Disposed

Kayaltheeram Builders and Realtors India Private Ltd. v. Union of India

Kerala HC19 Feb 2021WP(C)/7510/2020

Case brief

AI extract

What is this about?

Three companies challenged the requirement to appoint a whole-time Company Secretary to file e-form ACTIVE under the Companies Act, 2013. The High Court disposed of the petitions, granting liberty to proceed against petitioners for the violation of Section 203 while clarifying that the interim orders were not pronouncements on merits.

What did the court decide?

Liberty granted to respondents to proceed against petitioner companies for violation of Section 203 of the Companies Act, 2013.

Kayaltheeram Builders and Realtors India Private Ltd… — Company and Corporate | Kerala HC (2021)

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IN THE HIGH COURT OF KERALA AT ERNAKULAM

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PRESENT

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THE HONOURABLE MR.JUSTICE N.NAGARESH

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FRIDAY, THE 19TH DAY OF FEBRUARY 2021/30TH MAGHA,1942 WP(C).No.7510 OF 2020(K)

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PETITIONER:

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KAYALTHEERAM BUILDERS AND REALTORS INDIA PRIVATE LTD., FIRST FLOOR ANJANA COMPLEX, VYTILLA AROOR BYE PASS ROAD, KUNDANNOOR, KOCHI-682 304, REP. BY ITS DIRECTOR VIJAYA KUMAR P.P.

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BY ADVS. SRI.DEEPU THANKAN SMT.UMMUL FIDA SMT.LAKSHMI SREEDHAR SREELAKSHMI S

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RESPONDENTS:

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1 UNION OF INDIA REP. BY ITS SECRETARY, MINISTRY OF CORPORATE AFFAIRS, RAJENDRA PRASAD ROAD, NEW DELHI-110 001.

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2 REGISTRAR OF COMPANIES, KERALA, COMPANY LAW BHAVAN, THRIKKAKARA P.O., ERNAKULAM, KOCHI-682 011.

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SRI P.VIJAYAKUMAR ASGI

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THIS WRIT PETITION (CIVIL) HAVING BEEN FINALLY HEARD ON 19.02.2021, ALONG WITH WP(C).7995/2020(Y), WP(C).8334/2020(N), THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING:

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WP(C) No.7510/2020 & conn.cases

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IN THE HIGH COURT OF KERALA AT ERNAKULAM

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PRESENT

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THE HONOURABLE MR.JUSTICE N.NAGARESH

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FRIDAY, THE 19TH DAY OF FEBRUARY 2021/30TH MAGHA,1942

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WP(C).No.7995 OF 2020(Y)

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PETITIONER:

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K V RESORTS PRIVATE LTD., AP 13/56, ARYANAD P.O., THIRUVANANTHAPURAM 695 043, REP. BY ITS DIRECTOR, SHJI KALLADAYIL MATHEW.

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BY ADVS. SRI.DEEPU THANKAN SMT.UMMUL FIDA SMT.LAKSHMI SREEDHAR

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RESPONDENTS:

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1 UNION OF INDIA REP. BY ITS SECRETARY, MINISTRY OF CORPORATE AFFAIRS, RAJENDRA PRASAD ROAD, NEW DELHI 110 001.

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2 REGISTRAR OF COMPANIES, KERALA COMPANY LAW BHAVAN, THRIKKAKARA P.O., ERNAKULAM, KOCHI 682 011.

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BY ADV.SRI.ANISH JAIN, CGC SRI P.VIJAYAKUMAR ASGI

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THIS WRIT PETITION (CIVIL) HAVING BEEN FINALLY HEARD ON 19.02.2021, ALONG WITH WP(C).7510/2020(K), WP(C).8334/2020(N), THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING:

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WP(C) No.7510/2020 & conn.cases

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IN THE HIGH COURT OF KERALA AT ERNAKULAM

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PRESENT

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THE HONOURABLE MR.JUSTICE N.NAGARESH

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FRIDAY, THE 19TH DAY OF FEBRUARY 2021/30TH MAGHA,1942

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WP(C).No.8334 OF 2020(N)

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PETITIONER:

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SANDUNE PROPERTIES PRIVATE LTD., FIRST FLOOR ANJANA COMPLEX, VYTTILA-AROOR BYE PASS ROAD, KUNDANNOOR, KOCHI-682 304, REP BY ITS DIRECTOR SHAJI KALLADAYIL MATHEW

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BY ADVS. SRI.DEEPU THANKAN SMT.UMMUL FIDA SMT.LAKSHMI SREEDHAR

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RESPONDENTS:

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1 UNION OF INDIA REP. BY ITS SECRETARY, MINISTRY OF CORPORATE AFFAIRS, RAJENDRA PRASAD ROAD, NEW DELHI-110 001.

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2 REGISTRAR OF COMPANIES, KERALA, COMPANY LAW BHAVAN, THRIKKAKARA P.O., ERNAKULAM,KOCHI-682 011.

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BY ADV. MR.B.PRAMOD, CGC SRI P.VIJAYAKUMAR, ASGI

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THIS WRIT PETITION (CIVIL) HAVING BEEN FINALLY HEARD ON 19.02.2021, ALONG WITH WP(C).7510/2020(K), WP(C).7995/2020(Y), THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING:

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WP(C) No.7510/2020 & conn.cases

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J U D G M E N T

~ ~ ~ ~ ~ ~ ~ ~ ~

Dated this the 19^th day of February, 2021 [WP(C) Nos.7510, 7995 & 8334 of 2020]

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The petitioners, who are Companies incorporated with the Registrar of Companies, Kerala, have filed these writ petitions seeking to direct the respondents to permit the petitioners to file e-form ACTIVE, INC-22A without insisting on appointment of a whole-time Company Secretary. The petitioners have also sought to declare that the restriction imposed in filing e-form ACTIVE, INC-22A with regard to noncompliance of Section 203 of a whole-time Company Secretary or Rule 8A of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 is arbitrary and illegal.

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The petitioners submit that the 1^st respondentUnion of India, in exercise of its powers under Section 469 of

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WP(C) No.7510/2020 & conn.cases

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the Companies Act, 2013 amended the Companies (Incorporation) Rules, 2014 as per Notification dated 21.02.2019. As per the new added Rule 25A, every Company incorporated on or before 31.12.2017 shall file the particulars of the Company and its registered office in e-form ACTIVE (Active Company Tagging Identities and Verification) on or before 25.04.2019. It is the contention of the petitioners that the website of the Ministry of Corporate Affairs is not accepting e-form ACTIVE submitted by the petitioners for the reason that the paid up capital is more than ₹5 Crores and still the petitioners-Companies have not appointed whole-time Company Secretary.

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It is the case of the petitioners that as per Section 203(5), if any Company makes any default in complying with the provisions, such Company shall be liable for a penalty of ₹5 lakhs and Directors and Key Managerial Personnel are personally liable for a penalty of ₹50,000/- and if the default is a continuing one, with a further penalty of ₹1,000/- for each day.

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WP(C) No.7510/2020 & conn.cases

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The petitioners contend that they have part-time Company Secretaries and Auditors to properly look after the

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affairs of their Companies and for the last so many years, they have been functioning well within the provisions of the Act without giving any room for initiating any penalty proceedings. On these premises, the petitioners contend that they should not be forced to appoint a whole-time Company Secretary and should be permitted to file e-form ACTIVE, INC-22A without insisting on the appointment of a whole-time Company Secretary.

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When these writ petitions came up for admission, interim orders were passed by this Court permitting the petitioners to file e-form ACTIVE, INC-22A, Form PAS-03 (change in paid up capital) and Form DIR-12 (change in Director except cessation) without insisting on appointment of a whole-time Company Secretary provisionally, pending further orders in these writ petitions.

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When these writ petitions came up for hearing today, the Central Government Counsel representing the

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WP(C) No.7510/2020 & conn.cases

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respondents argued that as per the existing rules, the petitioners are bound to appoint whole-time Company Secretaries, as their paid up capital is more than ₹5 Crores. The petitioners cannot be granted any exemption from the Rules.

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The Central Government Counsel further argued that non-appointment of Company Secretary by petitionersCompanies is an offence under Section 383A (1A) vide Companies (Amendment) Act, 1988 with effect from 01.12.1988. If a Company fails to comply with the requirement regarding the appointment of Company Secretary, the Company and every officer of the Company who is in default shall be punishable with fine which may extend to ₹500/- per every day during which the default continues.

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Heard learned counsel for the petitioners and learned Central Government Counsel appearing for the respondents.

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WP(C) No.7510/2020 & conn.cases

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As things stand now, the petitioners have been permitted to file e-form ACTIVE, INC-22A without insisting the appointment of a whole-time Company Secretary, on a provisional basis. Section 203(5) of the Companies Act provides that if any Company makes any default in complying with the provisions of Section 203 relating to appointment of Key Managerial Personnel, such Company shall be liable to a penalty of ₹5 lakhs and every Directors and Key Managerial Personnel of the Company, who is in default, shall be liable to a penalty of ₹50,000/- and where the default is a continuing one, with further penalty of ₹1,000/- for each day after the first during which such default continues but not exceeding ₹5 lakhs.

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It is evident that the petitioner-Companies have not adhered to the provisions of the Companies Act, especially Section 203 thereof. In such circumstances, the respondents are empowered to proceed against the petitioner-Companies, in accordance with law.

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WP(C) No.7510/2020 & conn.cases

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In the circumstances, the writ petitions are disposed of granting liberty to the respondents to proceed against the petitioner-Companies for violating Section 203 of the Companies Act, if they are so advised. It is made clear that the interim orders passed in these writ petitions shall not be taken as pronouncement on merits on the legality of Section 203 of the Companies Act, 2013 or Rule 8A of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014.

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Sd/- N. NAGARESH, JUDGE

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aks/19.02.2021

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WP(C) No.7510/2020 & conn.cases

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APPENDIX OF WP(C) 7510/2020

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PETITIONER'S EXHIBITS:

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EXHIBIT P1 TRUE COPY OF THE CERTIFICATE OF INCORPORATION ISSUED BY THE SECOND RESPONDENT DATED 12.05.2008.

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EXHIBIT P2 TRUE COPY OF THE MASTER DATA OF THE PETITIONER COMPANY PUBLISHED IN THE OFFICIAL WEBSITE OF THE MINISTRY OF CORPORATE AFFAIRS. EXHIBIT P3 TRUE COPY OF THE GAZETTE NOTIFICATION ISSUED BY THE MINISTRY OF CORPORATE AFFAIRS OF THE FIRST RESPONDENT DATED 21.02.2019. EXHIBIT P4 TRUE COPY OF THE NOTIFICATION ISSUED BY THE FIRST RESPONDENT DATED 21.02.2019. EXHIBIT P5 TRUE COPY OF THE NOTIFICATION DATED 31.3.2014 COMPANIES (APPOINTMENT AND REMUNERATION OF MANAGERIAL PERSONNEL) RULES, 2014 WITH ITS AMENDMENTS.

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EXHIBIT P6 A TRUE COPY OF THE INTERIM ORDER PASSED BY THIS HON'BLE COURT IN WPC NO.27/2020 DATED 07.01.2020.

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WP(C) No.7510/2020 & conn.cases

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APPENDIX OF WP(C) 7995/2020

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PETITIONER'S EXHIBITS:

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EXHIBIT P1 TRUE COPY OF THE CERTIFICATE OF INCORPORATION ISSUED BY THE SECOND RESPONDENT DATED 07/05/2008. EXHIBIT P2 TRUE COPY OF THE MASTER DATA OF THE PETITIONER COMPANY PUBLISHED IN THE OFFICIAL WEBSITE OF THE MINISTRY OF CORPORATE AFFAIRS. EXHIBIT P3 TRUE COPY OF THE GAZETTE NOTIFICATION ISSUED BY THE MINISTRY OF CORPORATE AFFAIRS OF THE FIRST RESPONDENT DATED 21/02/2019. EXHIBIT P4 TRUE COPY OF THE NOTIFICATION ISSUED BY THE FIRST RESPONDENT DATED 21/02/2019. EXHIBIT P5 TRUE COPY OF THE NOTIFICATION DATED 31/3/2014 COMPANIES (APPOINTMENT AND REMUNERATION OF MANAGERIAL PERSONNEL), RULES 2014 WITH ITS AMENDMENTS.

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EXHIBIT P6 A TRUE COPY OF THE INTERIM ORDER PASSED BY THIS HONBLE COURT IN WPC NO. 27/2020 DATED 07/01/2020.

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WP(C) No.7510/2020 & conn.cases

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APPENDIX OF WP(C) 8334/2020

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PETITIONER'S EXHIBITS:

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EXHIBIT P1	TRUE COP	Y	OF		THE CERTIFICATE OF
	INCORPORAT RESPONDENT	IO D	N ATED	ISS 12	UED BY THE SECOND .05.2008
EXHIBIT P2	TRUE COPY PETITIONER		OF COM	HE PAN	MASTER DATA OF THE Y PUBLISHED IN THE
	OFFICIAL CORPORATE	WE AF	BSIT FAIR	E S	OF THE MINISTRY OF
EXHIBIT P3	TRUE COPY ISSUED BY OF THE FIR	TH ST	OF E MI RES	THE NIS PON	GAZETTE NOTIFICATION TRY OF CORPORATE AFFAIRS DENT DATED 21.01.2019
EXHIBIT P4	TRUE COPY FIRST RESP	OF ON	THE DENT	NO DA	TIFICATION ISSUED BY THE TED 21.02.2029
EXHIBIT P5	TRUE COP 31.3.2014 REMUNERATI 2014 WITH	Y ON IT	OF COMP OF s AM	T ANI MAN END	HE NOTIFICATION DATED ES (APPOINTMENT AND AGERIAL PERSONNEL) RULES MENTS
EXHIBIT P6	A TRUE CO THIS HON'B 07.01.2020	PY LE	OF COU	HE RT	INTERIM ORDER PASSED BY IN WPC NO.27/2020 DATED

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ncd

Kayaltheeram Builders and Realtors India Private Ltd. v. Union of India

Case brief

What is this about?

What did the court decide?

Kayaltheeram Builders and Realtors India Private Ltd. v. Union of India

Case brief

What is this about?

What did the court decide?

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