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2025 Supreme(Ker) 1290
IN THE HIGH COURT OF KERALA AT ERNAKULAM
DEVAN RAMACHANDRAN, J.
Annamanada Gramakshemam Nidhi Limited, Represented By Its Chairman – Petitioner
Versus
Union Of India, Rep. By Its Secretary, Ministry Of Corporate Affairs and Ors. – Respondents
WP(C) Nos.38860/2023, 38499/2023, 38436/2023, 38424/2023, 38065/2023, 37932/2023, 37618/2023, 37348/2023, 37058/2023, 37022/2023, 36985/2023, 36972/2023, 36949/2023, 36931/2023, 36929/2023, 36904/2023, 36878/2023, 36872/2023, 36864/2023, 36822/2023, 36796/2023, 36663/2023, 36632/2023, 36589/2023, 36442/2023, 36432/2023, 36296/2023, 36294/2023, 36277/2023, 36186/2023, 36181/2023, 36175/2023, 36157/2023, 36087/2023, 36097/2023, 35984/2023, 35982/2023, 35965/2023, 35934/2023, 35664/2023, 35639/2023, 35624/2023, 35587/2023, 35583/2023, 35532/2023, 35505/2023, 35465/2023, 35411/2023, 35374/2023, 35369/2023, 35257/2023, 35244/2023, 35196/2023, 35181/2023, 35136/2023, 35096/2023, 34930/2023, 34861/2023, 34818/2023, 34649/2023, 34643/2023, 34548/2023, 34406/2023, 34110/2023, 34088/2023, 33910/2023, 33849/2023, 33807/2023, 33682/2023, 33633/2023, 33570/2023, 33490/2023, 33346/2023, 32909/2023, 32752/2023, 32563/2023, 32391/2023, 32348/2023, 32235/2023, 32324/2023, 32152/2023, 32105/2023, 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15988/2021, 19278/2021, 12589/2021, 10074/2021, 25987/2023, 25459/2021, 20184/2023, 11653/2021, 34184/2022, 22854/2021, 25981/2023, 24651/2021, 25383/2023, 19459/2021, 14787/2023, 35/2024, 1446/2024, 22348/2021, 23701/2023, 31529/2023, 2818/2021, 6776/2021, 9099/2021, 10078/2021, 10499/2021, 10808/2021, 10908/2021, 11026/2021, 29434/2023, 34947/2023 & 38898/2023
Decided On : 19-03-2024
For the Petitioner: Sabu George, P.B. Krishnan, P.B. Subramanyan, Manu Vyasan Peter.
Other Present : Shri. S. Manu- DSGI.
Important Points
Subject
Corporate Law - Companies Act
Act Referred
Headnote
(A) Companies Act, 2013 - Section 406 - Nidhi Rules, 2014 - Amendments to Section 406 through Act 1 of 2018 challenged - Petitioners assert amendments impose unreasonable conditions, jeopardizing their status as Nidhi Companies - Government argues amendments necessary for regulation due to complaints of malpractices - Court defers coercive actions against petitioners, allowing them to apply for compounding offences and fresh declarations under NDH-4 format. (Paras 2, 3, 5, 18)
(B) Regulatory Mechanism - Reasonable restrictions permissible for financial entities - Court acknowledges necessity of regulation but leaves constitutional challenge open for future consideration. (Paras 10, 11, 12)
Facts of the case:
Petitioners are Nidhi Companies challenging amendments to Section 406 of the Companies Act, 2013, claiming they impose impossible conditions for compliance, thus threatening their operational status. (Para 2)
Findings of Court:
The court allows petitioners to apply for compounding offences and fresh declarations under NDH-4 format, while keeping the challenge to the amendments open for future consideration. (Paras 18)
Issues: Whether the amendments to Section 406 and Nidhi Rules are reasonable or oppressive to Nidhi Companies. (Para 11)
Ratio Decidendi: The court emphasizes the need for reasonable regulation of financial entities while deferring the constitutional challenge to the amendments for further scrutiny. (Paras 10, 12)
Result: Writ petitions ordered with directions for compounding offences and fresh applications under NDH-4 format.
JUDGMENT :
(DEVAN RAMACHANDRAN, J.)
[WP(C) Nos.38860/2023, 38499/2023, 38436/2023, 38424/2023, 38065/2023, 37932/2023, 37618/2023, 37348/2023, 37058/2023, 37022/2023, 36985/2023, 36972/2023, 36949/2023, 36931/2023, 36929/2023, 36904/2023, 36878/2023, 36872/2023, 36864/2023, 36822/2023, 36796/2023, 36663/2023, 36632/2023, 36589/2023, 36442/2023, 36432/2023, 36296/2023, 36294/2023, 36277/2023, 36186/2023, 36181/2023, 36175/2023, 36157/2023, 36087/2023, 36097/2023, 35984/2023, 35982/2023, 35965/2023, 35934/2023, 35664/2023, 35639/2023, 35624/2023, 35587/2023, 35583/2023, 35532/2023, 35505/2023, 35465/2023, 35411/2023, 35374/2023, 35369/2023, 35257/2023, 35244/2023, 35196/2023, 35181/2023, 35136/2023, 35096/2023, 34930/2023, 34861/2023, 34818/2023, 34649/2023, 34643/2023, 34548/2023, 34406/2023, 34110/2023, 34088/2023, 33910/2023, 33849/2023, 33807/2023, 33682/2023, 33633/2023, 33570/2023, 33490/2023, 33346/2023, 32909/2023, 32752/2023, 32563/2023, 32391/2023, 32348/2023, 32235/2023, 32324/2023, 32152/2023, 32105/2023, 32035/2023, 32029/2023, 32022/2023, 31984/2023, 31808/2023, 31659/2023, 31582/2023, 31500/2023, 31418/2023, 31413/2023, 31369/2023, 30971/2023, 30846/2023, 30694/2023, 30602/2023, 30585/2023, 30568/2023, 30431/2023, 30218/2023, 30089/2023, 29943/2023, 29904/2023, 29854/2023, 29847/2023, 29818/2023, 29811/2023, 29800/2023, 29783/2023, 29643/2023, 29623/2023, 29429/2023, 27802/2023, 25224/2023, 38585/2023, 35321/2023, 33841/2023, 31186/2023, 11704/2022, 10272/2021, 34455/2023, 34514/2023, 41360/2023, 41284/2023, 38981/2023, 39005/2023, 39256/2023, 39264/2023, 39339/2023, 39480/2023, 39598/2023, 39614/2023, 39660/2023, 39945/2023, 39964/2023, 39995/2023, 40020/2023, 40108/2023, 40192/2023, 40206/2023, 40340/2023, 40480/2023, 40524/2023, 40609/2023, 40645/2023, 40674/2023, 40688/2023, 40777/2023, 40796/2023, 40804/2023, 40841/2023, 40887/2023, 40974/2023, 41037/2023, 41310/2023, 41747/2023, 31115/2023, 39529/2023, 42086/2023, 42158/2023, 42208/2023, 42363/2023, 42396/2023, 42792/2023, 43349/2023, 43223/2023, 43277/2023, 43870/2023, 42744/2023, 194/2024, 195/2024, 43110/2023, 2290/2024, 2399/2024, 2788/2024, 42677/2023, 15715/2023, 32651/2023, 33713/2023, 12529/2023, 18015/2023, 27221/2023, 23833/2023, 15599/2023, 26000/2023, 14602/2023, 31721/2023, 23006/2023, 17263/2023, 20865/2023, 31180/2023, 20144/2023, 11741/2023, 23811/2023, 16370/2023, 30174/2023, 26131/2023, 21675/2023, 27175/2023, 28137/2023, 953/2024, 31538/2023, 4635/2024, 4464/2024, 4436/2024, 32648/2023, 5705/2024, 5896/2024, 3644/2024, 7740/2024, 6265/2024, 6250/2024, 7216/2024, 21015/2023, 6259/2024, 20500/2022, 27699/2021, 5899/2022, 20096/2022, 23292/2021, 13095/2021, 21694/2021, 12892/2021, 19491/2022, 19093/2022, 26893/2023, 23095/2023, 23694/2023, 24094/2023, 27207/2021, 29691/2023, 28692/2023, 8294/2023, 27201/2023, 19698/2021, 22407/2023, 15900/2021, 21401/2023, 11299/2021, 35406/2022, 37004/2022, 13807/2021, 17326/2021, 22730/2021, 12408/2021, 22127/2022, 15329/2022, 21006/2021, 9929/2022, 21807/2021, 14724/2023, 26725/2023, 19410/2021, 25125/2021, 25008/2023, 26717/2023, 28608/2023, 13919/2021, 12601/2021, 22719/2021, 24317/2021, 316/2023, 25420/2023, 19520/2023, 24313/2023, 29318/2023, 12506/2021, 12706/2021, 22107/2021, 11302/2021, 11501/2021, 22305/2023, 14502/2021, 24509/2023, 21305/2022, 27902/2023, 29104/2023, 15450/2022, 29305/2023, 30105/2021, 18046/2022, 19445/2021, 24244/2023, 24643/2023, 16565/2023, 43444/2023, 20147/2021, 12949/2021, 23041/2023, 20147/2023, 21435/2023, 28748/2023, 22639/2023, 5549/2024, 24040/2023, 5744/2024, 26945/2023, 25835/2023, 26944/2023, 23145/2023, 20142/2023, 25023/2023, 18743/2023, 26745/2021, 21422/2023, 17544/2021, 13541/2021, 12741/2021, 18224/2023, 20337/2021, 17536/2021, 15222/2023, 23937/2021, 17626/2023, 29134/2023, 29332/2023, 34637/2022, 22332/2023, 25137/2023, 18823/2021, 24333/2023, 12430/2021, 28739/2022, 18738/2022, 19412/2023, 19013/2021, 19212/2021, 24889/2023, 20011/2021, 22815/2021, 42883/2023
