TaxTMI 
TaxTMI 
2020 (1) TMI 1375
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....e 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 instance of the plaintiffs. 3. Heard the learned counsel for the revision petitioners and learned counsel for the respondents. 4. The short question that arises in the present revision is whether the suit is maintainable. Two contentions were advanced by the defendants. Firstly, Rule 71 of the bye-law provides an arbitration clause which was not invoked by the plaintiffs. Th....
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....e 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 confined to one State, shall mutatis mutandis and subject to the modifications 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 corporation (including banking, insurance and financial corporation) with objects confined to the State of Kerala. C.R.P.248/19 9. Section 3 provided that the Companies....
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....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 trading corporations with objects confined to one State, continue on force in the Malabar area, notwithstanding the repeal of that Act by the Companies Act 1956. The Non Trading Act got assent of Governor on 22.12.1961. It was published in the Government Gazette on 26.12.1961, notified on 20.02.1962 by G.O.No.3310/A4/62/1D and came into effect on 01.03.1962. Consequently, the Act came into force with ....
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....on 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. 16. The distinction between the above two legislative tools came up before the Supreme Court in Mahindra & Mahindra Ltd. v. Union of India & Anr. (1979 KHC 562). Supreme Court was called upon to consider the scope of an appeal provided under section 55 of the Monopolies and Restrictive Trade Practices Act, 1969. It provided that, any aggrieved person may prefer an appeal on one or more of the grounds speci....
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....nt 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 statute instead of setting out for itself at length the provisions which it desires to adopt. Once the C.R.P.248/19 incorporation was made, the provision incorporated becomes an integral part of the statute to which it was transposed and thereafter there was no need to refer to the statute from which the incorporation was made and any subsequent amendment made in it has no effect on the incorporating statute. 1....
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....r 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 Government in relation to a multi-state cooperative bank carrying on business in more than one State came up for consideration. Section 2(bb) of the Industrial Disputes Act defined "banking company" as to mean "banking company as defined in section 5 of the Banking Companies Act 1949 (10 of 1949) having branches or other establishments in more than one state, and includes the Export Import Bank of India, the Industrial Re....
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.... 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 between incorporation by reference and adoption of provisions by mere reference or citation was not too easy to be highlighted. It was held that the distinction was one of difference in degree and was often blurred. The fact that no clear cut guidelines or distinguishing features have been spelt out to ascertain whether it belongs to one or the other category makes the task of identification difficult. The semantics associat....
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....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 one State, one has to search the various provisions of the Companies Act. The C.R.P.248/19 opening words of the Non-trading Act indicate that the Act was intended to provide for the incorporation, regulation and winding up of the companies other than the trading corporation with objects confined to the State of Kerala. However, in the Non Trading Companies Act, there is absolutely no provision relating to the incorporation or windi....