!"#!"#
P410 BEFORE THE HON’BLE SUPREME COURT OF ISLANDIA Civil Appeal No.____/2016 [UNDER ARTICLE 136 OF THE CONSTITUTION OF ISLANDIA] IN THE MATTER OF
Mr. James McLinden……………………..……………………..APPELLANT
Vs.
Mr. Christopher Ryland ………………..…………………………RESPONDENT
ON SUBMISSION MEMORIAL ON BEHALF OF THE APPELLANT
TH
THE 4 KIIT UNIVERSITY NATIONAL MOOT COURT COMPETITION,2016 TABLE OF CONTENTS INDEX OF AUTHORITIES AUTHORITIES ................................................ ........................................................ 3 ABBREVIATION ABBREVIATIONS S USED ........................................................................................................... ................................................... ........................................................ 8 STATEMENT STATEMENT OF JURISDICTION JURISDICTION...................................................... ........................................................................................... ..................................... 9 STATEMENT STATEMENT OF FACTS................................................... ...................................................... 10 STATEMENT STATEMENT OF ISSUES ................................................................................................ ........ 11 SUMMARY OF ARGUMENTS ARGUMENTS................................................... ............................................. 12 ARGUMENTS ARGUMENTS ADVANCED ADVANCED............................................... ...................................................... 13 1. Whether the issue of limitation was required to be heard as a preliminary issue in terms of S. 9A of CPC? ..................................................... ........................................................................................................... ...................................................... 13
A. The suit is barred by Limitation........................................................................................ Limitation........................................................................................ 13 B. Mandate of S.9A of CPC, 1908. ....................................................................................... 13 C. Plea of limitation falls within the ambit of jurisdiction. ................................................... 14 2. Whether the age limit of 70 years under S. 196(3) (a) of the Companies Act, 2013 can apply to a WTD validly appointed prior to 01. 04. 2013? ......................... .......................... 15
A. Vested rights have no retrospective application. .............................................................. 15 B. Operation of S.6 of the General General Clauses Act, 1897. ................................................ ........ 17 C. Proviso is only Directory & not Mandatory ..................................................................... 18 3. Whether the word ‘continue’ used in S. 196 (3) ought to be construed in context of 196(3) (b), (c), (d) alone and not 196 (3) (a)?........................................................ ......................................................................... ................. 19
A. The Principle of Reddendo Singula Singulis. .................................................. ................. 19 B. The rule of Purposive Construction. Con struction. ....................................................... ................................................................................. .......................... 21 C. Consolidating Act. ............................................................................................................ 23 4. Whether S.196(3)(a) of the 2013 Act operates as an immediate disqualification or as an Eligibilty Condition and whether there is any distinction between the two ? ................... 24
A. Interpretation of the proviso to S.196 (3) (a) ................................................... ................. 24 B. Mid Tenure Cessation untenable ...................................................................................... 26 PRAYER.................................................... ............................................................................................................ .................................................................................. .......................... 28
MEMORIAL ON BEHALF OF APPELLANT %
TH
THE 4 KIIT UNIVERSITY NATIONAL MOOT COURT COMPETITION,2016
INDEX OF AUTHORITIES
INDIAN CASES
A.L.Kalra v. The Project & Equipment Corp. (P) Ltd., 1984 AIR SC 1361. ............................... 27 Andhra Pradesh State Road Transport Corporation v. The State Transport Appellate Tribunal & Ors., II (2001)
ACC 760......................................................................................................... 760......................................................................................................... 23
Bansidhar v. State of Rajasthan, (1989) 2 SCC 557. .................................................................... 17 Bharat Hari Singhania v. Commissioner of Wealth-tax (Central), 1994 (1) SCALE 644............ 644............ 18 Chandavarkar Sita Ratna Rao v. Ashalata S.Guram, AIR 1987 SC 117. ..................................... 12 Commissioner of Income Tax (CENTRAL)-I, New Delhi v. Vatika To wnship (P) Ltd., (2015) 1 SCC 1 ........................................................................................................................................ 16 Commissioner of Income Tax v. Shah Sadiq and Sons, AIR 1987 SC 1217. .............................. 18 Controller of Estate Duty, Gujarat, Ahmedabad v. M.A Merchant, AIR 1989 SC 1710. ............ 16 Deepal Girishbhai Soni and Ors.v. United India Insurance Co. Ltd., 2004 (5) SCC 385. .......... 23 Dental Council of India & Anr. v. Hari Prakash & Ors, (2001) 8 SCC 61. 6 1. ................................. 26 Dilip Kumar Sharma v. State of MP, (1976) 1 SCC 560. ..................................................... ............................................................. ........ 16 Dr. Preeti Srivastava & Anr. v. State of o f M.P, AIR 1999 SC 2894. 289 4. .............................................. 28 Econ Antri Ltd. v. Rom Industries Ltd. & Anr. (2014) 11 SCC 769. ........................................... 20 Election Commission, India v. Saka Venkata Rao, AIR 1953 SC 210. ....................................... 19 Foreshore Cooperative Housing Society Limited v. Praveen D Desai, (2015) 6 SCC 412. ......... 13 Gammon India Ltd. (M/s) v. Spl. Chief Secretary, (2006) 3 SCC 354. ....................................... 17 H.C.Puttaswamy v. Hon’ble Chief Justice of Karnataka High Court, (1991) Supp (2) SCC 421.27 Himani Malhotra v. High Court of Delhi, (2008) 7 SCC 11. ....................................................... 29 Howrah Municipal Corp, & Others v. Ganges Gange s Rope Co. Ltd. & Others, (2004) (2004 ) 1 SCC 663. ...... 15 Indian Handicrafts Emporium & Ors v. Union Of India & Ors on 27 August, 2003. .................. 24 Indian Handicrafts Emporium v. Union of India, AIR 2003 SC 3240 ......................................... 22 Ishwar Singh Bindra v. State of Uttar Pradesh, AIR 1966 All 168. ............................................. 22 MEMORIAL ON BEHALF OF APPELLANT &
TH
THE 4 KIIT UNIVERSITY NATIONAL MOOT COURT COMPETITION,2016 ITW Signode India Ltd. v. CCE, (2004) 3 SCC 48. ..................................................................... 13 Jacob M. Puthuparambil v. Kerala Water Authority, (199 1) 1 SCC 28. ...................................... 28 Jawaharmal v. State of Rajasthan, AIR 1966 SC 764................................................................... 764................................................................... 17 K. Manjusree v. State of Andhra Pradesh, (2008)3 SCC 512; Lila Dhar v. State of Rajasthan, (1981)4 SCC 159. ....................................................... .............................................................................................................. ............................................................... ........ 29 Kamlesh Babu v. Lajpat Rai Sharma, (2008) 12 SCC 577. .................................................. ........ 13 Keshava Madhava Menon v. v . State of Bombay, 1951 AIR SC 128 .............................................. 15 Koteswar Vittal Kamath v. Rangapa Baliga & Co., (1969) 1 SCC 255. 25 5. ...................................... 20 Lila Dhar v. State of Rajasthan, (1981)4 SCC 159. ..................................................... ...................................................................... ................. 28 M Venugopal v. Divisional Manager, (1994) 2 SCC 323. ........................................................... 12 Madanlal Fakirchand Dudhadiya v. Shree Changdoo Sugar Mills Ltd., AIR 1962 1 962 SC 1543. ..... 18 Mahadeolal Kanodia v. Administrator General of WB, AIR 1960 SC 936. ........................ ........ 21 Molar Mal v. Kay Iron Works (P) Ltd., AIR 2000 SC 1261. ....................................................... 21 N.Balakrishnan v. M.Krishna Murthy, (1998) 7 SCC 123. .................................................. ........ 11 National Agricultural Co-operative Marketing Federation of India & Anr. v. Union of India et al., (2003) 5 SCC 23. .................................................. ....................................................... ............................................................... ........ 16 New India Assurance Co. Ltd. v. Nusli Neivelle Wadia & Another, 2007 (14) SCALE 556. ..... 22 P. Suseela & Ors. v University Grants Commission & Ors 2015 (3) SCALE 726. ..................... 15 Pandurang Dhondi Chougule v. Maruti Hari Jadhav, 1966 SC 153. ............................................ 13 Rajbala v. State of Haryana, (2016) 2 SCC 445. .......................................................................... 28 Ramdas Vithaldas Durbar v. Amerchand & Co., (1916) ILR 40 Bom 630, ................................. 24 S.Gopal Reddy v. State of Andhra Pradesh, AIR 1996 SC 2184. ................................................ 23 Shah Bhojraj Kuverji Oil Mills & Ginning Factory v. Subhash Chandra Yograj Sinha ,AIR 1961 SC 1596. .................................................................................................................................... 19 Shainda Hasan (Miss) v. State of U.P, (1990) 3 SCC 48.............................................................. 48.............................................................. 29 Shyam Sundar & Ors. v. Ram Kumar & Anr., (2001) 8 SCC S CC 24. ................................................ 16 Southern Petro chemical Industries Co. Ltd. v. Electricity Inspector and E.T.I.O ,AIR 2007 SC 1984. .......................................................................................................................................... 24 State of Gujarat v. Arvindkumar T. Tiwari,(2012) 9 SCC 545 .................................................... 28 State of Orissa v. M.A Tulloch & Co., AIR 1964 SC 1284.......................................................... 17 State of Punjab v. Gurudev Singh (1991) 4 SCC 1. ..................................................................... 11 MEMORIAL ON BEHALF OF APPELLANT '
TH
THE 4 KIIT UNIVERSITY NATIONAL MOOT COURT COMPETITION,2016 State of Punjab v. Mohar Singh , AIR 1955 SC 84. ..................................................................... 18 State of U.P v. Rafiquddin, (1987) Supp SCC 401. ..................................................... ...................................................................... ................. 28 State of Uttar Pradesh v. Babu Ram Upadhya, AIR 1961 SC 751. .............................................. 18 Takur Amar Singhji v. State of Rajasthan, AIR 1955 SC 504. .................................................... 24 Tara Dutta v. State of West Bengal, 79 CWN 996. ...................................................................... 27 The Executive Engineer En gineer vs M/S Sri Seetaram Ricemill, (2012) 2 SCC 108 ................................ 23 Thyssen Stahlunion GumbH v. Steel Authority of India, 1999 (48) DRJ 210 ............................. 25 Tirath Singh v. Bachittar Singh, 1955 SCR (2) 457. .................................................................... 23 Trimbak Damodhar Rajpurkar v. Assaram Hiraman Patil, 1962 Suppl. 1 SCR 700. ................... 16 Union of India v. Eider Electronics Industries Ltd. 58(1995) DLJ 29. ........................................ 29 V.M Salgaocar v. Board of Trustees of Port of Mormugao, (2005) 4 SCC 613. ......................... 11 Virendra Singh Hooda v. State of Haryana, AIR 2005 SC 137. ................................................... 15 Yogesh Yadav v. Union of India, (2013) 14 SCC 623. ................................................................ 28 Zile Singh v. State of Haryana & Ors., (2004) 8 SCC 1. ...................................................... .............................................................. ........ 16 TEXTBOOKS
American Jurisprudence 32A-588. ............................................................................................... 15 th
G. Granville Sharp et al., Maxwell’s Interpretation of Statutes 229 (10 ed., 1953). .................. 21 Halsbury, Laws of England 489 (4th ed., 1973). 197 3). ................................................. .......................... 23 Halsbury’s Laws of England 10-314. ........................................................................................... 15 Justice A.K. Yog, Interpretation of Statutes 256-257 (1st ed., 2009). ........................................... 18 Justice A.K. Yog, Interpretation of Statutes 258 (1st ed., 2009). 2 009). .................................................. 18 th
Justice G.P.Singh, Principles of Statutory Interpretation Interpretation 574 (14 ed., 2016). ........................... 20 Justice. G.P.Singh, Principles of Statutory Interpretation 373 (14th ed., 2014). ........................... 23 th
Peter Benson Maxwell et al., Maxwell’s Interpretation of Statutes 58 (11 ed., 1962 ................ 24 th
Rao.M.N & Amita Dhanda, N.S.Bindra’s Interpretation of Statutes 467 (10 ed., 2015). .......... 25 th
St. J.Langan, Maxwell’s Interpretation of Statutes 216 (12 ed., 1969). ..................................... 16 th
St. J.Langan, Maxwell’s Interpretation of Statutes 22-25 (12 ed., 1969); .................................. 24 th
St. J.Langan, Maxwell’s Interpretation of Statutes 228 (12 ed.,1969). ...................................... 21
MEMORIAL ON BEHALF OF APPELLANT (
TH
THE 4 KIIT UNIVERSITY NATIONAL MOOT COURT COMPETITION,2016 FOREIGN CASES
Bennett v. Minister for Public Works, (NSW) 7 CLR 371. .................................................. ........ 19 Bishop v. Deakin, [1936] 1 All ER 255 ..................................................... ........................................................................................ ................................... 23 Bourke v. Mutt School Board Elections (1894) 1 QB 925 ................................................... ........ 17 Dewhurst v. Fieldon, [1845] 135 ER 79. ................................................... ................................... 29 IRC v. Hinchy (1960) 1 All ER 505, p 512 (HL). ........................................................................ 28 M Neill v. Crommelin, [1858] 9 Ir CLR 61. ....................................................... ................................................................................. .......................... 22 Mangin v. Inland Revenue Commission, [1971] AC 739. ........................................................... 26 Mitchell v. Simpson (1890) 25 QBD 183 .................................................. ................................... 28 Quim v. Lowell Electric Light Corporation, 140 Mass 106. ................................................ ........ 24 Sandberg v. McDonald, 248 U.S. 185 195 (1918)........................................................................ (1918)........................................................................ 23 Thomas v. Hill, (1870 ) LR 5 CP 564. ........................................................ ........................................................................................... ................................... 29
BOOKS REFERRED th
1. Avtar Singh, Company Law (16 ed., 2016) st
2. Bakshi.P.M, Interpretation of Statutes (1 ed. Reprint, 2010) th
3. Banerjee.S.C, Law of Specific Relief (17 ed., 2015) th
4. Bharat’s Companies Act (15 ed., 2010) th
5. Bhattacharyya.T, The Interpretation of Statutes (4 ed., 2001) th
6. Dr.Chandratre.K.R, Guide to Company Directors (4 ed., 2003) th
7. Durga Das Basu, Commentary on the Constitution of India (8 ed., 2007) nd
8. Gandhi.B.M, Interpretation of Statutes (2 ed., 2014) 9. Justice Subramani.S.S, Law of Limitation and P rescription (14th ed., th
10. Justice Venkatachaliah, Basu’s Code of Civil Procedure (11 ed., 2015) 11. Justice Yog.A.K, Interpretation of Statutes (1st ed., 2009) 12. Kafaltiya.A.B, Interpretation of Statutes, Universal Law Publishing Co. nd
13. Mathur.D.N, Introduction to Interpretation of Statutes (2 ed., 2005) 14. Mitra.S.C&Kataria.R.P, Commentary on the General Clauses Act, 1 897 (2nd ed., 2015) nd
15. Mittal.D.P, Interpretation of Statutes (2 ed.) MEMORIAL ON BEHALF OF APPELLANT )
TH
THE 4 KIIT UNIVERSITY NATIONAL MOOT COURT COMPETITION,2016 th
16. Ramaiya’s Guide to the Companies Act, 2013 (18 ed., 2015) th
17. Rao.M.N&AmitaDhanda, N.S.Bindhra’s, Interpretation of Statutes (10 ed., 2015) th
18. Saharay.H.K&Saharay.M.S, Goyle’s Supreme Court Guide to Words & Phrases (4 ed., 2005) th
19. Singh.G.P, Principles of Statutory Interpretation (12 ed., 2010) th
20. St. Langan.J, Maxwell on Interpretation of S tatutes (12 ed., 1969) 21. Takwani.C.K, Civil Procedure with Limitation Act (7th ed., 1963) th
22. Vepa.P.Sarathi, Interpretation of Statutes (5 ed., 2013)
LEGAL DATABASES
1. All India Reporter 2. Manupatra 3. SCC Online
STATUTES REFERRED
1. The Code of Civil Procedure, 1908 2. The Companies Act, 1956 3. The Companies Act, 2013 4. The Constitution of India, 1950 5. The General Clauses Act, 1897 6. The Limitation Act, 1963 7. The Specific Relief Act, 1963
LEXICONS REFERRED rd
1. Justice L.P.Singh & Majumdar.P.K, Judicial Dictionary (3 ed., Reprint, 2010) th
2. P. Ramanatha Aiyer’s Concise Law Dictionary (5 ed., 2014)
MEMORIAL ON BEHALF OF APPELLANT *
TH
THE 4 KIIT UNIVERSITY NATIONAL MOOT COURT COMPETITION,2016 ABBREVIATIONS USED
¶
Paragraph
(P) Ltd.
Private Limited
&
And
AIR
All India Reporter
Anr.
Another
Art.
Article
Bom.
Bombay
Co.
Company
Corp.
Corporation
Doc.
Document
ed.
Edition
et al.
And others
Ker.
Kerala
Ors.
Others
p.
Page no.
pp.
Pages
Raj.
Rajasthan
SC
Supreme Court
SCC
Supreme Court Cases
S.
Section
Spl.
Special
Suppl.
Supplementary
U.K
United Kingdom
U.S
United States
v.
Versus
Vol.
Volume
WTD
Whole Time Director MEMORIAL ON BEHALF OF APPELLANT +
TH
THE 4 KIIT UNIVERSITY NATIONAL MOOT COURT COMPETITION,2016
STATEMENT OF JURISDICTION
The appellant has filed the Special Leave Petition which is now converted as a Civil Appeal challenging the order and decretal order passed by the Division Bench of the High Court of Winchester, confirming the order of injunction granted by the learned Single Judge of the High Court restraining the appellant from continuing as Whole Time Director of Goodenough Ltd., pending disposal of the Suit. This court has Jurisdiction to entertain e ntertain the appeal under Art 136 of the Constitution of Islandia.
MEMORIAL ON BEHALF OF APPELLANT ,
TH
THE 4 KIIT UNIVERSITY NATIONAL MOOT COURT COMPETITION,2016
STATEMENT OF FACTS
•
Goodenough Limited is a public limited company. Mr.James McLinden was appointed as a whole time director for a period of 5 years, as per the requirements of the Companies Act 1956.
•
st
On 1 April, 2013 , the the Companies Act 2013 was passed and S.196 (3)(a) of the Act provided that no company shall appoint or continue the employment of a person who has attained the age of 70 years.
•
th
th
On 15 April 2013, Mr.James McLinden attained the age of 70. On 12 May 2016, Mr.Christopher Ryland, a shareholder of the company filed a suit in the High Court of Winchester challenging the continuation of Mr.James Mr.James McLinden as whole time director, along with a Notice of Motion seeking urgent interim relief restraining him from continuing and exercising powers as WTD.
•
In response to the Notice of Motion, Mr.James contended that by virtue of Section 9A of CPC, his claim of the suit being barred under the Limitation Act should be heard as a preliminary issue.
•
The learned Single Judge ruled in favour of Mr.Christopher Ryland and the order was challenged by Mr. James McLinden in an appeal before the Division Bench of the High Court of Winchester.The Division Bench upheld the order of the Single Judge and dismissed the appeal.
•
Mr. James McLinden thus, has filed a Special Leave Petition before the Supreme Court, for which leave has been granted.
MEMORIAL ON BEHALF OF APPELLANT -.
TH
THE 4 KIIT UNIVERSITY NATIONAL MOOT COURT COMPETITION,2016 STATEMENT OF ISSUES
ISSUE 1: WHETHER THE ISSUE OF LIMITATION WAS REQUIRED TO BE
HEARD AS A PRELIMINARY ISSUE IN TERMS OF S.9A of CODE OF CIVIL PROCEDURE? ISSUE 2: WHETHER THE AGE LIMIT OF 70 YEARS UNDER S. 196(3)(a) OF THE
COMPANIES ACT 2013, CAN APPLY TO A WTD VALIDLY APPOINTED PRIOR TO 01. 04. 2013? ISSUE 3: WHETHER THE WORD ‘CONTINUE’ USED IN S. 196(3) OUGHT TO BE
CONSTRUED IN CONTEXT OF S. 196(3) (b), (c), (d) ALONE AND NOT 196(3) (a)? ISSUE 4: WHETHER S.196 (3) (a) OF THE 2013 ACT OPERATES AS AN
IMMEDIATE
DISQUALIFICATION
ON
THE
APPOINTMENT
AND
CONTINUATION OF A PERSON AS WTD OR WHETHER IT IS AN ELIGIBILITY CONDITION WHICH ONLY APPLIES AT THE TIME OF APPOINTMENT AND WHETHER THERE IS ANY DISTINCTION BETWEEN THE TWO?
MEMORIAL ON BEHALF OF APPELLANT --
TH
THE 4 KIIT UNIVERSITY NATIONAL MOOT COURT COMPETITION,2016 SUMMARY OF ARGUMENTS
ISSUE-1: THE ISSUE OF LIMITATION WAS REQUIRED TO BE HEARD AS A PRELIMINARY ISSUE IN TERMS OF S.9A of CPC.
The mandate of S.9A of CPC requires that the issue of limitation be heard as a preliminary issue. There are innumerable precedents that have brought in the concept of ‘limitation’ within the ambit of jurisdiction. Moreover, The suit is barred by virtue of S.3 r/w Art.58 of Schedule as per Limitation Act, 1963.
ISSUE-2: THE AGE LIMIT OF 70 YEARS UNDER S. 196(3)(a) OF THE COMPANIES ACT 2013, CANNOT APPLY TO A WTD,VALIDLY APPOINTED PRIOR TO 01. 04. 2013.
Retrospective operation of statutes can never be a subject matter of presumption. The right to the Office of WTD, being a vested right conferred on Mr. McLinden cannot be abrogated by retrospective operation on account of the operation of S.6 of the General Clauses Act, 1897.
ISSUE-3:THE WORD ‘CONTINUE’ USED IN S.196(3) OUGHT TO BE CONSTRUED IN CONTEXT OF 196(3) (b), (c), (d) ALONE AND NOT 196(3) (a).
The rule of purposive construction and principle of Reddendo Singula Singulis needs to be applied to interpret the word ‘continue’ which applies only to clauses (b), (c) and (d) of S.196. Adding to this, the fact that the Companies Act, 2013 is a Consolidating Act, requires reference to be made to relevant provisions of Companies Act, 1956.
ISSUE-4: S.196 (3) (a) OF THE 2013 ACT IS AN ELIGIBILITY CONDITION WHICH ONLY APPLIES AT THE TIME OF APPOINTMENT AND THERE IS A DISTINCTION BETWEEN THE TWO.
There is a fundamental difference between an eligibility criterion and a disqualification condition; S.196(3)(a) is not a disqualification condition. Hence, mid tenure cessation of Mr. McLinden is untenable.
MEMORIAL ON BEHALF OF APPELLANT -%
TH
THE 4 KIIT UNIVERSITY NATIONAL MOOT COURT COMPETITION,2016 ARGUMENTS ADVANCED
1. Whether the issue of limitation was required to be heard as a preliminary issue in terms of S. 9A of CPC?
It is submitted that the issue of limitation should be heard as a preliminary issue because: A. The suit is barred by virtue of S.3 r/w Art.58 of the Schedule as per Limitation Act, 1963; B.
Mandate of S.9A of CPC, 1908; C. Decisions of the Apex Court. A. The suit is barred by Limitation.
i.
The statute of Limitation is founded on public policy that an unlimited and perpetual threat of litigation leads to confusion and disorder and creates insecurity and uncertainty. Rules of limitation are meant to see that parties do not resort to dilatory tactics but seek 1
remedy for the redress of the legal injury so suffered. It is enshrined in the maxim , interest reipublicaeut sit finnislitum which means that it is for the general welfare that a period fixed for litigation. Vigilantibusnon dormientibus jura subveniunt ; the law assists the vigilant and not those who sleep over their rights, is relevant here. Art.58 inserted in the Schedule to the Limitation Act , 1963 distinctly specifies the period of limitation for declaratory suits, to be three years; the time period being calculated from the date on which the right to sue first sue first accrues. accrues. ii.
The facts indicate that Mr. McLinden attained the age of 70 on 15th April 20132. However Mr. Ryland instituted the suit seeking declaratory relief under S.34 of Specific Relief Act, th
1963, only on 12 May, 2016 when clearly the limitation period had long-lapsed. Thus, considering this legal plea, the suit filed by Mr.Ryland is liable to be dismissed. B. Mandate of S.9A of CPC, 1908.
iii.
S.9A of CPC, 1908 is an amendment inserted by the state of Winchester, being competent to do so by virtue of Entry 13 of List III in Schedule 7 of the Constitution of
1
N.Balakrishnan v. M.Krishna Murthy, ( 1998) 7 SCC 123. ¶4 of moot proposition.
2
MEMORIAL ON BEHALF OF APPELLANT -&
TH
THE 4 KIIT UNIVERSITY NATIONAL MOOT COURT COMPETITION,2016 the Republic of Islandia. The Statement of Objects and Reasons reveals that this amendment was brought in to counter the grave abuse done because of the practice of 3
granting injunctions, without going into the qu estion of jurisdiction, even though raised . •
iv.
Non Obstante Clause
Non obstante clause is a Latin word meaning ‘notwithstanding’. A clause beginning with the expression “notwithstanding anything contained in this Act” is appended to a section in the beginning with a view to give the enacting part of the section in case of conflict, an overriding effect over everything else. When the non obstante clause not only overrides the provision of the Act but also the provision of any other law/statute for the time being 4
in force, such a non obstante clause must be given its full effect. v.
The non obstante clause of S.9A gives it precedence over any other conflicting provision in the Code or any other existing legislation. In the instant case, it is the petitioner’s contention that the suit is barred by limitation. The natural implication is that by virtue of S.3 of Limitation Act 1963, the jurisdiction of the Court would be ousted. Therefore, there is an imperative issue pertaining to jurisdiction, which needs to be pondered upon, as a preliminary issue, as per the mandate of S.9A of CPC, 1908. In addition to this, Order 7 Rule 11 (d) of the Civil Procedure Code casts a mandate upon the court to reject a plaint where the suit appears from the statement to be barred by any law, in this case, the law of limitation. C. Plea of limitation falls within the ambit of jurisdiction.
vi.
Pandurang Dhondi Chougule A Constitution Bench of this Hon’ble Court in the case of Pandurang 5
v. Maruti Hari Jadhav , while dealing with the question of jurisdiction, observed that a
plea of limitation is a plea of law which concerns the jurisdiction of the court which tries 6 Sharma ,when the proceeding. In the case of Kamlesh Babu vs. Lajpat Rai Sharma ,when the trial court
dismissed the suit on issues other than the issue of limitation, the Bench held: “The “The reasoning behind the said proposition is that certain questions relating to the jurisdiction of a court, including limitation, goes to the very root of the court’s jurisdiction to 3
Statement of Objects and reasons of S. 9A of CPC, 1908. M Venugopal v. Divisional Manager, (1994) 2 SCC 323. 5 PandurangDhondiChougule v. MarutiHariJadhav, 1966 SC 153. 6 KamleshBabu v. LajpatRai Sharma, (2008) 12 SCC 577. 4
MEMORIAL ON BEHALF OF APPELLANT -'
TH
THE 4 KIIT UNIVERSITY NATIONAL MOOT COURT COMPETITION,2016 entertain and decide a matter, as otherwise, the decision rendered without jurisdiction will be a nullity. nullity. In Foreshore Cooperative Housing Society Limited v Praveen D 7
Desai , the Hon’ble Supreme Court dealt with the question of law whether ‘an objection
to jurisdiction in Section 9A of CPC would include objection regarding limitation and held in the affirmative. •
vii.
Jurisprudential meaning of ‘jurisdiction ’
By ‘jurisdiction’ is meant the authority which a court has to decide matters that are litigated before it or to take cognisance of matters presented in a formal way for its decision. A limitation may be either as to the kind and nature of the claims and matters of which the particular court has cognisance, or as to the area over which the jurisdiction 8
extends, or it may partake of both these characteristics. The term ‘jurisdiction’ is a term of art; it is an expression used in a variety of senses and draws colour from its context.
9
Therefore, to confine the term ‘jurisdiction’ to its conventional and narrow meaning would be contrary to the well-settled interpretation of the term. Thus, at this instance, this particular suit by Mr. Ryland is liable to be dismissed at the threshold on account of being barred by limitation.
2. Whether the age limit of 70 years under S. 196(3) (a) of the Companies Act, 2013 can apply to a WTD validly appointed prior to 01. 04. 2013?
It is averred that the prescribed age limit would not affect the appointment of Mr.James McLinden, because: A.Vested Rights cannot be abrogated by retrospective operation; B.Operation of S.6 of the General Clauses Act, 1897; C. Proviso to S.196 (3)(a) is Directory. A. Vested rights have no retrospective application.
i.
Though there is no statutory definition of the term ‘vested right’, the Supreme Court , in 10
Howrah Municipal Municipal Corpn. & Others v. Ganges Rope Co. Ltd. & Others , enunciated 7
Foreshore Cooperative Housing Society Limited v. Praveen D Desai, (2015) 6 SCC 412. Halsbury’s Laws of England 10-314. 9 American Jurisprudence 32A-588. 10 Howrah Municipal Corp. & Others v. Ganges Rope Co. Ltd. & Others, (2004) 1 SCC 663. 8
MEMORIAL ON BEHALF OF APPELLANT -(
TH
THE 4 KIIT UNIVERSITY NATIONAL MOOT COURT COMPETITION,2016 that “With the long usage, the said word 'vest' has also acquired a meaning as "an absolute or indefeasible right" . There is not an iota of doubt that Mr. McLinden’s appointment was a valid one, done under S.267 of Companies Act 1956. ii.
A statute is deemed to be retrospective, which takes away or impairs any vested right acquired under existing laws, or creates a new obligation, or imposes a new duty, or 11
attaches a new disability, in respect to transactions or considerations already past . Extending the application of S.196(3)(a) in Companies Act 2013 to a valid appointment made as per the Companies Act 1956, which results in a cessation of Mr.McLinden’s tenure as Whole Time Director, would amount to giving the provision, a retrospective application. Nemo application. Nemo potest mutare consilium suum in alterius injuriuminjurium- no one is allowed to change his mind to the injury of others. Therefore, the legislature should also not change its mind to the prejudice of a vested right. iii.
Also, it has to be noted that every statute is prima facie prospective unless it is expressly 12
or by necessary implications made to have retrospective operation. Even if the enactment is expressed in a language which is surely capable of either interpretation, it 13
ought to be construed as prospective only. If two constructions are possible upon the language of the statute, eschew the construction which makes its operation unduly 14
oppressive, unjust or unreasonable. The Companies Act, 2013, neither expressly mentions its retrospective operation nor is it by necessary implication evident that the provisions of the Act will apply to a valid appointment made under the then existing Act of 1956. The idea behind the rule of prospective construction is that a current law should govern current activities.This is also affirmed from the maxim nova constitution futuris 15
formam imponere debet, non praeteritis . iv.
16
The general principle of law is lexprospicit non respicit, which means that a law looks forward and not backward. Hence, in lieu of this, a retrospective amendment must always
11
Virendra Singh Hooda v. State of Haryana, AIR 2005 SC 137. KeshavaMadhavaMenon v. State of Bombay, 1951 AIR SC 128 , P. Suseela & Ors. v. University Grants Commission & Ors 2015 (3) SCALE 726. 13 ShyamSundar&Ors. v. Ram Kumar &Anr., (2001) 8 SCC 24. 14 Dilip Kumar Sharma v. State of MP, (1976) 1 SCC 560. 15 Zile Singh v. State of Haryana &Ors., (2004) 8 SCC 1. 16 Commissioner of Income Tax (CENTRAL)-I, New Delhi v. Vatika Township (P) Ltd., (2015) 1 SCC 1. 12
MEMORIAL ON BEHALF OF APPELLANT -)
TH
THE 4 KIIT UNIVERSITY NATIONAL MOOT COURT COMPETITION,2016 17
be expressly worded. worded . It has been consistently held that repeal of an Act followed by reenactment does not automatically wash away the right accrued and the liabilities incurred 18
under the repealed law unless a contrary intention appears in the repealing law. v.
With respect to the mode of construing consolidating Acts, it must be remembered that they, like all other Acts , speak as from the date of passing , unless some other date is 19
expressly fixed and so speaking the law be taken as declared therein . Hence, it cannot extend to make the WTD step down from his post to which he was validly appointed according to the Act that existed then. B. Operation of S.6 of the General Clauses Act, 1897.
vi.
Since the present issue would involve delving into the complicated arena of interpretation, it would be prudent to refer to the ‘General Rules of Construction’ enumerated in the General Clauses Act, 1897. These rules are the basic assumptions on 20
which the statutes are drafted . S.6(c) lays down that when any Central Act repeals an Act, it does not affect any right, privilege, obligation or liability acquired, accrued or incurred under any enactment so repealed. The right that is saved must be an accrued 21
right not merely an inchoate one. Here, Mr.James Mclinden’s right to hold office of the Whole Time Director is clearly an accrued one according to law and hence S.6 will operate to save his position. •
vii.
Scope of S.6(c)
The broad proposition that S.6(c) is ruled out when there is a repeal of an enactment followed by a fresh legislation, has been reversed by a catena of judgments by the Supreme Court22.Whenever there is a repeal of an enactment, the consequences laid down in S.6 of the General Clauses Act will follow, unless, a different intention appears. The line of enquiry would be, not whether the new Act expressly keeps alive old rights and 23
liabilities but whether it manifests an intention to destroy them .When an Act repeals a 17
National Agricultural Co-op. Mar keting Federation of India &Anr. v. Union of I ndia et al., (2003) 5 SCC 23. Controller of Estate Duty, Gujarat, Ahmedabad v. M.A Merchant, AIR 1989 SC 1710. 19 Bennett v. Minister for Public Works, (NSW)7 CLR 371. 20 State of Orissa v. M.A Tulloch & Co., AIR 1964 SC 1284. 21 Bansidhar v. State of Rajasthan, (1989) 2 SCC 557. 22 st Justice A.K. Yog, Interpretation of Statutes 258 (1 ed., 2009). 23 Gammon India Ltd. (M/S) v. Spl. Chief Secretary, (2006) 3 SCC 354. 18
MEMORIAL ON BEHALF OF APPELLANT -*
TH
THE 4 KIIT UNIVERSITY NATIONAL MOOT COURT COMPETITION,2016 previous Act and provides that all orders issued under the repealed Act shall be deemed to be issued under the new Act, then it means that it is designed to safeguard the validity of orders, appointments, etc., issued under the repealed Act and not to give retrospective 24
effect to the new Act . A right which had accrued and had become vested, continues to be capable of being enforced, notwithstanding the repeal of the statute under which that right accrued unless the repealing statute took away such right expressly or by necessary implication. This is the effect of Section 6 of the General Clauses Act25.The Companies Act 2013 neither expressly nor impliedly states that S.196(3)(a) ought to be given a retrospective effect to impact appointments made under Companies Act 1956. The absence of a saving clause in the new enactment preserving the rights and liabilities under the repealed law is neither material nor decisive of the question as to the intention of the Legislature26. Thus, S.6(c) would operate and Mr.James McLinden’s right to serve as the Whole Time Director is protected. C. Proviso is only Directory & not Mandatory
viii.
A provision is said to be directory, when the absence of a strict or literal compliance with it and in some cases, even non-compliance with it may not vitiate the thing done. On the other hand, a mandatory provision is one which has to be obeyed in its letter and spirit and anything done without such compliance stands vitiated.
27
Prima facie, when the 28
statute uses the word ‘shall’, it makes the provision mandatory. Ordinarily, the expression ‘may’ in a context is not an expression of ‘compulsion’ but it is an enabling 29
word intending ‘capacity’ or ‘discretion’ .These rules of interpretation make it crystal clear that the proviso is merely directory. The Board of Directors may choose to call or not to call a meeting of the shareholders to pass such a resolution, authorizing the continuation of the WTD. Moreover, a proviso is added to an enactment to qualify or create an exception to what is in the enactment, and ordinarily, a proviso is not
24
st
Justice A.K. Yog, Interpretation of Statutes 256-257 (1 ed., 2009). 25 Commissioner of Income Tax v Shah Sadiq and Sons., (1987) 3 SCC 516. 26 State of Punjab v. MoharSingh , AIR 1955 SC 84. 27 Bharat HariSinghania v. Commissioner of Wealth-tax (Central), 1994 (1) SCALE 644. 28 State of Uttar Pradesh v. Babu Ram Upadhya, AIR 1961 SC 751. 29 MadanlalFakirchandDudhadiya v. Shree Changdoo Sugar Mills Ltd., AIR 1962 SC 1543.
MEMORIAL ON BEHALF OF APPELLANT -+
TH
THE 4 KIIT UNIVERSITY NATIONAL MOOT COURT COMPETITION,2016 30
interpreted as stating a general rule. Thus , any claims by the respondent that the vested right is protect and there is only a temporary disruption of tenure is false. 3. Whether the word ‘continue’ used in S. 196 (3) ought to be construed in context of clauses 196(3)(b), (c), (d) alone and not 196 (3) (a)?
It is submitted that the word “continue” used in S. 196(3) shouldn’t be construed in the context of S.196(3)(a) by: A. Applying the principle of Reddendo SingulaS ingulis; ingulis; B. Adopting Purposive construction; C. The Companies Act, 2013 being a Consolidating Act. A. The Principle of Reddendo Singula Singulis •
i.
Concept of Reddendo of Reddendo Singula Singula Singulis Singulis
All difficulty can be avoided by applying the well known method of construction commonly known as reddendo singular singulis31.This principle concerns the use of words distributively. Where a complex sentence has more than one subject, and more than one object, it may be the right construction to render each to each, by reading the 32
provision distributively and applying each object to its appropriate subject. . By applying the same principle to S.196, the word continue has to be construed in context of its respective subject alone, which here are clauses (b), (c) and (d).Where there are general words of description, following an enumeration of particular things such general words are to be construed distributively reddendo singular singulis; singulis; and if the general words will apply to some things and not to others, the general words are to be applied to those things to which they will, and not to those to which they will not apply; that rule is 33
beyond all controversy . •
ii.
Application of the principle to S.196
Where a sentences in a statue contains several antecedents and several consequences, they are to be read distributively; that is to say, each phrase or expression is to be referred 34
to its appropriate object. Thus it would be right to read the term “continue” distributively 30
Shah BhojrajKuverji Oil Mills & Ginning Factory v. Subhash Chandra YograjSinha ,AIR 1961 SC 1596. Election Commission, India v. SakaVenkataRao, AIR 1953 SC 210. 32 th Justice G.P.Singh, Principles of Statutory Interpretation 574 (14 ed., 2016). 33 M Neill v. Crommelin, [1858] 9 Ir CLR 61. 34 KoteswarVittalKamath v. Rangapa Baliga& Co., (1969) 1 SCC 255. 31
MEMORIAL ON BEHALF OF APPELLANT -,
TH
THE 4 KIIT UNIVERSITY NATIONAL MOOT COURT COMPETITION,2016 only to S.196(3)(b),(c) and (d) distributively. By applying the rule of reddendo singula singulis, singulis, words and provisions are referred to their appropriate objects, resolving confusion and accomplishing the intent of the law against a strict grammatical 35
construction. Therefore the word “continue” used in Sec 196(3) would be restricted to clause (b), (c) and (d) of the said sub-section and not to clause(a) of the same sub-section. A qualifying phrase ought to be referred to the next antecedent which will make sense with the context and to which the context appears properly to relate it.36Herein the word “continue” the employment would be applicable only to an undischarged insolvent, a person who has ha s suspended payment to his h is creditors or one who has made a composition with them and any person convicted by the court for any offence and been imprisoned for a period exceeding six months. •
iii.
Rule of Literal or Grammatical Interpretation is not applicable
General words admit of indefinite extension, or restriction, according to the subject to which they relate and the scope and object in contemplation. It is open to the court, in cases where there is a manifest contradiction of the apparent purpose of the enactment or where the literal construction is likely to lead to a result not intended by the legislature, to modify the meaning of the words, if necessary even by departing from the rules of 37
grammar or by giving an unusual meaning to the words. iv.
Courts will have to follow the rule of literal construction, which enjoins the court to take the words as used by the Legislature and to give it the meaning which naturally implies, held that there is an exception to that rule. The exception comes into play when application of literal construction of the words in the statute leads to absurdity, inconsistency or when it is shown that the legal context in which the words are used or by 38
reading the statute as a whole, it requires a different meaning .The method of limiting the effect of expressions, which are obviously too wide to be construed literally, is most frequently adopted when the opening words of a section are general, while the succeeding parts of it branch out into particular instances39.The word “continue” being too wide, it is
35
Sandberg v. McDonald , 248 U.S. 185 195 (1918). MahadeolalKanodia v. Administrator General of WB, AIR 1960 SC 936. 37 th St. J.Langan, Maxwell’s Interpretation of Statutes 228 (12 ed.,1969). 38 Molar Mal v. Kay Iron Works (P) Ltd., AIR 2000 SC 1261. 39 Quim v. Lowell Electric Light Corporation, 140 Mass 106. 36
MEMORIAL ON BEHALF OF APPELLANT %.
TH
THE 4 KIIT UNIVERSITY NATIONAL MOOT COURT COMPETITION,2016 trite to limit its scope by streamlining it with the particular subject to which it is concerned. Thereby the word “continue” ought to be read in context of clauses (b),(c) and (d) of sub-section (3) of Section 196 and a nd not to clause(a) of the said sub-section. v.
If one construction will lead to an absurdity while another will give effect to what commonsense would show was obviously intended, the construction which would defeat the ends of the Act must be rejected even if the same words used in the same section, and even the same sentence, have to be construed differently. Indeed, the law goes so far as to require the Courts sometimes even to modify the grammatical and ordinary sense of the words if by doing so absurdity and inconsistency can be avoided40. Courts can modify language of the statute in order that the section makes good sense and does not lead to 41
absurdity or manifest injustice . vi.
Also, it is well settled principle that the interpreter should assume that the legislature is composed of reasonable people seeking to achieve reasonable goals in a reasonable 42
manner . For instance, a case where X is appointed Managing Director on 31st March 2014 for five years; he turns 70 the next day. S.196(3) operating to stop his tenure before it has even started is ludicrous. Thus, deeming the word “continue” to apply for all the sub-sections of S.196 would result in absurdity as it is not practically feasible. Thus, the application of the legal maxim Reddundo Singula Singulis Singulis has the salutary effect of obviating unnecessary chaos in the administration of the company.
B. The rule of Purposive Construction.
ix.
A purposive construction of an enactment is one which gives effect to the legislative purpose by applying a strained meaning where the literal meaning is not in accordance with the legislative purpose.43Therefore, a purposive approach for interpreting a statute is necessary.44Where the language of the statute in it’s ordinary meaning and grammatical construction leads to a manifest contradiction of the apparent purpose of the Act or presumably not intended, a construction may be put upon it which modifies the meaning
40
th
G. Granville Sharp et al.,Maxwell’s Interpretation of Statutes 229 (10 ed., 1953). Ishwar Singh Bindra v. State of Uttar Pradesh, AIR 1966 All 168. 42 New India Assurance Co. Ltd. v. NusliNeivelleWadia& Another, 2007 (14) SCALE 556. 43 Indian Handicrafts Emporium v. Union of India, AIR 2003 SC 3240 at p.3264. 44 S.Gopal Reddy v. State of Andhra Pradesh, AIR 1996 SC 2184. 41
MEMORIAL ON BEHALF OF APPELLANT %-
TH
THE 4 KIIT UNIVERSITY NATIONAL MOOT COURT COMPETITION,2016 45
of the words, and even the structure of the sentence. Further, it is a well-settled principle of law that where the law is not clear, recourse must be taken to purposive 46
interpretation . x.
Thus, it is evident that the word ”continue” has been intended exclusively for a person who had been adjudicated insolvent, suspended payment to his creditors or one who has made composition with his creditors and one who is convicted by a court and imprisoned for a term exceeding six months and not intended to extend to a person who has attained the age of 70 years. The object underlying the statute is required to be given effect to by applying the principles of purposive construction.47Thereby, the object underlying S.196(3) is to consolidate the statutory provision for the appointment and continuation in the office of a Managerial personnel together for convenience sake. Hence, the very purpose behind the provision ought to be considered.
xi.
The object of the construction of a statute, be it to ascertain the will of the legislature, it may be presumed that neither injustice nor absurdity was intended. If, therefore a literal interpretation would produce such a result, and the language admits of an interpretation which would avoid it, then such an interpretation may be adopted.48 Considering a scenario where the word ‘continue’ is read in the context of all the clauses (a), (b),(c) and (d) of sub-section (3) of Section 196, it would lead to chaos, wherein a person who is in the post of a Whole-Time Director as Mr. James McLinden, which is of utmost importance being a key managerial personnel would give rise to a series of difficulties. Furthermore, in a case of this nature, principles of purposive construction must come into 49
play . Thereby it would be appropriate to construe the word “continue” only in the context of Clauses (b), (c) and(d) alone.
45
Tirath Singh v. Bachittar Singh, 1955 SCR (2) 457. APSRTC v. The State Transport Appellate Tribunal &Ors.,II (2001) ACC 760; The Executive Engineer vs M/S Sri Seetaram Ricemill, (2012) 2 SCC 108. 47 Deepal Girishbhai Soni and Ors.v. United India Insurance Co. Ltd., 2004 (5) SCC 385. 48 Mangin v. Inland Revenue Commission, [1971] AC 739. 49 Indian Handicrafts Emporium & Ors v. Union Of India & Ors on 27 August, 2003. 46
MEMORIAL ON BEHALF OF APPELLANT %%
TH
THE 4 KIIT UNIVERSITY NATIONAL MOOT COURT COMPETITION,2016 C. Consolidating Act.
xii.
The purpose of a consolidating statute is to present the whole body of statutory law in a 50
subject in complete form, repealing the former statute . A consolidating Act may further 51
52
be an amending a mending Act . Such a statute is not intended to alter the law. For the purpose of construing a statute which is a consolidating as well as an amending Act, the proper 53
course is to have a ‘reasonable interpretation of its provisions’ and to apply the normal 54
rule of construction ‘so as to give each word the meaning proper to it in its context’ . xiii.
Section 196(3) of the Companies Act, 2013 is nothing but a replica of S. 267 and S.269 of the 1956 Act. S.267 had dealt with the disqualification of a managing or whole-time director which prohibited such persons from continuing in office. The clauses (b),(c) and (d) of sub-section(3) of Section 196 is nothing but a mirror image of the disqualifications provided by S. 267 of the earlier Act and was not intended to bring about any changes in the law. It is also to be noted that the age bar in itself for the appointment of a managing director or whole-time director or manager is not a novelty but a parallel provision to S. 269 of the Companies Act of 1956. S.196(3) of the Companies Act of 2013 is an amalgamation of S.267 and S.269 of the Companies Act of 1956. Since, S.196(3)is merely of a consolidating nature it ought to be read as it was in the context of the earlier enactment. Also it is noteworthy to mention the well-established principle of law that in a consolidating Act the language contained therein bears the meaning attached to it in the 55
original enactment. Thereby it ought to be inferred from S. 196(3) that the Companies Act, 2013 has not brought about any changes with the meaning as was attached in the original enactment. xiv.
The Statement of Object and Reasons of the Companies Act,2013 reads as follows: “An Act to consolidate and amend the law relating to companies”. Arguendo, even if the Companies Act of 2013 is assumed to be a repealing Act it is a well-established principle of law that a purposive approach should be adopted which could be inferred from the
50
th
Halsbury, Laws of England 489 (4 ed., 1973). th Justice. G.P.Singh, Principles of Statutory Interpretation 373 (14 ed., 2014). 52 Southern Petro chemical Industries Co. Ltd. v. Electricity Inspector and E.T.I.O ,AIR 2007 SC 1984. 53 RamdasVithaldas Durbar v. Amerchand& Co., (1916) ILR 40 Bom 630, p 636. 54 Takur Amar Singhji v. State of Rajasthan, AIR 1955 SC 504. 55 th Peter Benson Maxwell et al., Maxwell’s Interpretation of Statutes 58 (11 ed., 1962); Mitchell v. Simpson (1890) 25 QBD 183. 51
MEMORIAL ON BEHALF OF APPELLANT %&
TH
THE 4 KIIT UNIVERSITY NATIONAL MOOT COURT COMPETITION,2016 56
statement of object and reasons of the Act . If an Act is legislated ‘to consolidate previous statutes’, the courts may lean to a presumption p resumption that it is not intended to alter the law, and may solve doubtful points by aid of such presumption of intention rejecting the 57
literal construction. In construing a Consolidation Act, prior statutes repealed, but reproduced in substance are regarded as in parimateria. xv.
58
The Companies Act, 2013 being purely a Consolidating Act, although has amended the reproduced enactments, the amendment is merely for the purpose of rearrangement and by no figment of imagination the essence of the older enactments ceases to be in force, although it is true that its ancient form has been destroyed it ought to be read in that very context in which it had been originally enacted without making any modifications. Hence, the word “continue” ought not to be read in the context of S.196(3)(a) and only to be read in the context of S.196(3)(b),(c) and (d).
4. Whether S.196(3)(a) of the 2013 Act operates as an immediate disqualification or as an Eligibilty Condition and whether there is any distinction between the two ?
It is submitted that S.196(3)(a) of the Companies Act, 2013 operates as an eligibility condition in lieu of : A. Interpretation of the proviso to S.196 (3) (a); B. Untenability of Mid Tenure Cessation; C. Age is barely an imperative condition. A. Interpretation of the proviso to S.196 (3) (a)
i.
The subsidiary rules of interpretation that are used to interpret the proviso bring to light the fact that S.196(3)(a) of the 2013 Act operates only as an eligibility condition at the time of appointment and not an immediate disqualification .The maxim expressio unis est exclusion alterius , i.e., the express mention of one thing implies the exclusion of 59
another enunciates one of the first principles not only as applicable to the construction 60
of written instruments but as observed in Dewhurst v. Fieldin: ‘the ordinary
56
ThyssenStahlunionGumbH v. Steel Authority of India, 1999 (48) DRJ 210. th St. J.Langan, Maxwell’s Interpretation of Statutes 22-25 (12 ed., 1969); IRC v. Hinchy, (1960) 1 All ER 505, p 512 (HL). 58 th Craies, Statute Law 127 (5 ed.). 59 Thomas v. Hill, (1870) LR 5 CP 564. 60 Dewhurst v. Fieldon, [1845] 135 ER 79. 57
MEMORIAL ON BEHALF OF APPELLANT %'
TH
THE 4 KIIT UNIVERSITY NATIONAL MOOT COURT COMPETITION,2016 construction of an Act of the legislature is expressio unis est exclusion alteris.The alteris.The common words used in the beginning of S. 196 of the Companies Act, 2013, include the words ‘appoint’ and ‘continue’. Whereas, the proviso to the section, only provides for a special resolution to be passed at the time of appointment of a WTD. The express omission of the word ‘continue’ in the proviso prima facie shows that the Legislature meant to make the provision operational only at the time of appointment of the WTD, i.e., no special procedure has been provided to continue the employment of a WTD who has attained the age of 70 years while in office. ii.
Moreover, what is not included by the legislature cannot be done by the court by adopting the principle of purposive construction.61In interpreting a statute, the court cannot fill in 62
gaps or rectify defects. Thus, a solution cannot be provided by interpreting ‘appointment’ in the proviso, to include ‘re-appointment’ or ‘continuation’ as Courts are 63
not to supply cassus omisus when the language is plain . If a contrary view is taken and age bar is interpreted as an immediate disqualification instead of an eligibility criteria, the proviso runs the risk of being unconstitutional. For instance, ‘A’ a WTD is appointed in 2014 at the age of 75 years by passing a special resolution according to the 2013Act and another WTD ‘B’ is appointed at the age of 68 years by an ordinary resolution according to the 1956 Act and attains the age of 70 in the year 2014. Though A is older than B in 2014, the special resolution saves him whereas B has to step down. This is not a situation that was intended by the law makers and hence the age bar of 70 years can apply only at the time of appointment and not as an immediate disqualification. iii.
Disqualifying a WTD as stated above is arbitrary even if the respondents ask to pass a special resolution to re-appoint him. There is no necessity for the WTD to step down from his office because the age itself serves only as an eligibility criteria and the Act of 1956, under which Mr. James McLinden was appointed never subjected him to a special resolution to continue in office. Hence the question of appointing him again after passing a special resolution can never arise. Also, an action per se arbitrary itself denies equal 64
protection of law. In the light of ut res magis valeat quam pereat , it is clear that the 61
Dental Council of India & Anr. v. Hari Prakash & Ors, (2001) 8 SCC 61. Tara Dutta v. State of West Bengal, 79 CWN 996. 63 Rao.M.N&Amita Dhanda, N.S.Bindra’s Interpretation of Statutes 467 (10th ed., 2015). 64 A.L.Kalra v. The Project & Equipment Corp. (P) Ltd., 1984 AIR SC 1361. 62
MEMORIAL ON BEHALF OF APPELLANT %(
TH
THE 4 KIIT UNIVERSITY NATIONAL MOOT COURT COMPETITION,2016 condition relating to age is only an eligibility criteria applicable at the time of appointment. B. Mid Tenure Cessation untenable
iv.
The Supreme Court in H.C.Puttaswamy v.Hon’ble Chief Justice of Karnataka High 65 Court permitted the irregularly appointed employees to continue in service without a
break since the initial appointments were not illegal or unauthorised. Hence, the appointment of Mr.James McLinden having been validly made as per the requirements of 66
the 1956 Act he ought to continue in service and mid-tenure cessation is inadmissible. Arguendo, Arguendo, even if the appointment was made contrary to the required procedure, the 67
Puthuparambil v. appointee cannot be terminated from office . Further, in Jacob M. Puthuparambil 68
Kerala Water Authority, the ad-hoc employees who had continued in service for a year
or more were entitled to be regularised. Thereby, Mr. James McLinden who has been in the office of a Whole-Time Director for more than 3 years is entitled to complete his term. He attained the age of 70 years and for no fault of his he found himself stranded in 69
life midstream . v.
Eligibility is used in common parlance for describing the state of being qualified for or worthy of something. Eligibility connotes the minimum criteria for selection, that may be laid down by the executive authority/legislature by way of any statute or 70
rules .Disqualification in common parlance means to stop or prevent someone from doing, having or being a part of something.Moreover, something.Moreover, disqualification is the existence or absence of a particular state of affairs which renders the achievement of a particular object impossible.71 Thereby, S.196 (3)(a) of the Companies Act, 2013 is merely an eligibility criterion and not a disqualification.
65
H.C.Puttaswamy v.Hon’ble Chief Justice of Karnataka High Court, (1991) Supp (2) SCC 421. ¶ 2 of the Moot proposition. 67 State of U.P v. Rafiquddin,(1987) Supp SCC 401. 68 Jacob M. Puthuparambil v. Kerala Water Authority, (1991) 1 SCC 28. 69 Lila Dhar v. State of Rajasthan, (1981)4 SCC 159. 70 State of Gujarat v. Arvindkumar T. Tiwari,(2012) 9 SCC 545; Dr. PreetiSrivastava&Anr. v. State of M.P, AIR 1999 SC 2894. 71 Rajbala v. State of Haryana, (2016) 2 SCC 445. 66
MEMORIAL ON BEHALF OF APPELLANT %)
TH
THE 4 KIIT UNIVERSITY NATIONAL MOOT COURT COMPETITION,2016 vi.
72
Law does not permit to change the rules of the game once the game has started.
Thereby, it would be against all cannons of fairness and equity to terminate a person’s tenure, once he has been appointed validly for 5 years according to the provisions that existed at the time of his appointment, by introducing a new eligibility criteria as a 73
condition to be fulfilled . Hence, S.196 (3)(a) of the 2013 Act cannot operate so as to result in the mid-tenure cessation of McLinden. The rules relating to appointment cannot be modified either during the selection process or after the selection process to add an 74
additional requirement or qualification for appointment or continuation in service of those duly selected. Arguendo, selected. Arguendo, the the Supreme Court in Himani Malhotra v. High Court of 75 Delhi, has held that prescribing minimum criteria after the selection process has started,
which has not been stipulated at the time of initiation of recruitment was unwarranted and impermissible. In the instant case where the appointment of the WTD has been made validly according to the provisions of the 1956 Act even prescribing a new eligibility criterion to be fulfilled by him is not permissible. C. Age is barely an imperative condition
vii.
Age limit has been prescribed as an eligibility criteria for assuming significant posts or 76
being appointed in a key managerial role. In the famous case of Shainda Hasan(Miss) v. 77
State of U.P ,the ,the court upheld the of the appointment of an over-aged women as Principal. Also, laws of most countries including England do not provide for a maximum age limit for disqualification from continuing in office office of a Director. The Companies 78
Act, 2006 of England only provides a minimum age as an eligibility criterion and his tenure is totally subject to the agreement entered into at the time of appointment79. Thereby, it is discernible that age not being an imperative condition cannot operate as a bar for the continuation of Mr.McLinden in the post of a WTD. 72
YogeshYadav v. Union of India, (2013) 14 SCC 623. Union of India v. Eider Electronics Industries Ltd., 58(1995) DLJ 29. 74 K. Manjusree v. State of Andhra Pradesh,(2008)3 SCC 512; Lila Dhar v. State of Rajasthan,(1981)4 SCC 159. 75 HimaniMalhotra v. High Court of Delhi, (2008) 7 SCC 11. 76 S.196(3)(a),Companies Act, 2013. 77 ShaindaHasan (Miss) v. State of U.P, (1990) 3 SCC 48. 78 S. 157 of Companies Act, 2006 of England. 79 S. 168 of Companies Act, 2006 of England. 73
MEMORIAL ON BEHALF OF APPELLANT %*
TH
THE 4 KIIT UNIVERSITY NATIONAL MOOT COURT COMPETITION,2016
PRAYER
For the reasons aforesaid and the arguments advanced, it is humbly prayed that this Hon’ble court may be pleased to allow the Civil Appeal by setting aside both the original as well as appellate order and decretal order of the High Court of Winchester, vacate the injunction and dismiss the interlocutory petition and thus render Justice. Sd/(Counsel for Appellant)
MEMORIAL ON BEHALF OF APPELLANT %+
