IMPORTANT POINTS
The Companies Act, 1956 was enacted by the Central Legislature which draws its legislative power from Entry 43, List I of the 7th Schedule to the Constitution of India. The Act dealt with Trading Corporations, other than non-trading corporations falling under Item 32, List II. The State legislature derived its powers to enact the Kerala Non-Trading Companies Act, 1961 from Item 32, List II of 7th Schedule. Both the enact enactments deals with regulation and winding up of incorporated companies and are complementary to each other to that extent.

ORDER :

1. In C.P. No. 17/KOB/2020 filed by respondents 1 to 4 under Sections 241 and 242 of the Companies Act, 2013, the National Company Law Tribunal passed Ext.P1 interim order on 22.06.2020 appointing an Interim Administrator to manage the petitioner-Company until further orders. The petitioner filed this writ petition invoking Article 226 of the Constitution of India seeking to quash the said Ext.P1 interim order and to declare that the National Company Law Tribunal (NCLT) has no jurisdiction to entertain Ext.P2 Company Petition.

2. The petitioner has a statutory remedy of appeal against Ext.P1 order under Section 421 of the Companies Act, 2013 and therefore a writ petition is not ordinarily maintainable. However, since the petitioner has raised an issue questioning the jurisdiction of the NCLT over the petitioner-Company, it has become necessary to decide on the jurisdiction as a preliminary issue and hence, this order.

3. Heard Senior Advocate Ramesh Babu assisted by Advocate Saji Varghese appearing for the petitioner-Company, Advocate Philip Mathew counsel for respondents 1 to 4, Senior Advocate George Cheriyan assisted by Advocate K.S. Santhi appearing for the 5th respondent, Advocate Roshan Alexander appearing for the 6th respondent, Advocate Jacob P. Alex counsel for the 8th respondent, Advocate P. Vijayakumar ASGI appearing for respondents 9 and 10, Senior Advocate Joseph Kodianthara assisted by Advocate G. Harikumar counsel for the 11th respondent and Advocate S. Easwaran appearing for additional respondents 14 and 15.

4. The petitioner is a Company governed by the Kerala Non-trading Companies Act, 1961. Section 3 of the Act, 1961 reads as follows:-

“Application of the Companies Act, 1956 (Central Act I of 1956) to non-trading companies with objects confined to the State of Kerala - The Companies Act, 1956, (Central Act I of 1956), in so far as it is the law relating to companies, other than trading corporations (including banking, insurance and financial corporations), with objects not confined to one State shall, mutatis mutandis, and subject to the modification specified in the Schedule to this Act, be applicable to the State of Kerala and shall be the law relating to companies, other than trading corporations (including banking, insurance and financial corporations), with objects confined to the State of Kerala.”

Therefore, the Companies Act, 1956 will apply to the petitioner. But, the Companies Act, 1956 was repealed by Section 465 of the Companies Act, 2013.

5. The crux of the arguments of the petitioner is that Section 3 of the Act, 1961 is an instance of legislation by “Incorporation by Reference.” The State Legislature has bodily lifted the Act, 1956 and incorporated the same in the Act, 1961. Subsequent repeal of the Act, 1956 by the Parliament shall not affect the Act, 1956 as incorporated in the Act, 1961 by the State Legislature. The new Companies Act, 2013 will not govern the non-trading companies like the petitioner as long as the same is not adopted or incorporated by the State Legislature. Hence, the Company Petition under the Companies Act, 2013 is not maintainable. If it is assumed that the Companies Act, 2013 will apply, then it will be an instance of abdication of power by the State Legislature. The learned Senior Counsel argued that adoption of provisions of another Act by simple reference or citation with intention to take in subsequent amendments also to that other Act, will be permissible only if both Acts are creatures of the same Legislature.

6. The defence of the contesting respondents is that Section 3 is an instance of Legislation by “Simple Reference” and hence all subsequent amendments made to the Companies Act, 1956 including the substituted Companies Act, 2013 will apply to the petitioner. Though the counsel for the 5th respondent made an alternate argument that the Act, 1961 will not apply to the petitioner and it was always the Act, 1956 and now the Act, 2013 which would apply to the pe