TMI Blog2020 (1) TMI 1375X X X X Extracts X X X X X X X X Extracts X X X X ..... liament , Comptroller and Auditor- General , Supreme Court , with corresponding words which are required to make a Central Statute applicable to a State. The effect of section 3 is that, the provisions of the Companies Act 1956, with certain limited modifications to the words mentioned in the Schedule of the Act, are made completely applicable to the Non Trading Act. It is pertinent to note that, no specific provision of the Companies Act, is sought to be incorporated in the Non Trading Act. In fact entire provision of the Companies Act 1956 to the extent applicable are made applicable by a single reference. None of the provision of the Companies Act is lifted and incorporated in the Non- trading Act. There is nothing in the Non-trading Act to indicate that, any single provision in the Companies Act was introduced in the incorporating Statute and made part of it. Further, there is nothing in the Act to show that it was an instance of legislation by incorporation. In the Non Trading Companies Act, there is absolutely no provision relating to the incorporation or winding up of the companies other than the non trading corporation. For the detailed provisions, one has to search for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the yogam. The prayer sought in the suit was to permanently injunct the second defendant from convening, holding and conducting annual general meeting of the first defendant proposed to be held on 15.02.2019 or any other annual general meeting, for moving the amendments proposed in the notice produced along with the plaint. Along with the suit, an interim injunction in the above terms was sought, by filing I.A.No.562 of 2019. Defendants appeared and filed objections, inter alia, contending that, being a non trading company, in the light of the bar under the Companies Act, suit was not maintainable. Repelling the above objections, interim injunction as sought was granted by the learned Munsiff. This was challenged by the defendants 1 and 2 in C.M.A.No.7 of 2019. Learned first Additional District Judge, Kollam, by the impugned judgment allowed the appeal and C.R.P.248/19 held that the suit was not maintainable, in the light of the Companies Act 2013, which provided for an alternate forum of adjudication of the disputes. Consequently, the court below was directed to return the plaint. It was held that the suit was not maintainable in a civil court. This is under challenge at the ins ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... existing company, it was deemed to be registered under the Indian Companies Act, 1956. Even after commencement of Kerala Non Trading Companies Act, 1961, SNDP C.R.P.248/19 Yogam continued to be governed by the Companies Act, 1956 till the Central Government passed order dated 23.08.2005 under section 399(4) of the Companies Act, 1956 finding that the appropriate authority would be the State Government under the Kerala Non Trading Companies Act, 1961. Though this is not admitted by plaintiffs, there seems to be unanimity in the contention of both sides that yogam is governed by the Kerala Non Trading Companies Act 1961. 8. The Non Trading Act came into operation with effect from 01.03.1962. The entire dispute between the parties revolve around the interpretation of section 3 of the Non Trading Act. The above provision reads as follows: Section 3 : Applications of the Companies Act 1956 (Central Act 1 of 1956) to non trading companies with objects confined to the State of Kerala The Companies Act 1956 (Cental Act 1 of 1956) in so far as it is the law relating to companies, other than trading corporation (including banking, insurance and financial corporations) with objects not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Indian Companies Act, 1913, was superseded by the Companies Act 1956 (Cental Act 1 of 1956) The Indian Companies Act, 1913, as also the Travancore and Cochin Companies Act provided for the incorporation, regulation and winding up of companies, including non-trading corporations with objects confined to the State. The subject matter incorporation regulation and winding up of corporations whose objects confined to one State falls under entry 32 of List II of the Seventh Schedule to the Constitution of India and therefore the State Legislature has exclusive power to make laws with respect to that matter. Hence, the provisions of the Companies Act, 1956, passed by Parliament, cannot have any application to such non trading corporations in the State. As regards the C.R.P.248/19 incorporation, regulation and winding up of such corporations, the provisions of Travancore Companies Act 1114 and the Cochin Companies Act 1120, continue to be in force in the Travancore and Cochin areas respectively, since the repeal of these Acts by Parliament cannot have effect so far as those provisions are concerned. Similarly, the provisions of the Indian Companies Act, 1913 relating to non tradi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at, it seems to be no less logical to hold that where certain provisions from an existing Act have been incorporated into a subsequent Act, no addition to the former Act, which was not expressly made applicable C.R.P.248/19 to the subsequent Act, can be deemed to be incorporated in it, at all events, if it is possible for the subsequent Act to function effectually without the addition. 15. The Constitution Bench of the Supreme Court in Ram Sarup v. Munshi and Ors. (AIR 1963 SC 553) had occasion to consider the above aspect in detail. Section 15 of Punjab pre-emption Act 1913, defined agricultural land to mean land as defined in Punjab Alienation of Land Act, 1900. By Adaptation of Laws (3 rd amendment) Order 1951, Punjab Alienation of Land Act 1900 was repealed. Answering the question whether the repeal of the Punjab Alienation of Land Act, 1900 will affect the continued operation of the Pre-emption Act, it was held that the expression agricultural land in the later Act has to be read as if the definition in the Alienation of Land Act has been bodily transposed into it and hence, repeal of 1900 Act will have no impact. It was held to be a case of legislation by incorporation. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e distinction between a mere reference to or citation of one statute in another and an incorporation which in effect means, bodily lifting a provision of one enactment and marking it in a part of another. Elucidating the clear and wide distinction between amendment by incorporation and amendment by reference, Supreme Court proceeded to explain that, where there was a mere reference to or citation of one enactment in another by incorporation, section 8(1) applies and the repeal and re-enactment of the provision referred to or cited has the effect set out in that section and the reference to the provision repealed was required to be construed as reference to the provision as re-enacted. However, it was further held that, where a provision of one statute was incorporated in another, the repeal or amendment of the former does not affect the latter. The effect of incorporation was as if the provision incorporated was written out in the incorporating statute and was a part of it. Legislation by incorporation was a common legislative device employed by the legislature, where the legislature for convenience of drafting incorporates provisions from an existing statute by reference to that s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e and the meaning of motor vehicle must, therefore, be taken to be the same as defined from time to time in section 2(18) of the Motor Vehicles Act, 1939. Refuting the above argument, it was held that, it was a case of incorporation and not reference and the definition in section 2(18)of the Motor Vehicles Act, 1939 as then existing, was incorporated in section 2(c) of the Taxation Act and neither repeal of the Motor Vehicles Act nor any amendment in it would affect the definition of motor vehicle in section 2(c) of the Taxation Act. The Supreme Court held that when two acts were complementary or interconnected, legislation by reference may be an easier method because a definition given in one Act C.R.P.248/19 may be made to do as the definition in another Act, both of which being enacted by the same legislature. To arrive at the above conclusion, the Supreme Court, referred to the decision in re.Wood's Estate (supra). 21. The same legal issue came up for consideration before the three Judges Bench of the Supreme Court again in Bharat Coop. Bank (Mumbai) Ltd. v. Coop. Bank Employees Union ((2007)4 SCC 685 ). In that decision, the question as to which was the appropriate Go ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ute. Once incorporation was made, the provision incorporated became an integral part of the statute to which it was transposed and thereafter there was no need to refer to the statue from which the incorporation was made C.R.P.248/19 and any subsequent amendment made in it has no effect on the incorporating statute. On the contrary, in the case of a mere reference or citation, a modification, repeal or re-enactment of the statute, that was referred will also have effect on the statute in which it was referred. 23. Supreme Court referred to the law laid down in Ram Sarup's case and Bolani Ores Ltd.'s case (supra). Supreme Court held that when there is a mere reference to a provision of one statute in another without incorporation, then, unless a different intention clearly appears, the reference would be construed as a reference to the provision as may be in force from time to time in the former statute. But, if a provision of one statute is incorporated in another, any subsequent amendment in the former statute or even its total repeal would not affect the provision as incorporated in the latter statute. 24. However the Supreme Court noted that the precise distinction ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion to terms like Central Government , Government , Parliament , Comptroller and Auditor- General , Supreme Court , with corresponding words which are required to make a Central Statute applicable to a State. The effect of section 3 is that, the provisions of the Companies Act 1956, with certain limited modifications to the words mentioned in the Schedule of the Act, are made completely applicable to the Non Trading Act. It is pertinent to note that, no specific provision of the Companies Act, is sought to be incorporated in the Non Trading Act. In fact entire provision of the Companies Act 1956 to the extent applicable are made applicable by a single reference. None of the provision of the Companies Act is lifted and incorporated in the Non- trading Act. There is nothing in the Non-trading Act to indicate that, any single provision in the Companies Act was introduced in the incorporating Statute and made part of it. Further, there is nothing in the Act to show that it was an instance of legislation by incorporation. For the purpose of deciding the various aspects of law applicable to Non Trading Companies, other than trading corporations with objects not confined to more than ..... X X X X Extracts X X X X X X X X Extracts X X X X
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