………………………………………...…..V STATEMENT OF JURISDICTION…………………...………………………………….IX STATEMENT OF FACTS……………………...………………………………………….X STATEMENT OF ISSUES…………………...…………………………………………..XII SUMMARY OF ARGUMENTS…………………………………………………………XIII ARGUMENTS ADVANCED…………………………………………………………...1-15 1. That the issue of limitation was not required to be heard as a preliminary issue in terms of Section 9A of the CPC………………………………………………...1 1.1. That issue of limitation in the present case was not compulsorily required to be heard as a preliminary issue in terms of Section 9A of the CPC……………………1 1.2. That the bar of limitation is not applicable on the suit filed by the Respondent…………………………………………………………………………..3 2. That Section 196(3)(a) operates as an immediate disqualification on the appointment and continuance of a person as a Whole-Time Director, and the same

is

not

an

eligibility

criterion

that

applies

at

the

time

of

appointment...............................................................................................................5 2.1. That disqualification and eligibility criterion are distinct from eachother and operate differently…………………………………………………………………...5 2.2. That section 196(3)(a) operates as an immediate disqualification on the appointment and continuance of a person as a whole-time director………………..6 3. That 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…………………………………………………………………………..8 3.1. That the provisions of the Companies Act, 2013 are applicable for all purposes of company law……………………………………………………………………...8 3.2. That the Section 196(3)(a) being a disqualification will result in immediate II

MEMORIAL ON BEHALF OF THE RESPONDENT

4th KIIT UNIVERSITY NATIONAL MOOT COURT COMPETITION, 2016 cessation of employment of a whole-time director appointed prior to the commencement of the Companies Act, 2013………………………………………..9 4. That the word ‘continue’ used in section 196(3) ought not to be construed in context of 196(3)(b), (c) and (d) alone and must be construed in context of 196(3)(a) as well…………………………………………………………………...12 4.1. That Section 196(3)(a) cannot be construed in isolation to Sections 196(3)(b), (c) and (d)…………………………………………………………………………..13 4.2. That all clauses of Section 196(3) operate similarly…………………………..14 PRAYER……………………………………………………………………………………..XV

III



ABBREVIATIONS

§

:

Section

¶

:

Paragraph

&

:

And

AIR

:

All India Reporter

All

:

Allahabad

All ER

:

All England Reporter

CompLJ

:

Company Law Journal

CPC

:

Code of Civil Procedure

Crl.LJ

:

Criminal Law Journal

DRJ

:

Delhi Reported Journal

Ed.

:

Edition

MhLJ

:

Maharashtra Law Journal

MLJ

:

Madras Law Journal

Pat.

:

Patna

SC

:

Supreme Court

SCC

:

Supreme Court Cases

SCR

:

Supreme Court Reporter

SLP

:

Special Leave Petition

WTD

:

Whole-Time Director

IV



INDEX OF AUTHORITIES

STATUTES 

Code of Civil Procedure, 1908



Companies Act, 1956



Companies Act, 2013



Constitution of India, 1950



Limitation Act, 1963

BOOKS 

A. RAMMAIYA, GUIDE TO COMPANIES ACT: PART 1 (18th ed. LexisNexis 2014).



A. RAMMAIYA, GUIDE TO COMPANIES ACT: PART 2 (17th ed. LexisNexis Butterworths Wadhwa 2010).



A. RAMMAIYA, GUIDE TO COMPANIES ACT: PART 2 (18th ed. LexisNexis 2014).



DICEY, MORRIS & COLLINS, THE CONFLICT OF LAWS: VOLUME 1 (Sir Lawerence Collins et al eds., 14th ed. Thomson, Sweet & Maxwell 2006).



G.P. SINGH, PRINCIPLES OF STATUTORY INTERPRETATION (13th ed. LexisNexis Butterworths Wadhwa 2012).



JEHANGIR M.J. SETHIA, INDIAN COMPANY LAW (11th ed. Modern Law Publication 2005).



LEN SEALY & SARAH WORTHINGTON, CASES & MATERIALS IN COMPANY LAW (9th ed. Oxford University Press 2010).



MAXWELL, INTERPRETATION OF STATUTES (P. St. J. Langan ed., 12th ed. LexisNexis Butterworths 2003).



MULLA, CODE OF CIVIL PROCEDURE (Solil Paul & Anupam Srivastava eds., 16th ed. LexisNexis 2001).



N.S. BINDRA, INTERPRETATION OF STATUTES (Amita Dhanda ed., 11th ed. LexisNexis 2014).



SALMOND, JURISPRUDENCE (Glanville Williams et al ed., 11th ed. (reprint) Sweet & Maxwell, 1957).



U.N. MITRA, LAW OF LIMITATION AND PRESCRIPTION: VOLUME 1 (JJ. Y.V. Chandrachud and S.S. Subramani eds., 12th ed. LexisNexis Butterworths Wadhwa2011). V


4th KIIT UNIVERSITY NATIONAL MOOT COURT COMPETITION, 2016 

U.N. MITRA, LAW OF LIMITATION AND PRESCRIPTION: VOLUME 2 (JJ. Y.V. Chandrachud and S.S. Subramani eds., 12th ed. LexisNexis Butterworths Wadhwa 2011).

REPORTS 

3rd Law Commission of India Report, Limitation Act, 1908 (Ministry of Law, Government of India,1956).



21st Report of the Standing Committee on Finance, 2009-10 (15th Lok Sabha, August 2010).

LEXICONS 

BLACK’S LAW DICTIONARY (B.A. Garner ed., Thomson West, 8th ed. 2004).



OXFORD ENGLISH DICTIONARY (Catherine Soanes ed., Oxford University Press, 9th ed. 2001).

ONLINE DATABASES 

Manupatra (last accessed on 1/9/2016)



SCC Online (last accessed on 1/9/2016)



Taxmann (last accessed on 1/9/2016)



Westlaw (last accessed on 1/9/2016)

CASES 

A. Malaisamy v. Union Of India, Writ Petition No. 8523 of 2015.



Ansal Housing & Construction Ltd. v. Commissioner of Income Tax, 2010 (6) RCR (Civil) 12.



Ashok Mittal v. Mr. Ram Parshotam Mittal &Ors., (2008) 2 CompLJ 193 Del.



B.D.S Madhavaram v. R.S. Sundaram, AIR 1987 Mad 183.



Bai Manehha v. Syed Mohamed Bakr Edrus, AIR 1963 Guj 168.



Balakrishana Sawalram v. Dhyaneshwar, AIR 1959 SC 758.



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



Bibhuti Narayan v. Guru Mahadeo AIR 1940 Pat 449.



Brij Bhusan v. S.D.O. Siwan, AIR 1955 Pat 1.



C. Ram Prakash & Anr. v. Power Grid Corporation Of India &Anr., (2011) 8 MLJ 593.



CIT, Mysore v. Indo Mercantile Bank Ltd., AIR 1959 SC 713. VI



Competition Commission of India v. Steel Authority of India Ltd., (2010) 10 SCC 744.



Consumer Education & Research Society v. Union of India &Ors., (2009) 9 SCC 648.



Digam Singh v. Anshu Prakash & Ors., (2013) SCC Online Del 782.



Dwarka Prasad v. Dwarka Das Saraf, 1976 SCR (1) 277.



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



Fazelehussian Haiderbhoy v. Yusufally Adamji & Ors., AIR 1955 Bom 55.



Grasim Industries Ltd. v. Collector of Customs, AIR 2002 SC 1706.



Kamalakar Eknath Salunkhe v. Baburav Vishnu Javalkar & Ors., Civil Appeal No. 1085 of 2015.



Kamlesh Babu v. Lajpat Rai Sharma, (2008) 12 SCC 577.



Kerala Ceramics and Clays Staff & Ors. v. State Of Kerala & Ors., Writ Petition (Civil). No. 20749 of 2011.



Kuseshwar Jha v. Uma Kant Jha, AIR 1941 Pat 188.



Lily Thomas v. Union of India, (2013) 7 SCC 653.



M/s. Bengal Waterproof v. M/s. Bombay Waterproof Manufacturing Co. &Anr., AIR 1997 SC 1398.



Maharashtra State Warehousing v. Bhujang Krishnaji Kohale, (1999) 101 BomLR 83.



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



Maulvi Hussain Haji Abraham Umraji v. State of Gujarat, (2004) 6 SCC 672.



M.N. Dastur & Co. Ltd. & Anr. v. Union of India & Ors., 2006 (4) STR 3.



Narayan Gujabrao Bhoyar v. Yeotmal Zila Parishad & Ors., 2009 (6) MhLJ 500.



National Insurance Co. Ltd. v. Anjana Shyam, (2007) 7 SCC 445.



Poppatlal Shah v. State of Madras, AIR 1953 SC 274.



Purno Agitok Sangma v. Pranab Mukherjee, (2013) 2 SCC 239.



Rajan Dhansukhlal Vora v. Dinesh Bacchubhai Parekh, 2012(1) MhLJ 696.



Ram Dayal Umraomal v. Pannalal Jagan-nathji, AIR 1979 MP 153 (Full Bench).



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



Ramesh B. Desai &Ors. v. Bipin Vadilal Mehta &Ors., 2006(5) SCC 638.



Ravikant S Patil v. Sarvabhouma S. Bagali, (2007) 1 SCC 673.



Shankar S/o Bhagwan Ambhore v. Vice Chancellor, Dr. Babasaheb Ambedkar Marathwada University, Aurangabad &Ors., (2006) 3 MhLJ 835.



Sridhar Sundarajan v. Ultramarine & Pigments Co. and Anr, 2016 (4) MhLJ 590. VII



State Of Bihar v. Deokaran Nenshi, 1973 SCR (3) 1004.



State of Maharashtra v. Nanded Prabhani Operator Sangh, AIR 2000 SC 725.



Syam Sundar Misra v. Municipal Chairman, Parlakimedi, AIR 1964 Orissa 111.



Tribhuban Parkash Nayyar v. Union Of India, 1970 SCR (2) 732.



United Savings and Finance Co. Pvt. Ltd. &Anr. v. The Deputy Chief Officer, Reserve Bank of India, 1980 Crl.LJ 607.



Usha Sales Ltd. v. Malcolm Gomes & Ors., AIR 1984 Bom 60.



Yahoo Properties Pvt. Ltd. v. Bhai Manjit Singh & Anr., 2013 DRJ (133) 49.



A.G. v. HRH Prince Ernest Augustus, (1957) 1 All ER 49 (House of Lords).



R. v. Oxford, Shire County Council, (1999) 3 All ER 385 (House of Lords).

VIII



STATEMENT OF JURISDICTION

The Respondent humbly submits to the jurisdiction of the Honourable Supreme Court of the Republic of Islandia which has been invoked by the Petitioner by way of a Special Leave Petition under Article 136 of the Constitution of Islandia. Article 136 reads as follows, “136. Special leave to appeal by the Supreme Court (1) Notwithstanding anything in this Chapter, the Supreme Court may, in its discretion, grant special leave to appeal from any judgment, decree, determination, sentence or order in any cause or matter passed or made by any court or tribunal in the territory of India (2) Nothing in clause shall apply to any judgment, determination, sentence or order passed or made by any court or tribunal constituted by or under any law relating to the Armed Forces.” The Honourable Court granted special leave on 6th August 2016.

IX



STATEMENT OF FACTS

I. BACKGROUND Goodenough Ltd. is a public limited company registered under the laws of and listed on the stock exchanges of the Republic of Islandia since 1997. As of date, it has more than 2,50,000 shareholders. On 25th of March, 2013 an ordinary resolution passed in the Annual General Meeting, appointing Mr. James McLinden (the Petitioner in the present case) as the company’s Whole-Time Director for a period of five years with effect from 12th of February 2013 in accordance with the Companies Act, 1956. II. THE COMPANIES ACT, 2013 On the 1st of April 2013 the Companies Act, 2013 was enforced in the country, replacing the erstwhile Act of 1956. This Act introduced Section 196(3), the provision currently under dispute. This provision prohibited the “appointment and continuance in employment” of any person as a whole-time director, managing director, or a manager who was below the age of 21 years and above the age of 70 years, amongst prohibitions with regards to persons who are undischarged insolvents, who have failed to make payment or have compounded with creditors, or who have been convicted and sentenced for a period of six months. III. THE DISPUTE On 15th of April 2013, Mr. McLinden attained seventy years of age. On 12 th May 2016, Mr. Christopher Ryland (the Respondent in the present case), a shareholder of the company filed a suit before a Single Judge Bench of the High Court of State of Winchester challenging Mr. McLinden’s appointment and continuance as a whole-time director of Goodenough Ltd. on grounds of introduction of Section 196(3) by the Companies Act, 2013. The suit was filed 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. On 19th May 2016, Mr. McLinden filed a reply to the Notice of Motion. He raised a preliminary issue under Section 9A CPC (as added by the State of Winchester) challenging the maintainability of the suit on grounds of jurisdiction. He argued that the suit was barred by limitation, and thus the High Court did not have jurisdiction over that same. On merits,

X


4th KIIT UNIVERSITY NATIONAL MOOT COURT COMPETITION, 2016 he denied that Section 196(3)(a) had applicability on an appointment made prior to the commencement of the 2013 Act. IV. RESULTANT LITIGATION 1) Order of the Single Judge: By an order dated 13th June 2016, the Honourable Single Judge held that the High Court had an inherent jurisdiction that did not include limitation. The issue under Section 9A CPC could not be thus addressed as a preliminary issue. On merits, the Single Judge decided in favour of Mr. Ryland and highlighted that Section 196(3) was a disqualification and will apply to all appointees, including those appointed prior to the enforcement of the 2013 Act. An interim injunction restraining Mr. McLinden from continuing as WTD of Goodenough Ltd. pending disposal of the suit was passed. 2) Appeal before Division Bench: The Honourable Division Bench upheld the order of the Single Judge by an order dated 28th July 2016. 3) Special Leave Petition: Mr. McLinden filed a Special Leave Petition before the Honourable Supreme Court of the Republic of Islandia, which was granted on the 6th of August 2016.

XI



STATEMENT OF ISSUES

ISSUE 1: Whether the issue of limitation was required to be heard as a preliminary issue in terms of Section 9A of the Code of Civil Procedure?

ISSUE 2: Whether Section 196(3)(a) of the 2013 Act operates as an immediate disqualification on the appointment and continuation of a person as 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?

ISSUE 3: Whether 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?

ISSUE 4: Whether the word “continue” used in Section 196 (3) ought to be construed in context of 193(3) (b), (c) and (d) alone and not 196(3) (a)?

XII



SUMMARY OF ARGUMENTS

CONTENTION 1: That the issue of limitation was not required to be heard as a preliminary under of Section 9A of the Code of Civil Procedure. Limitation is not a part of the inherent jurisdiction of courts. This jurisdiction is limited to pecuniary, territorial, and that of subject matter. Limitation is an issue of law and fact. In accordance with Order XIV Rule 2 of the CPC, an issue of law must be decided prior to an issue of fact. Limitation thus need not be treated as a preliminary issue. Further, the suit was not barred by the law of limitation, since the continuance of employment of the Petitioner after attaining 70 years of age is a continuing wrong. The limitation period of such wrongs does not begin to run till the wrong has ceased. CONTENTION 2: That Section 196(3)(a) of the 2013 Act operates as an immediate disqualification on the appointment and continuation of a person as whole-time director the same is not an eligibility condition which applies at the time of appointment. Section 196(3)(a) is a disqualifying condition that results in immediate cessation of employment of the appointee. Prior to the enactment of the 2013 Act, the conditions now contained in clauses (b), (c), and (d) of Section 196(3) were disqualifications contained in Section 267 of the 1956 Act. The intent of the Legislature to introduce the criterion of age as a disqualification is clear from the fact that it has been clubbed with conditions that have been unanimously held to be disqualifications. CONTENTION 3: That 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. Section 1(4)(a) of the 2013 Act makes the Act applicable for all purposes to companies constituted under any previous law. This makes it applicable on the present case as well. Further, Section 196(3)(a) is a disqualification that operated whenever it is incurred. In does not question the validity of an appointment validly made, but will operate to cease such valid employment, whenever the appointee attains seventy years of age. The provision does XIII


4th KIIT UNIVERSITY NATIONAL MOOT COURT COMPETITION, 2016 not distinguish between WTDs appointed before and after the commencement of the 2013 Act. It the disqualification was to not apply an appointment made prior to the commencement, words will have to be added to the provision. This goes against the established principles of statutory interpretation. CONTENTION 4: That the word “continue” used in section 196 (3) ought not to be construed in context of 193(3) (b), (c) and (d) alone and must be construed in context of 196(3)(a) as well. Clause (a) is as much a part of Section 196(3) clauses (b), (c), and (d). Separating it from the other clauses and construing it as an eligibility criterion different from the other disqualifications will undermine the intent on the legislature. It will also result in unnecessary complexity. Further, all the clauses operate similarly and lead to cessation of employment whenever disqualification is incurred.

XIV



ARGUMENTS ADVANCED

CONTENTION 1: THAT THE ISSUE OF LIMITATION WAS NOT REQUIRED TO BE HEARD AS A PRELIMINARY UNDER OF SECTION 9A OF THE CODE OF CIVIL PROCEDURE.

1. It is humbly contended before the Honourable Supreme Court that the issue of limitation was not compulsorily required to be heard as a preliminary issue in under Section 9A of Code of Civil Procedure (CPC). The arguments in this regard are two-fold: 1.1 That issue of limitation in the present case was not compulsorily required to be heard as a preliminary issue under Section 9A of the CPC. 2. The Respondent humbly submits that issue of limitation in the pertinent case was not necessarily required to be heard as a preliminary issue under Section 9A of the code of civil procedure. 3. Section 9A (State of Winchester Amendment), CPC contemplates that when an issue of jurisdiction is raised, the said issue should be decided at first as expeditiously as possible, and be treated as a preliminary issue. The intent behind this is that if the court finds that it does not have jurisdiction vested in it in law, then no further enquiry is needed and saves a lot of valuable judicial time in an age where the pendency of present cases alone will take years to resolve. The interpretation of the term “jurisdiction” used in this provision, however, has to be considered with reference to the value, place and nature of the subject matter. The classification into territorial jurisdiction, pecuniary jurisdiction and jurisdiction over the subject matter is of fundamental character and has to be considered when the term “jurisdiction” is being interpreted. 4. The Apex Court in Kamalakar Eknath Salunkhe v. Baburav Vishnu Javalkar & Ors. 1 has confirmed this position. The Court held that limitation was not a part of jurisdiction. The lower courts had therefore erred in making limitation a preliminary issue under Section 9A of the CPC that talks about jurisdiction alone. In the present case, where the Petitioner’s

1

Civil Appeal No. 1085 of 2015, at ¶¶ 17-22.

1


4th KIIT UNIVERSITY NATIONAL MOOT COURT COMPETITION, 2016 plea to raise limitation as a preliminary issue under this provision was unjustified, as rightfully held by the High Court of the State of Winchester.2 5. Further, Order XIV Rule 2 of the CPC confers powers upon the Court to pronounce judgment on all the issues. But where issues of both law and fact arise, and the Court is of the opinion that the case or any part may be disposed on the issue of law, it may try it before trying an issue of fact. This position has also been reiterated in Yahoo Properties Pvt. Ltd. v. Bhai Manjit Singh & Anr.3, wherein it was observed that the CPC confers no jurisdiction upon the Court to try a suit on mixed issues of law and fact as preliminary. 6. This provision is not in conflict with Section 9A of the CPC; both are to be read harmoniously and are intended to achieve the same object4 and thus must be treated at par. In the present case, the issue of limitation is a mixed issue of both fact and law 5 that does not deal with jurisdiction. Since limitation cannot be decided as an abstract principle of law divorced from facts as in every case the starting point of limitation has to be ascertained which is entirely a question of fact. 7. In the case of Ramesh B. Desai & Ors. v. Bipin Vadilal Mehta & Ors., 6 it has been expressly laid down by the Apex Court that limitation cannot be heard as a preliminary issue in law, since it is not purely a question of law. Thus, in the present case, when the determination of limitation involves in great part a determination of fact, while the other issues revolve around the High Court was justified in refusing to determine as a preliminary issue. 8. It must also be mentioned that Courts under civil law have the power to determine their own jurisdiction and decide all issues7, unless barred by law.8 In the present case, the High Court of Winchester has exercised this very power. It has rightfully proceeded to decide the case on merits. If all issues have ultimately been decided, consideration of those issues at preliminary stage later by decision of the Appellate Court, results into the piecemeal trial of

2

Moot Problem, at ¶¶ 7 and 9. 2013 DRJ (133) 49, at ¶ 5 & 8. See also Estrela Batteries v. Modi Industries, AIR 1976 All 201, at ¶¶ 2-5; Ram Dayal Umraomal v. Pannalal Jagan-nathji, AIR 1979 MP 153 (Full Bench), at ¶ 5; Major S.S. Khanna v. Brig. F.J. Dhillon, AIR 1964 SC 497, at ¶¶ 11 & 13; Usha Sales Ltd. v. Malcolm Gomes & Ors., AIR 1984 Bom 60, at ¶¶ 7, 9, & 10. 4 Rajan Dhansukhlal Vora v. Dinesh Bacchubhai Parekh, 2012(1) MhLJ 696, at ¶; Fazelehussian Haiderbhoy v. Yusufally Adamji & Ors., AIR 1955 Bom 55, at ¶¶ 2-4. 5 Balasaria Construction Pvt. Ltd. v. Hanuman Seva Trust & Ors., (2006) 5 SCC 658, at ¶ 8. 6 2006 (5) SCC 638, at ¶ 16. 7 MULLA, CODE OF CIVIL PROCEDURE: VOLUME 1 140 (Solil Paul & Anupam Srivastava eds., 16th ed. 2001). 8 § 9 of CPC, 1908. 3

2


4th KIIT UNIVERSITY NATIONAL MOOT COURT COMPETITION, 2016 the suit and thereby taking the matter up and down at every stage of litigation instead of final disposal of controversy.9 9. In view of the above arguments, the Respondent submits before the Court that the issue of limitation was not required to be treated or should be treated as a preliminary issue by the High Court of Winchester. 1.2 That the bar of limitation is not applicable on the suit filed by the Respondent. 10. The Respondent contends before the Honourable Court that the suit filed before the High Court of the State of Winchester was not barred by the Limitation Act, 1963. 11. The limitation period for filing any suit under company law is three years under Part X, Article 113 of the Limitation Act, 196310. The right to sue and the commencement of the running of time for purposes of limitation begins when the cause of action arises. 11 But this cause of action may not fall on a particular date alone. According to Section 22 of the Limitation Act, 1963 a fresh period of limitation begins to run at every moment, de die in diem, 12 the wrong continues. The criterion for application of Section 22 is whether the wrong is a continuing one; 13 and when it is so, the cause of action that arises is also continuous. The scope this provision is not limited to torts or breach of contracts, but also includes any breach of statutory duties resulting in injury14, whether private or public15. A continuing cause of action is one that involves a repetition of acts of the same kind for which the action is brought.16 Every moment of continuance of wrong would afford a fresh cause of action.17 Further, the time for determining limitation does not begin to run unless the wrong has ceased or come to an end.18 The period of limitation in a continuing wrong, the last act of wrong controls the commencement of period.19 12. In the present case, the Petitioner’s appointment is a continuous wrong; the cause of action is not his attaining 70 years of age, it is his continuance in employment as a whole-time 9

Maharashtra State Warehousing v. Bhujang Krishnaji Kohale, (1999) 101 BomLR 83, at ¶ 13. U.N. MITRA, LAW OF LIMITATION AND PRESCRIPTION: VOLUME 2 2088 (JJ. Y.V. Chandrachud and S.S. Subramani eds. 12th ed. 2011). 11 Syam Sundar Misra v. Municipal Chairman, Parlakimedi, AIR 1964 Orissa 111, at ¶ 8. 12 M/s. Bengal Waterproof v. M/s. Bombay Waterproof Manufacturing Co. & Anr., AIR 1997 SC 1398, at ¶ 3. 13 Bai Manehha v. Syed Mohamed Bakr Edrus, AIR 1963 Guj 168; Balakrishana Sawalram v. Dhyaneshwar, AIR 1959 SC 758, at ¶ 21; 14 rd 3 Report of the Law Commission of India, Limitation Act 1908 (Ministry of Law, Government of India,1956). 15 Kuseshwar Jha v. Uma Kant Jha, AIR 1941 Pat 188; Bibhuti Narayan v. Guru Mahadeo AIR 1940 Pat 449, at ¶ 5; Brij Bhusan v. S.D.O. Siwan, AIR 1955 Pat 1, at ¶ 23. 16 Digam Singh v. Anshu Prakash & Ors., (2013) SCC Online Del 782., at ¶ 9; 17 B.D.S Madhavaram v. R.S. Sundaram, AIR 1987 Mad 183. 18 Supra 7, at 683. 19 Supra 7, at 694. 10

3


4th KIIT UNIVERSITY NATIONAL MOOT COURT COMPETITION, 2016 director after the attainment of the said age. Since the Petitioner had not ceased his appointment after becoming disqualified, as per the provisions of Section 196(3)(a), Companies Act 2013, the wrong continues to renew every day along with the limitation period. The limitation period did not commence through all this time. It would have begun from the date the Petitioner would have ceased his employment, which he did not. It is thus clear that non-compliance with a statutory provision or regulation is a continuous wrong, as long as the non-compliance subsists. 13. This position has been confirmed in the case of United Savings and Finance Co. Pvt. Ltd. & Anr. v. The Deputy Chief Officer, Reserve Bank of India20, wherein it the issue revolved around a limited company’s non-compliance with Sections 58B(2) and 58C of the Reserve Bank of India Act, 1934. The Calcutta High Court held that refusal or failure to comply with the said provisions of the law would constitute a continuing wrong. Failure or refusal to comply with the term of the said section creates a wrong and continues to be a wrong so long as such failure or refusal persists. This position has also been reiterated by the Apex Court in State Of Bihar v. Deokaran Nenshi21. In this case, the Court had to decide, inter alia, whether refusal to comply with Section 66 of the Mines Act, 1952 would amount to a continuous wrong. The Court observed that a continuing wrong was distinguishable from a wrong that was done once and for all. On every occasion there was disobedience or noncompliance with the statutory provisions, there is a fresh wrong committed. The noncompliance with Section 66 was thus held to be a continuing wrong. 14. It is therefore humbly submitted before the Honourable Court that the Petitioner’s continuance as a whole-time director of Goodenough Ltd. subsequent to his becoming disqualified under Section 196(3)(a) of Companies Act, 2013, is a continuing wrong. The suit for his removal filed by the Respondent was not barred by limitation since the limitation period had not begun with his attainment of 70 years of age, but had continued till he remained in his position. With this, the suit filed by the Respondent is not time barred and thus the decision of the first court on other issues must not be disturbed.22

20

1980 Crl.LJ 607, at ¶ 12. 1973 SCR (3) 1004, at ¶ 4. 22 Kamlesh Babu v. Lajpat Rai Sharma, (2008) 12 SCC 577, ¶ 23. 21

4


4th KIIT UNIVERSITY NATIONAL MOOT COURT COMPETITION, 2016 CONTENTION 2: THAT SECTION 196(3)(a) OPERATES AS AN IMMEDIATE DISQUALIFICATION ON THE APPOINTMENT AND CONTINUANCE OF A PERSON AS A WHOLE TIME DIRECTOR, THE SAME IS NOT AN ELIGIBILITY CRITERION THAT APPLIES AT THE TIME OF APPOINTMENT, AND THERE IS DISTINCTION BETWEEN THE TWO.

15. It is humbly contended before the Honourable Supreme Court that Section 196(3)(a) is a disqualification that bars appointment and continuance of appointment of a whole-time director, and is not merely an eligibility criterion. The arguments in this regard are twofold: 2.1 That disqualification and eligibility criterion are distinct from eachother and operate differently. 16. The Respondent humbly states that disqualification and eligibility criterion are distinct from each other and have different operations. 17. Eligible means fit and proper to be selected or chosen23; an eligibility criterion therefore is a condition that has to be ascertained at the time of the selection for appointment. A person once eligible may be appointed, and any future change in the eligibility criteria does not affect this appointment. Disqualify means to make unsuitable for a job or activity. 24 It thus may arise during the course of the activity and not only before such activity starts. It also prevents the continuation of appointment of an individual. Any amendment that adds a disqualification, or changes an existing disqualification will cause to affect any appointment made prior to such amendment. Eligibility and disqualification are thus two distinct things,25as also noted by the Single Bench of the High Court of Winchester. 26 The basis of difference is the time of operation; while eligibility is to be determined while appointing an individual to a position, disqualification operates during the course of employment. Eligibility criteria, therefore, act as a screen at the time of appointment of an individual. At the time of appointment, the proposed appointee shall be subject to the conditions laid as

BLACK’S LAW DICTIONARY 559 (B.A. Garner ed., 8th ed. 2004). OXFORD ENGLISH DICTIONARY 257 (Catherine Soanes ed., 9th ed. 2001). 25 Sridhar Sundarajan v. Ultramarine & Pigments Co. and Anr., 2016 (4) MhLJ 590, at ¶ 21; Purno Agitok Sangma v. Pranab Mukherjee, (2013) 2 SCC 239, at ¶ 40. 26 Moot Problem, at ¶ 8. 23 24

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4th KIIT UNIVERSITY NATIONAL MOOT COURT COMPETITION, 2016 eligibility. Disqualifying conditions continue to screen appointees throughout the length of their appointment. Meeting any such conditions result in cessation of employment.27 18. It is therefore concluded that eligibility and disqualification are distinct and separate and operate differently, at different points of time. 2.2 That section 196(3)(a) operates as an immediate disqualification on the appointment and continuance of a person as a whole-time director. 19. The Respondent contends before the Honourable Court that Section 196(3)(a) is an immediate disqualification on the appointment and continuance of employment of a wholetime director and not merely an eligibility criterion to be considered at the time of appointment. 20. Section 196(3) is sourced from Section 267 of the erstwhile Companies Act, 1956. Section 267 contained grounds that disqualified whole-time directors and managing directors from continuing in their positions. Before the commencement of the 2013 Act, the age criterion was a part of Schedule XIII (Part I) of 1956 Act. The 2013 Act brought the age criterion previously contained in Schedule XIII of the 1956 Act has been brought out into the main body of the legislation as an additional disqualification.28 This is clear from the fact that the 2013 Act does not change the language of the provision from what it was before the Amendment with the exception of it being applicable to managers as well. The said words read as, “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…” 21. This provision has been judicially construed as an immediate disqualification.29 Since the addition of the lower 21 years and the upper 70 years of age have been made to this very provision, it can be concluded that the Legislature intended it to operate in a similar manner – an immediate disqualification. Had it been intended to operate as an eligibility criterion at the time of appointment, the Legislature would have created a separate provision or expressly mentioned it to be so. In the absence of such contrary intention, the provision

27

Narayan Gujabrao Bhoyar v. Yeotmal Zila Parishad & Ors., 2009 (6) MhLJ 500, at ¶¶ 34 & 56. A. RAMAIYA, GUIDE TO THE COMPANIES ACT: PART 2 3421 (18th ed. 2014). 29 Shankar S/o Bhagwan Ambhore v. Vice Chancellor, Dr. Babasaheb Ambedkar Marathwada University, Aurangabad & Ors., (2006) 3 MhLJ 835, at ¶ 6; Rama Narang v. Ramesh Narang, (1995) 2 SCC 513, at ¶ 8; Ravikant S Patil v. Sarvabhouma S. Bagali, (2007) 1 SCC 673, at ¶ 6. 28

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4th KIIT UNIVERSITY NATIONAL MOOT COURT COMPETITION, 2016 must be construed in accordance with the plain text as per the established principles of interpretation of statutes.30 22. This position has been confirmed in the recently decided case Sridhar Sundarajan v. Ultramarine & Pigments Co. and Anr.31, wherein the Division Bench of the Bombay High Court held that Section 196(3)(a) was an additional disqualification and not merely an eligibility criterion. It was further held that since a new clause was added as disqualification for appointment or continuation as whole-time director, managing director, or manager, it would operate not only at the stage of appointment but also would operate in the case of a person who has already been appointed and attained the age of 70 years and such a person, therefore, by virtue of disqualification, had no right to continue as whole-time director, unless a special resolution was passed by the Company.32 It was also observed that even though the disqualifying Amendment was made subsequent to the appointment of the concerned, it would result in the cessation his employment, as the disqualification will operate even after the appointment. In the present case, the Petitioner, though validly appointed, must cease his employment in accordance with this disqualifying amendment. 23. Section 196(3) of Act of 2013 being very recent remains to be interpreted in its entirety. It is for the judiciary to polish the bare legislation, a task which is yet underway. However, the judicial opinion regarding this provision may also be gauged from another recent judgment of the Madras High Court. In A. Malaisamy v. Union Of India33, the issue before the Court was to decide the validity of an advertisement for the post of managing director in what was claimed to be a Public Sector Undertaking. Though the issue was not the interpretation of Section 196(3)(a), the Court at several places made a reference to the “age limit for holding the post of managing director” is 70 years. This was also compared to the age of superannuation in PSUs, that is, the age at which the employment ceases. From this comparison, and the reference to the age limit of 70 years, it can be construed that the Court had assumed the age limit of 70 years to be a disqualifying criteria when the employment will be brought to an end. 24. In view of the above arguments, the Respondent submits that Section 196(3)(a) being a disqualification, disqualifies the Petitioner from continuing in his appointment.

30

G.P. SINGH, PRINCIPLES OF STATUTORY INTERPRETATION 64 (13th ed. 2012). 2016 (4) MhLJ 590, at ¶¶ 21, 22, and 25. 32 See Proviso to § 196(3)(a) of Companies Act, 2013. 33 Writ Petition No. 8523 of 2015, at ¶¶ 4, 8, and 17. 31

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4th KIIT UNIVERSITY NATIONAL MOOT COURT COMPETITION, 2016 CONTENTION 3: THAT 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. 25. It is humbly contended before the Honourable Supreme Court that the age limit prescribed under Section 196(3)(a) of the Companies Act, 2013 can apply to a whole-time director appointed prior to the commencement of the Act. The arguments in this regard are twofold: 3.1 That the provisions of the Companies Act, 2013 are applicable for all purposes of company law. 26. The Respondent humbly argues that the provisions of the Companies Act, 2013 alone extend and are applicable to all situations that arise or may arise in the future under company law in India. No other law governs acts of companies. 27. The Companies Act, 2013 was brought into force with a view to replace the erstwhile Companies Act of 1956. This is the usual purpose of a new enactment. In the case of this legislation, this purpose has been unequivocally and unambiguously stated under Section 1(4)(a) of the 2013 Act, which reads as: “The provisions of this Act shall apply to – companies incorporated under this Act or under any previous company law.” 28. This makes it clear that this Act shall be applicable for all purposes even if the subject of the provisions, that is, a company incorporated under a previous Act. By virtue of this Section, all provisions of the 2013 Act will apply to all companies and there is no escape from obligations imposed by this act on all companies. 34 One of such obligations is the appointment and continuance of employment of managers, managing directors, and wholetime directors in accordance with the 2013 Act. 29. Therefore, in view of the above arguments, the Respondent submits that the Companies Act, 2013 is applicable to Goodenough Ltd., which was incorporated under the Companies Act, 1956. It thus becomes an obligation of Goodenough Ltd. to appoint and continue the employment of its managerial officials, including the Petitioner, in accordance with the new Act.

34

A. RAMAIYA, GUIDE TO THE COMPANIES ACT: PART 1 6 (18th ed. 2014).

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4th KIIT UNIVERSITY NATIONAL MOOT COURT COMPETITION, 2016 3.2 That the Section 196(3)(a) being a disqualification will result in immediate cessation of employment of a whole-time director appointed prior to the commencement of the Companies Act, 2013. 30. The Respondent states before the Honourable Court that the disqualifying Section 196(3)(a) will result in the immediate cessation of employment of a whole-time director, managing director, or a manager appointed under the Companies Act, 1956. 31. Section 196(3) contains situations where a whole-time director will be removed from his post. These disqualifications operate immediately and result in an automatic vacancy of the office, like disqualifications for other purpose35. The cessation of employment can in no case be deferred to the end of appointee’s term. All disqualifications mentioned under Section 196(3) of the Companies Act, 2013 are to operate similarly and are not to be distinguished from eachother. The disqualifications contained under clauses (b), (c), and (d) of this Section were contained in Section 267 of the erstwhile Companies Act, 1956 before the enactment of the present Act. These disqualifications prevented a person from continuing in his appointment the moment he incurred them. The disqualification shall take effect from the moment any of the conditions are met and are not mere requirements to be met at the stage of appointment. The manner in which Section 267 is worded, mandates denial of continuation to the appointment or employment as managing or whole-time director, if the individual is disqualified due to any of these conditions,36 notwithstanding when or under what circumstances was he appointed. 32. This has been reiterated by the Honourable Supreme Court in Rama Narang v. Ramesh Narang37, wherein the MD of the concerned company was convicted and sentenced by the Additional Sessions Court, Delhi. The Apex Court held that the section not only prohibits appointment or employment after conviction but also exercises discontinuance of appointment or employment made prior to his conviction. This, the Court observed, was the clear mandate of Section 267. It is thus evident that this Section resulted in immediate cessation of the appointee’s term. 33. Section 196(3) of the 2013 Act, is the successor of Section 267. It has a same wording and is largely similar with the exception of the addition of disqualifications faced by persons below 21 years and above 70 years of age. This gives rise to the conclusion that the 35

Consumer Education & Research Society v. Union of India & Ors., (2009) 9 SCC 648, at ¶ 29; Lily Thomas v. Union of India, (2013) 7 SCC 653, at ¶ 3 & 17. 36 Shankar S/o Bhagwan Ambhore v. Vice Chancellor, Dr. Babasaheb Ambedkar Marathwada University, Aurangabad & Ors., (2006) 3 MhLJ 835, at ¶ 6. 37 (1995) 2 SCC 513, at ¶ 10.

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4th KIIT UNIVERSITY NATIONAL MOOT COURT COMPETITION, 2016 operation of the predecessor and the successor will be the same; the disqualifications will result into immediate removal of the whole-time director from his position. This plain conclusion is further cemented by the fact that the 2013 enactment does not differentiate between appointments made before and after the commencement of the Act on 1st April 2013. 34. Differentiating between whole-time directors appointed prior to and after the commencement of the 2013 Act will result in not only undermining the intent of the legislature, but also denying the provision its plain meaning by addition of words. The cardinal rule of construction of law is to give primacy to the mens or sentential legis, that is, the intention of its maker – the Legislature38. To gauge this intention, effect must be given to the plain meaning, irrespective of consequences39 and is must be deduced from the language used.40 A construction which requires for its support addition of words has to be avoided41. Distinguishing between whole-time directors appointed prior to 1st April 2013 and those appointed hence is clearly not the legislative intent. The provision does not itself differentiate between the two, and construing it so can not be possible without the addition of the said words – a proposition against the established principles of interpretation. In the present case, if a distinction is made between a whole-time director appointed before and after the commencement of the 2013 Act, the disqualification of age applying to only individuals appointed hence, it will undermine the intent of the Legislature. 35. In the recent case of Sridhar Sundarajan v. Ultramarine & Pigments and Anr.42, a Division Bench of the Bombay High Court decided the issue of disqualification of a MD who was appointed before the commencement of the Act when he was below 70 years of age, and subsequently attained the age of 70 years. It was observed, “the language of section 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 the Section does not make any distinction between the Managing Directors who have been appointed before and after commencement. The moment therefore Managing Director attains the age of 70 years, disqualification mentioned in Section 196(3)(a) would operate immediately. It is not open to alter its clear terms by a process of interpretation for excluding the Managing Directors 38

SALMOND, JURISPRUDENCE 152 (Glanville Williams et al eds., 11th ed. (reprint) 1957). See also Competition Commission of India v. Steel Authority of India Ltd., (2010) 10 SCC 744, at ¶ 52. 39 Supra note 26, at 50. 40 MAXWELL, THE INTERPRETATION OF STATUTES 29 (P. St. J. Langan ed., 12th ed. 2003). 41 State of Maharashtra v. Nanded Prabhani Operator Sangh, AIR 2000 SC 725, at 727; Grasim Industries Ltd. v. Collector of Customs, AIR 2002 SC 1706, at 1709. 42 2016 (4) MhLJ 590, at ¶ 17.

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4th KIIT UNIVERSITY NATIONAL MOOT COURT COMPETITION, 2016 appointed prior to commencement from the purview of prohibition contained in Section 196(3).” It was also held that on account of operation of the Act, the disqualification, whenever incurred, would automatically result in the cessation of employment43. Similar is the present case, wherein the Petitioner was validly appointed under the 1956 Act. Subsequent to the commencement of the 2013 Act, he attained 70 years of age and thus inviting the said disqualification. His appointment must thus have come to an end. 36. Therefore, it is submitted that the disqualifying age limit of 70 years will apply immediately and automatically to all whole-time directors, regardless of the time of appointment. It applies to all appointments made before and after the enforcement of the Companies Act. Thus, the Petitioner though validly appointed prior to 1st April 2013 under the provisions of the erstwhile Companies Act, 195644, will stand disqualified from the date he attains the age of 70 years.

43 44

Id., at ¶ 25. Moot Problem, at ¶ 2.

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4th KIIT UNIVERSITY NATIONAL MOOT COURT COMPETITION, 2016 CONTENTION 4: THAT THE WORD “CONTINUE” USED IN SECTION 193(3) OUGHT NOT TO BE CONSTRUED IN CONTEXT OF 196(3) (b), (c) AND (d) ALONE AND MUST BE CONSTRUED IN CONTEXT OF 196(3) (a) AS WELL. 37. It is humbly contended before the Honourable Supreme Court that “continued” used in Section 196(3) ought to be construed with respect to all clauses contained – Section 196(3)(a), (b), (c), and (d). The arguments in this regard are two-fold: 4.1 That Section 196(3)(a) cannot be construed in isolation to Sections 196(3)(b), (c) and (d). 38. The Respondent humbly states that Section 196(3)(a) has to be interpreted in accordance with the rest of the clauses, and its construction cannot disregard Sections 196(3)(b), (c), and (d) of the Companies Act, 2013. 39. It is a settled45 and elementary46 principle of interpretation that all provisions must be read as a whole, not only among themselves but also with respect to the entire statute 47. The ideal interpretation will look at what precedes and at what succeeds, not merely at the clause itself.48 The whole section must be construed in a way that each part throws light on the others.49 Further it is also settled that a statute is to be construed as a whole and that no words in a statute are presumed to be superfluous. 50 In the present case, if the word “continue” is construed to not apply to the age disqualification contained in Section 196(3)(a), this rule shall be disregarded. Not only will clause (a) not be read in context of the other clauses, but it will also result in rendering the word “continue” superfluous with regards to clause (a). Such a provision must be avoided to uphold the settled position principle of interpretation. 40. Regard must also be given to the historical background of the provision. When language is borrowed from earlier legislation, context must encompass the entire historical background of the statutory provision.51 In the present case, clause (a) of the provision was originally an eligibility criterion under the erstwhile Companies Act, 1956. The rest of the clauses were disqualifications that were construed with regard to the word “continue” under Section 267 45

Poppatlal Shah v. State of Madras, AIR 1953 SC 274, at 276. AG v. HRH Prince Ernest Augustus, (1957) 1 All ER 49, at 55. 47 C. Ram Prakash & Anr. v. Power Grid Corporation Of India & Anr., (2011) 8 MLJ 593, at ¶ 20. 48 National Insurance Co. Ltd. v. Anjana Shyam, (2007) 7 SCC 445, ¶17. 49 Dwarka Prasad v. Dwarka Das Saraf, 1976 SCR (1) 277, at ¶. 50 Tribhuban Parkash Nayyar v. Union of India, 1970 SCR (2) 732, at 740. 51 Supra note 26, at 39. See also R. v. Oxford, Shire County Council, (1999) 3 All ER 385, at 390. 46

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4th KIIT UNIVERSITY NATIONAL MOOT COURT COMPETITION, 2016 of the 1956 Act. With the enactment of the 2013 Act, the age criteria was merged with the rest of Section 267 (of the 1956 Act), with no change whatsoever in its applicability. Since its merger was absolute, the age criteria previously, contained as an eligibility condition, must now be construed in a manner similar to the interpretation of the other clauses before the commencement of the 2013 Act and not separately. The word “continue” appearing in both – Section 267 of the 1956 Act and Section 196(3) of the 2013 Act – must be thus construed with respect to all clauses of Section 196(3). 41. In dealing with the language of the legislation the words of a statute must prima facie be given their ordinary meaning.52 Statutes are also presumed to use words and their effects in their popular rather than narrowly legal sense; loquitur ut vulgus, that is according to common understanding. 53 In the present case, the common understanding will be construction of the word “continue” for all clauses contained in Section 196(3). To read clause (a) in isolation with the other clauses will require a twisted and confusing reasoning, which must be avoided. The simple, common, and straightforward interpretation will lead to the construction of all clauses similarly and not in isolation to eachother, or as a group. 42. It is therefore concluded that clause (a) of Section 196(3), must be construed together with the rest of the clauses of Section 196(3), and not in isolation to each other, and its true meaning be gauged with respect to the other clauses and not in accordance with the provisions of the erstwhile Companies Act, 1956. 4.2 That all clauses of Section 196(3) operate similarly. 43. It is humbly submitted before the Honourable Court that all clauses under Section 196(3) operate similarly and have the same effect, since the word “continue” applies to all said clauses equally. 44. All clauses of Section 196(3) are disqualifications. They result in the immediate cessation of the managing director’s, the manager’s, or the whole-time director’s appointment. Thus, if the appointee is under 21 years of age or has attained 70 years of age 54 , is an undischarged insolvent, has failed to make payment to the creditors 55 , or has been convicted56, he cannot continue in his appointment. All the said clauses have been judicially 52

Supra note 26, at 86. Supra note 36, at 81. See also M.N. Dastur & Co. Ltd. & Anr. v. Union of India & Ors., 2006 (4) STR 3, at ¶ 6; Ansal Housing & Construction Ltd. v. Commissioner of Income Tax, at ¶ 5. 54 Sridhar Sundarajan v. Ultramarine & Pigments and Anr., 2016 (4) MhLJ 590, at ¶ 25. 55 Ashok Mittal v. Mr. Ram Parshotam Mittal & Ors., (2008) 2 CompLJ 193 Del., at ¶ 4. 56 Kerala Ceramics and Clays Staff & Ors. v. State Of Kerala & Ors., Writ Petition (Civil). No. 20749 of 2011., at ¶ 6; Rama Narang v. Ramesh Narang, (1995) 2 SCC 513, at ¶ 10. 53

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4th KIIT UNIVERSITY NATIONAL MOOT COURT COMPETITION, 2016 held to cause cessation of employment of the appointee meeting the criteria. This is because of the interpretation of the word “continue” with respect to all clauses, and not making clause (a) an exception. 45. Clause (a) is not an exception to the word “continue”. The proviso allowing a special resolution to validate the appointment of persons above the age of 70 years, attached to the clause, does not make it an exception. A proviso has no repercussion on the interpretation of the enacting portion of the section so as to exclude something by implication.57 It cannot expand or limit the principle provision.58 In the case of Dwarka Prasad v. Dwarka Das Saraf59, the Apex Court observed that a proviso must be limited to the subject matter of the enacting clause. It is a settled rule of construction that a proviso must prima facie be read and considered in relation to the principal matter to which it is a proviso. It is not a separate or independent enactment. Thus, in the present case, it cannot be claimed that Section 196(3)(a) shall not be construed with respect to the word “continue” despite the presence of the proviso, since the proviso is only meant to aid the whole provision which falls with the construction of “continue”. Further, the Standing Committee Report on the Companies Bill 60 , warns against the excessive use of the proviso when it says, “with regard to extension of age for the appointment of Managing Directors beyond seventy years by special resolution as proposed in the Bill, the Committee are of the view that considering the need for greater professionalization of companies and nurturing of younger talent in the management, this may be resorted to only in extraordinary circumstances.” This clarifies that the Parliament intended Section 196(3)(a) to operate in like fashion with the other clauses, despite the proviso attached. 46. This view has been reiterated in Sridhar Sundarajan v. Ultramarine & Pigments and Anr.61 wherein it was held that the disqualifications which are mentioned in clauses (a) to (d) cannot be fractured or split or dissected to mean that disqualifications (b) to (d) would operate instantly but clause (a), that is, appointment or continuation of Managing Director beyond the age of 70 years would operate in a different manner than the remaining clauses (b) to (d). 47. In view of the above arguments, it is concluded that the word “continue” must be construed with respect to all clauses of Section 196(3). All clauses have to be interpreted in the light 57

CIT, Mysore v. Indo Mercantile Bank Ltd., AIR 1959 SC 713, at 718. Maulvi Hussain Haji Abraham Umraji v. State of Gujarat, (2004) 6 SCC 672, at 679. 59 AIR 1975 SC 1758, at ¶ 18. 60 21st Report of the Standing Committee on Finance, 2009-10 (15th Lok Sabha, August 2010). 61 2016 (4) MhLJ 590, at ¶ 15. 58

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4th KIIT UNIVERSITY NATIONAL MOOT COURT COMPETITION, 2016 of eachother, and not in isolation to eachother. All clauses of Section 196(3) operate similarly and result in immediate disqualification. The word “continue”, therefore applies to all provisions.

15



PRAYER

Wherefore, in the light of the issues raised, arguments advanced and authorities cited, it is humbly requested that the Honourable Supreme Court may be pleased to adjudge and declare that: 1. That the issue raised by the Petitioner challenging the jurisdiction of the High Court of the State of Winchester must not be treated as a preliminary issue 2. That the Petitioner has been disqualified under Section 196(3)(a) of the Companies Act, 2013 and therefore the interim order restraining the Petitioner from continuing as a Whole-Time Director of Goodenough Ltd. passed by the High Court of the State of Winchester is valid and good in law. And pass any such order, judgment or direction that the Honourable Court deems fit and proper in the interest of justice. For this act of kindness, the Counsels for the Respondent as in duty bound shall forever pray.

ALL OF WHICH IS RESPECTFULLY SUBMITTED

_________________________

Sd/COUNSELS FOR THE RESPONDENT

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4th KIIT National Moot Court Competition 2016

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