Judgments
UNITECH Limited vs. Telangana State Industrial Infrastructure Corporation (TSIIC)1
“The presence of an arbitration clause within a contract between a state instrumentality and a private party does not act as an absolute bar to availing remedies under Article 226.”
In the case where it was argued that a remedy for the recovery of moneys arising out a contractual matter cannot be availed of under Article 226 of the Constitution.
The Hon’ble Supreme Court clarified that the recourse to the jurisdiction under Article 226 of the Constitution is not excluded altogether in a contractual matter. A public law remedy is available for enforcing legal rights subject to well-settled parameters.
The Hon’ble Court, however, made clear that though the presence of an arbitration clause does not oust the jurisdiction under Article 226 in all cases, it still needs to be decided from case to case as to whether recourse to a public law remedy can justifiably be invoked.
Naresh Dayal vs. Delhi Gymkhana Club Ltd2
“NCLT has no jurisdiction to decide cause of action over which it has no power under Companies Act.”
The case dealt with the allotting of a certain “green card holder” to the members of the Delhi Gymkhana Club, wherein permanent members of the club were allotted this card.
As per the AOA of the Company, there was no provision for the allocation of such cards, and therefore, the party approached the Court.
The respondents claimed that it was up to the NCLT to decide upon this matter, for it is bestowed with this jurisdiction as per §242 of the Companies Act.
The court held that since the present matter does not pertain to any aspect as provided under §242, i.e., any action of oppression or mismanagement, any prejudicial interests or a petition for winding up therefore, it was held that the NCLT does not have jurisdiction to decide over matter for which it does not have jurisdiction under Companies Act.
Ramesh Kymal vs. M/s Siemens Gamesa Renewable Power Pvt Ltd3
“Retrospective application of S.10A of the Insolvency and Bankruptcy Code”
A question of law pertaining to the application of §10A of the Insolvency and Bankruptcy Code was raised in this matter.
It was contended that §10A was inserted by the way of an amendment and was restricted to the initiation of CIRP’s for any defaults occurring on and after 25th March, 2020, owing to the COVID-19 pandemic.
The appellants contested that the applicability of the provision is prospective in nature, with special reference to the language of the section being “shall be filed” and “shall ever filed”. The respondents contested this contention by claiming that this construction of the section vitiates the purpose of the legislature.
The Hon’ble Supreme Court held that, the purpose, object and the intent of the legislature has to be duly taken into consideration w.r.t. such enactment and should be looked into, apart from the language of the statute. Therefore, the appeal was dismissed.
Legislations
Implications of Union Budget on Companies.
a. |
Decriminalization of Limited Liability Partnership Act, 2008 |
b. |
FDI in the insurance sector was increased from 49% to 74%. |
c. |
Proposal to consolidate the provisions of SEBI Act, 1992, Depositories Act, 1996, Securities Contracts (Regulation) Act, 1956 and Government Securities Act, 2007 into a rationalized single Securities |
d. |
Markets Code. |
e. |
Startup incentives were provided by allowing OPCs to grow without any restrictions on the paid up capital and turnover, allowing their conversion into any other type of company at any time, reducing the residency limit for an Indian citizen to set up an OPC from 182 days to 120 days and also allow Non Resident. |
f. |
The amendments proposed to OPC are intended to benefit NRIs to incorporate OPCs in India. |
g. |
The definition under the Companies Act, 2013 for ‘Small Companies’ was proposed to be amended by increasing their thresholds for paid up capital from “not exceeding `50 Lakh” to “not exceeding `2 Crore” and turnover from “not exceeding `2 Crore” to “not exceeding 20 Crore”. |
Companies (Incorporation) Second Amendment Rules, 20214
The changes that have been brought about are with respect to the ‘One Person Company (OPC)”.
These amendments were made to the respective rules of Companies (Incorporation) Rule, 2014:
Rule 3: The eligibility criteria for directors was revised to include non-residents. Further, the number of days of residence for Resident Indians was reduced to 120 days.
Rule 3(7): This rule which provided for the criteria for conversion from OPC to any other form of company; has now been omitted.
Rule 6: Provided for the conversion procedure and compliance requirement; which has been completely omitted. The new rules provide as follows:
a. |
MOA and AOA can be altered by passing a resolution as per § 122(3) for conversion of OPC |
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b. |
OPC may convert into a Private or Public Company, other than a Section 8 company by fulfilling the below requirements- |
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c. |
Form, Fees and Documents required for filing Conversion- |
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After completion of all requirements, ROC shall approve form and Issue New Certificate of Incorporation |
Companies (Specification of definitions details) Second Amendment Rules, 20215
Under this amendment the definition of the term ‘limited company’ has been amended. According to Section 2(52) of the Companies Act, a "listed company" means a company which has any of its securities listed on any recognized stock exchange. The amendment to the Act in the month of January has added a proviso to the section which states that “provided that such class of companies, which have listed or intend to list such class of securities, as may be prescribed in consultation with the Securities and Exchange Board, shall not be considered as listed companies”.
By virtue of the amendment Rule 2A has been added which is as follows:
‘The following companies shall not be considered as listed companies:
a. |
Public co. which have not listed their equity shares on a recognized stock exchange but have listed their – |
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Private companies which have listed their non-convertible debt securities on private placement basis on a recognized stock exchange in terms of SEBI (Issue and Listing of Debt Securities) Reg., 2008; |
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c. |
Public co. which have not listed their equity shares on a recognized stock exchange but whose equity shares are listed on a stock exchange in a jurisdiction as specified in sub-section (3) of section 23 of the Companies Act. |
Companies (Specification of Definitions Details) Rules, 2014
The amendment brought changes to the definition of ‘small company’ under S. 85 (i) and (ii) and now provides that paid up capital and turnover of the small company shall not exceed rupees two crores and rupees twenty crores respectively.
Companies (Compromises, Arrangements and Amalgamations) Rules, 2016
An amendment has been brought to include certain other classes under the scheme of arrangement under Section 233 of Companies Act, 2013.
Now the scheme of fast-track merger can be entered into by the following companies:
a. |
two or more small companies; |
b. |
holding company and its wholly-owned subsidiary company; |
c. |
two or more start-up companies; |
d. |
one or more start-up company with one or more small company. |
Previously, a scheme of arrangement could be entered only between two or more small companies or between a holding company and its wholly-owned subsidiary company.
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