TMI Blog2006 (10) TMI 230X X X X Extracts X X X X X X X X Extracts X X X X ..... o transfer of securities by introducing amendments to various related statutes like Companies Act, Indian Stamp Act, Income-tax Act, Securities Contracts (Regulation) Act. Prior to the enactment of the Depositories Act, 1996, two remedies were available to the aggrieved investors as regards the transfer of shares or debentures of a public or a private company to appeal to the Central Government under section 111 of the Companies Act or to appeal before the High Court for rectification under section 155 of the Companies Act. The provision of section 155 of the Companies Act relating to the power of the court to rectify was omitted by the Companies (Amendment) Act, 1998 with effect from 31-5-1991. The same was incorporated in section 111 of the Companies Act that the avenue of relief through rectification was directed to the Company Law Board. Sub-section (14) was added to section 111 of the Act consequent on the amendment introduced by the Depositories Act, 1996, as per which for the purpose of section 111, a company shall mean a private company including a private company declared a public company under section 43A of the Act. 3. Section 111A of the Companies Act was inserted b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sfers or the intimation of transmission was delivered to the company, as the case may be. 6. It may be noted herein itself that the introduction of provision of rectification however does not do away with a civil remedy. The law laid down by the Apex Court in the decision in Ammonia Supplies Corpn. (P.) Ltd. v. Modern Plastic Containers (P.) Ltd. [1998] 94 Comp. Cas. 310 with reference to section 155 of the Act, as it stood there, still has its relevance on the interpretation of section 111A(3) of the Act. 7. The question that arises herein relates to the availability of the jurisdiction under section 111A(3) of the Companies Act with reference to the time-limit prescribed therein in respect of transfers that had taken place prior to the introduction of the provision. An aggrieved party has the right to elect the forum to exercise his common law right to move the civil court to vindicate the grievances or invoke the statutory right to move the Company Law Board for relief. The Apex Court held in the decision Ammonia Supplies Corpn. (P.) Ltd. s case ( supra ) that the jurisdiction under section 155 of the Act was summary in nature. However, when the claim is based on t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dment Act of 1997 by addition of words "any other law for the time being in force", is retrospective and hence the petition was maintainable. 10. According to the respondents herein as on the date of the amendment, the respondents had a subsisting civil right, as such, section 111A of the Companies Act has application and relevancy to the already existing or subsisting right meaning thereby the legislative changes are not be read as prospective to cover cases arising on or after 15-1-1997, calling for rectification, thereby make the respondents remediless. 11. The Company Law Board considered the rival submissions and held that when the respondents applied to the Company Law Board in December 1995 under section 111A of the Companies Act, the Company Law Board dismissed the petition on the ground that their remedy would not be under section 111A of the Companies Act before the Company Law Board. By reason of insertion of "violation of any other provisions of law" in section 111A of the Companies Act with effect from 15-1-1997, the rights of the petitioners to move the Company Law Board has been recognised. The amendment being clarificatory, the period of limitations of two m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ot extend the time for considering the case of this nature. He also submitted that the section 111A(3) of the Companies Act is prospective in character, it being substantive as well as a procedural provision. He submitted that the introduction of "any other law for the time being in force" in section 111A(3) of the Act is substantive in its character. That the statutory remedy for rectification for violation of other Act was constituted only on and from 15-1-1997. Consequently, the only remedy available to the respondents herein from 15-1-1997, is to go before the civil court. He also submitted that when there is only a common law right available, the respondents ought to have taken recourse to the same. In support of this proposition, he relied on the decision in Shirish Finance Investment (P.) Ltd. v. M. Sreenivasulu Reddy [2002] 109 Comp. Cas. 913 (Bom.). Apart from this substantive point, he also made submissions on the allegations of fraud. 13. Per contra , Mr. Aravind P. Datar, learned senior counsel appearing for the respondents herein submitted that the first order by the Company Law Board was passed on 6-6-1997. The second petition was preferred in the year Nove ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... brought forth by way of substitution of the existing provisions, when the section itself does not expressly state so. 16. Legislation in modern state is directed with some policy to effectuate some public benefit or cure, curb a menace. The normal rule of interpretation is every statute or amendment to the statute is prospective prima facie unless it is expressly or by necessary implication made to have retrospective operation. Hence, it is not necessary to give retrospectivity to the statute only through express provision. Equally, the rule against retrospective construction is not applicable as a general proposition, merely because a part of the requisites for its action is drawn from facts antecedent in point of time to its passing of the enactment. Dilip v. Mohd. Azizul Haq AIR 2000 SC 1976. It is an accepted canon of interpretation that in deciding the question of application of particular statutory provision to past events, the language used is studying factor to look at. It is held that a bare mechanical interpretation of the words and the application of legislative intent, devoid of purpose, will reduce most of the remedial beneficent legislation to futility. In t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... action and right of appeal, even though remedial, is substantive in character. 19. In the background of these principles, one has to look at the amendment brought forth to section 111 A of the Act with effect from 15-1-1997, as to whether the inclusion of any other law for the time being in force with limitation of two months prescribed in section 111A of the Act has to be read as a retrospective provision with limitation prescribed therein read down to cover cases of violations or breach under any other law for the time being in force happening prior to the introduction of the amendment falling beyond the period of limitation, but which are otherwise alive within the limitation period for common law remedy. 20. It is an admitted fact that right to file a petition for rectification was a statutory right as well as a common law remedy one available under section 155 of the Companies Act originally to come before the High Court or in a given case to move the civil court for that matter. The amendment in 1991 to section 111 of the Act, however resulted in the provisions of section 155 taken to section 111 of the Act. Consequently, with the introduction of section 111, apart f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Industrial Companies (Special Provisions) Act, 1985. The introduction of proviso with effect from 15-1-1997, by the Depositories Related Laws (Amendment) Act, 1997, cured the lacunae as regards the appeal remedy as well as to the scope of the rectification remedy. 21. The Amendment Act substituted with effect from 15-1-1997, the original sub-section (3) by addition of words "any other law for the time being in force" so as to include contravention of the provisions of the Companies Act, the Securities Contracts (Regulation) Act, 1956 and other applicable law enabling the aggrieved party to seek rectification before the Company Law Board. The result of this amendment is that the right to seek the rectification remedy for violation of the provisions of the Companies Act or any other law for the time being in force, hitherto a common law right came to be recognised as a statutory remedy with effect from 15-1-1997. It also shows that till the date of amendment and for the period between 20-9-1995 to 15-1-1997, the only remedy available to an aggrieved person as regards the violations of any other law for the time being in force is a civil remedy alone. Hence, till 15-1-1997, as fa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t held that in determining, therefore, the nature of the Act, regard must be had to the substance rather than to the form. The court held that : "In the absence of a retrospective operation having been expressly given, the courts may be called upon to construe the provisions and answer the question whether the Legislature had sufficiently expressed that intention giving the statute retrospectivity. Four factors are suggested as relevant; ( i ) general scope and purview of the statute; ( ii ) the remedy sought to be applied; ( iii ) the former state of the law; and ( iv ) what it was the Legislature contemplated. The rule against retrospectivity does not extend to protect from the effect of a repeal, a privilege which did not amount to accrued right." (p. 9) 23. The Apex Court considered the Haryana Municipal Act, 1973. Chapter III of the said Act deals with the composition of municipalities. The Haryana Municipal (Second Amendment) Act, 1994 (Act 3 of 1994) inserted section 13A in Chapter III of the Principal Act which provides for disqualification from being chosen as a member of a municipality if he had more than two living children, provided that a person having more than ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sought to be applied, the former state of law, the legislative intent and the employment of the expression, the Apex Court declared the petition is retrospective. 25. Similar view was taken in the case in Government of India v. Indian Tobacco Association [2005] 7 SCC 396. This case relates to the provisions of the Customs Act and the exemption notification. Dealing with the amendment notification as regards substituting a larger list containing the name of some additional places for the list of the places specified in the original notification, the Supreme Court considered the effect of the substitution to the existing provisions. Referring to the amendment by substitution, the Supreme Court held that the amendment only corrected certain obvious mistake. This decision referred to the earlier decision in Zile Singh s case ( supra ), extracting the paragraphs 23 to 25 of this decision, the Apex Court held that : "We are not oblivious of the fact that in certain situations, the court having regard to the purport and object sought to be achieved by the Legislature may construe the word substitution as an amendment having a prospective effect but such a question does not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cision in Indian Tobacco Association s case ( supra ) rests on the construction of the notification granting benefit of exemption, that on the facts of the case and having regard to the intent of the notification, even in the absence of express words, on retrospectivity, the Apex Court granted the benefit basing on the intent and object of the legislation culled out from the background of facts. In fact the Apex Court held that the court having regard to the purpose and object sought to be achieved by the legislation may construe the word substitution as an amendment having a prospective effect. In the light of the law declared by the Apex Court, and having regard to the object and the background as regards the availability of rights, the aggrieved person to invoke the common law remedy, I do not find any necessity to read rctrospecrivity to relax the limitation clause in the section. 28. There is yet another aspect to this. As already seen, section 111A(3) of the Act prior to the Amendment Act, 1997, covered cases of violation falling under the SEBI Act and the Sick Industrial Companies (Special Provisions) Act, 1985, which need to be petitioned within the time-limit of two ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Act recognises a right under the previsions of the Companies Act to seek relief in summary manner for rectification. Yet, at the same time, the common law right to file a petition is always available on the date as well as post the date when the amendment was brought forth. 30. Learned counsel for the appellants, referring to the Maxwell on the Interpretation of Statutes, Craies on Statute Law and Bennion on Principles of Statutory Interpretation, in support of his contention, submitted that unless the statute intended retrospectivity to the provisions, the same cannot be read into, more so, where there is no ambiguity pointed out in the amended provision. He also submitted that when common law right had not been taken away from the respondents, the prayer for retrospectivity could not be granted to the provisions of statutory remedy of rectification. Learned counsel in this connection placed reliance on the decision in New India Insurance Co. Ltd. s case ( supra ), and submitted that the retrospectivity can be read only in cases of procedural law and not substantive law. 31. The decision cited by learned counsel for the appellants is also relied on by learned counsel fo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Legislature did not think it necessary to affect the pending suits but wanted the cheap remedy to be available as soon as the Tribunal was constituted by the State Governments, in all cases irrespective of the date of the accident, provided the remedy of going to the court was not barred on the date of the constitution of the Tribunal. The Court felt that the limitation in such cases have to be solved. The Apex Court further held that if a party was not able to file an application for no fault of his but because the Tribunal was not in existence, it would not be a case where it could be said that the applicant was prevented by sufficient cause from making the application in time. For considering the question of limitations, the Apex Court gave two reasons, which are : "(1) Time for the purpose of filing the application under section 110A did not start running before the constitution of the Tribunal. Time had started running for the filing of the suit but before it had expired the forum was changed. And for the purpose of the changed forum, time could not be deemed to have started running before a remedy of going to the new forum is made available. (2) Even though by and large ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Ajay Pradhan v. State of M.P. AIR 1988 SC 1875 and Nelson Motis v. Union of India AIR 1992 SC 1981, in support of the contention that unless the statute intended retrospectivity, reading down of statute is not permissible to confer jurisdiction on the Company Law Board to entertain the applications for rectification in respect of the company law violations, or any other law for that matter alleged to be committed much prior to the introduction of the amendment to section 111A(3) of the Act. He also referred to a decision in Shirish Finance Investment (P.) Ltd. s case ( supra ) that when common law right is already available, a person cannot have grievance on this. In the context of these decisions, the appellants prayed that the appeal be allowed. 35. Mr. Aravind P. Datar, learned senior counsel appearing for the respondents, however, submitted that the second petition was preferred in November, 1997, and the first petition was dismissed on 6-6-1997. Going by the fact that the amendment itself was available on 15-1-1997, the application was there when the first order was made, learned counsel submitted that there was no delay in filing the application, considering t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e section to show that the amendment has put an end to the common law right to leave the affected party remediless. Consequently, to this extent the reliance placed by the respondents in the case of New India Insurance Co. Ltd. ( supra ), is not sustainable. The situation which prompted the Apex Court to read retrospectivity as in the reported decision is not same in the case on hand to read an implied retrospectivity. There is nothing in the objects to suggest that the Legislature intended to rope in violations of other laws irrespective of the time-limit to give a right under section 111A(3) of the Act to base the cause of action drawn from past events. The common law right which was available for the period of 1995 to 1997 remain intact even after the amendment and the aggrieved party could assert that the right by filing a suit before the court of competent jurisdiction a right which continues even after the amendment. It must be noted that the amendment does not in any way whittle down or abrogate the common law remedy. Post the amendment, both the common law and statutory remedy are concurrent remedies available leaving open an element of election to the parties concerned. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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