Legislation by reference under a state enactment allowed later Companies Act amendments to bar civil court jurisdiction.

A bye-law objection based on an arbitration clause was rejected because no binding clause requiring prior referral to arbitration was established. The Kerala Non Trading Companies Act, 1961 was held to operate by legislation by reference: it applies the Companies Act, 1956 mutatis mutandis through Section 3 rather than bodily incorporating its provisions. As a result, later amendments to the Companies Act, 2013 continued to apply, including the civil court bar under Section 430. The suit was therefore held not maintainable in civil court, and the plaint was ordered to be returned for presentation before the proper authority.

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Issues: (i) Whether the suit was barred for want of invocation of the arbitration clause in the bye-laws. (ii) Whether the Kerala Non Trading Companies Act, 1961 incorporated the Companies Act, 1956 so as to exclude the later amendments in the Companies Act, 2013 and bar the suit under Section 430 of the Companies Act, 2013.

Issue (i): Whether the suit was barred for want of invocation of the arbitration clause in the bye-laws.

Analysis: The bye-law objection was examined with reference to the earlier decision on the same society, and the existence of a binding arbitration clause was negatived. The dispute was therefore not shown to be one that had to be referred to arbitration before approaching the civil court.

Conclusion: The objection based on arbitration was rejected.

Issue (ii): Whether the Kerala Non Trading Companies Act, 1961 incorporated the Companies Act, 1956 so as to exclude the later amendments in the Companies Act, 2013 and bar the suit under Section 430 of the Companies Act, 2013.

Analysis: Section 3 of the Kerala Non Trading Companies Act, 1961 makes the Companies Act, 1956 applicable to non-trading companies with the modifications in the Schedule. The provision does not bodily lift any specific section of the Companies Act into the State enactment, but merely makes the Central Act applicable mutatis mutandis. In this setting, the scheme of the Act, the absence of any self-contained code on incorporation, regulation or winding up, and the need to refer back to the Companies Act for the operative rules indicated legislation by reference and not legislation by incorporation. On that basis, subsequent amendments to the Companies Act continued to apply, including the jurisdictional bar under Section 430 of the Companies Act, 2013.

Conclusion: The suit was held to be not maintainable in a civil court and the bar under Section 430 operated.

Final Conclusion: The revision failed. The finding that the suit as framed was not maintainable was affirmed and the plaint was directed to be returned for presentation before the proper authority.

Ratio Decidendi: Where a State enactment merely makes a Central statute applicable mutatis mutandis without incorporating any specific provision bodily into the State law, the arrangement is one of legislation by reference and subsequent amendments to the Central statute apply to the State enactment.

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