LegalCrystal – Blog

ACT NO. 12 OF 2003

[13th January, 2003.]

An Act to provide, keeping in view of the economic development of the country, for  the establishment of a Commission to prevent practices having  adverse  effect  on  competition, to  promote  and   sustain  competition  in markets, to protect the interests of consumers and  to  ensure  freedom of trade carried on by other participants in  markets, in India, and for matters connected therewith or incidental thereto.

BE it enacted by Parliament in the Fifty-third Year of the Republic of India as follows:-

CHAPTER I

PRELIMINARY

1.   Short title, extent and commencement-

1)   This Act may be called the Competition Act, 2002.

2)   It extends to the whole of India except the State of Jammu and       Kashmir.

3)   It shall come into force on such date as the Central Government may, by notification in the Official Gazette, appoint:

Provided that different dates  may   be  appointed  for   different provisions  of this Act and any reference in any such provision to the commencement  of  this  Act shall be construed as a reference  to  the coming into force of that provision.

2.   Definitions.-In this Act, unless the context otherwise requires -

a) “acquisition” means, directly or indirectly, acquiring or agreeing to acquire-

(i)   shares, voting rights or assets of any enterprise;  or

(ii)   control over management or control over assets of any enterprise;

b) “agreement” includes any arrangement or understanding or action in concert,-

(i)   whether or not, such arrangement, understanding  or  action  is formal or in writing;  or

(ii)   whether or not such arrangement, understanding or action is intended to be enforceable by legal proceedings;

c) “cartel” includes  an   association  of  producers,  sellers, distributors,  traders or service providers who, by agreement amongst  themselves,  limit,  control  or attempt to  control  the  production, distribution,  sale  or price of, or, trade in goods or provision  ofservices;

d) “Chairperson” means the Chairperson of the Commission  appointed under sub-section (1) of section 8;

e) “Commission” means the Competition Commission of India established under sub-section (1) of section 7;

f) “consumer” means any person who-

(i)   buys any goods for a consideration which has been paid or promised  or  partly  paid and partly promised, or under any system of  deferred payment  and includes any user of such goods other than the person who buys  such goods for consideration paid or promised or partly paid  or partly promised, or under any system of deferred payment when such use is  made  with the approval of such person, whether such  purchase  of goods is for resale or for any commercial purpose or for personal use;

(ii)   hires  or avails of any services for a consideration  which  has been paid or promised or partly paid and partly promised, or under any system  of  deferred  payment  and includes any  beneficiary  of  such services  other than the person who hires or avails of the services for  consideration paid or promised, or partly paid and partly promised, or  under  any system of deferred payment, when such services are  availed of with the approval of the first-mentioned person whether such hiring or  availing of services i for any commercial purpose or for  personal use;

g)   ”Director  General” means the Director General  appointed  under sub-section  (1) of section 16 and includes any Additional,  Joint, Deputy or Assistant Directors General appointed under that section;

h) “enterprise” means a person or a department of the Government, who or  which  is, or has been, engaged in any activity, relating to the production, storage, supply, distribution, acquisition or control of articles  or  goods, or the provision of services of any kind,  or  in investment,  or in the business of acquiring, holding, underwriting or dealing with shares, debentures or other securities of any other body corporate,  either  directly  or through one or more of its  units  or is  located at the same place where the enterprise is located or at  a different  place  or  at different places, but does  not  include  any activity of the Government relatable to the sovereign functions of the Government  divisions  or subsidiaries, w ether such unit or division  or subsidiary  nt including all activities carried on by the  departments of  the  Central  Government  dealing with  atomic  energy,  currency, defence and space.

Explanation.-For the purposes of this clause,-

(a)  ”activity” includes profession or occupation;

(b) “article” includes  a new article and “service” includes  a  new service;

(c)  ”unit” or “division”, in relation to an enterprise, includes-

(i)   a  plant  or  factory established for  the  production,  storage, supply, distribution, acquisition or control of any article or goods;

(ii)   any  branch  or  office established for  the  provision  of  any service;

i)    ”goods” means goods as defined in the Sale of Goods Act, 1930  (8 of 1930) and includes-

(A)  products manufactured, processed or mined;

(B)  debentures, stocks and shares after allotment;

(C)  in relation to goods supplied, distributed or controlled in India, goods imported into India;

j) “Member”  means  a  Member  of  the  Commission  appointed  under sub-section (1) of section 8 and includes the Chairperson;

k) “notification“  means  a notification published in  the  Official Gazette;

l)    ”person” includes-

(i)   an individual;

(ii)   a Hindu undivided family;

(iii)  a company;

(iv)  a firm;

(v)   an  association  of  persons or a body  of  individuals,  whether incorporated or not, in India or outside India;

(vi)  any  corporation established by or under any Central,  State  or Provincial  Act  or a Government company as defined in section 617  of the Companies Act, 1956 (1 of 1956);

(vii) any  body  corporate  incorporated by or under the  laws  of  a country outside India;

(viii) a co-operative society registered under any law  relating  to co-operative societies;

(ix)  a local authority;

(x)  every artificial juridical person, not falling within any of  the preceding sub-clauses;

PROVISIONS APPLICABLE TO EVERY MODE OF WINDING UP

CHAPTER V

Proof and ranking of claims

528.      Debts of all descriptions to be admitted to proof.

In every winding up (subject, in the case of insolvent companies, to the application in accordance with the provisions of this Act of the law of insolvency), all debts payable on a contingency, and all claims against  the company,  present or future, certain  or contingent, ascertained or sounding only in damages, shall be admissible to proof against the company, a just estimate being made, so far as  possible, of  the value  of  such debts or claims as  may  be subject  to any contingency, or may sound only in damages, or for some  other reason may not bear a certain value.

529.      Application of insolvency rules in winding up of insolvent companies.

(1)        In the winding up of an insolvent company, the same rules shall prevail and be observed with regard to –

(a)        debts provable;

(b)        the valuation of annuities and future  and  contingent liabilities; and

(c)        the respective  rights of secured  and unsecured creditors; as are in force for the time being under the  law of insolvency with respect to the estates of persons adjudged insolvent:

1[Provided that the security of every secured creditor shall be deemed  to be subject to a pari passu charge in favour of the  workmen  to  the extent of the workmen's portion therein, and, where a  secured creditor, instead of relinquishing his security and proving his  debt, opts to realise his security –

(a)        the liquidator  shall  be entitled to represent the workmen    and enforce such charge;

(b)        any amount realised by the liquidator by way of enforcement  of such charge shall be applied ratably for  the discharge of workmen's dues; and

(c)        so much  of the debt due to such creditor as could  not  be realised by him by virtue  of  the  foregoing provisions  of  this proviso or the amount of  the workmen's portion in his security, whichever is less, shall rank  pari passu  with  the workmen's dues for the purposes  of  section 529A.]

(2)        All persons who in any such case would be entitled to prove for and receive dividends out of the assets of the company, may come in under the winding up, and make such claims against the company as they respectively are entitled to make by virtue of this section,

2[Provided  that if a secured creditor instead of relinquishing his  security  and proving  for his  debt  proceeds  to  realise  his security,  he shall be liable to 3[pay his portion of the expenses] incurred by the liquidator(including a provisional liquidator, if any) for the preservation of the security before its realization  by  the secured creditor.]

1[Explanation.-For the purposes of this proviso, the portion of expenses incurred by the liquidator for the preservation of a security which the secured creditor shall be liable to pay shall be the whole of the expenses less amount which bears to such expenses the same proportion as the workmen's portion in relation to the security bears to the value of the security.]

1[(3)      For the purposes of this section, section 529A and section 530 –

(a)        "workmen",  in  relation  to  a  company,   means   the employees of the company, being workmen within the meaning of the Industrial Disputes Act, 1947(14 of 1947);

(b)        "workmen's dues", in relation to a company, means the aggregate  of the following sums due from the company to  its workmen, namely –

(i)         all  wages or salary including wages payable  for time  or piece work and salary earned wholly or in  part by way of commission of any workman, in respect of services  rendered to the company and  any  compensation payable  to any workman under any of the  provisions of the Industrial Disputes Act, 1947 (14 of 1947);

(ii)         all accrued holiday remuneration becoming  payable to any workman, or in the case of his death to any other person in his right, on the termination of his employment before, or by the effect of the winding up  order or resolution;

(iii)        unless the company is being wound up voluntarily merely for the purposes of reconstruction or of amalgamation with another company, or unless the company has, at the commencement of the winding up, under such contract with insurers as is mentioned in section 14 the Workmen's Compensation Act, 1923 (8 of 1923), rights capable of being transferred to and vested in the workman, all amounts due in respect of any compensation or liability for compensation under the said Act in respect of  the  death or disablement of any workman of the company;

(iv)        all sums due to any workman from a provident  fund, a  pension fund, a gratuity fund or any other  fund  for the welfare of the workmen, maintained by the company;

(c)        "workmen's portion", in relation to the security of any secured  creditor of a company, means the amount which  bears to the  value  of the security the same  proportion  as the amount of the workmen's dues bears to the aggregate of –

(i)         the amount of workmen's dues; and

(ii)         the amounts of the  debts  due  to  the secured creditors.

Illustration

The value of the security of a secured creditor of a company is Rs. 1,00,000.  The total amount of the workmen's dues is Rs. 1,00,000 The amount of the  debts due  from  the company to its secured creditors is Rs. 3,00,000.  The aggregate of the amount of workmen's dues and of the amounts of debts due to secured creditors is Rs. 4,00,000. The workmen's portion of the security is, therefore, one-fourth of the value of the security, that is Rs. 25,000.]

Overriding preferential payment

529A.    Overriding preferential payment.

Notwithstanding anything contained in any other provision of this Act or any other law for the time being in force in the winding up of a company –

(a)        workmen’s dues; and

(b)        debts due to secured creditors to the extent such debts rank under clause (c) of the proviso to sub-section (1) of section 529 pari passu with such dues, shall be paid in priority to all other debts.

(2)        The debts payable under clause (a) and clause (b) of sub-section (1) shall be paid in full, unless the assets are insufficient to meet them, in which case they shall abate in equal proportions.]

530.      Preferential payments.

(1)        In a winding up, 5[subject to the provisions of section 529A, there shall be paid] in priority to all other debts –

(a)        all revenues, taxes, cesses and rates  due  from  the company  to the Central or a State Government or to a local authority at the relevant date as defined in clause (c) of sub-section (8), and having become due and payable  within  the twelve months next before that date;

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1.   Ins.  by Act 35 of 1985, s.4.

2.   Ins. by Act 65 of 1960, s. 183.

3.   Subs. by s.4, ibid.

4.   Ins. by s.5, ibid.

5.   Subs. by s.6, ibid.

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(b)        all wages or salary (including wages payable for time or piece work and salary earned wholly or in part by way of commission) of any employee, in respect of services rendered to the company and due for a period not exceeding four months within the twelve months next before the relevant date 1* ** subject to the limit specified in sub-section (2);

(c)        all accrued holiday remuneration becoming  payable to any employee, or in the case of his death to any other person in his right, on the termination of his employment before or by the effect of, the winding up order or resolution;

(d)       unless the company is being wound up voluntarily merely for the purposes of reconstruction or of amalgamation with another company, all amounts due, in respect of contributions payable during the twelve months next before  the  relevant date,  by the company as the employer of any  persons, under the  Employees’ State Insurance Act, 1948 ( 34 of  1948.)  or any other law for the time being in force;

(e)       unless the company is being wound up voluntarily merely for the purposes of reconstruction or of  amalgamation  with another  company,  or  unless  the  company  has, at the commencement of the winding up, under such a  contract  with insurers as  is  mentioned in section 14  of  the  Workmen’s Compensation Act, 1923, (8 of 1923.) rights capable of  being transferred to and vested in the workman, all amounts due in respect  of  any compensation or liability for compensation under the said Act in respect of the death or disablement  of any employee of the company;

(f)         all sums due to any employee from a  provident  fund, a pension  fund a gratuity fund-or any other  fund  for the welfare of the employees, maintained by the company; and

(g)        the expenses of any investigation held in pursuance  of section  235  or 237, in so far as they are  payable  by  the company.

POWERS OF CENTRAL GOVERNMENT TO REMOVE MANAGERIAL PERSONNEL FROM OFFICE ON THE RECOMMENDATION OF THE COMPANY 4[Company Law Board]

388B. Reference to Company Law Board of cases against managerial personnel.

(1) Where in the opinion of the Central Government there are circumstances suggesting

(a) that any person concerned in the conduct and management of the affairs of a company is or has been in connection therewith guilty of fraud, misfeasance, persistent negligence or default in carrying out his obligations and functions under the law, or breach of trust; or

(b) that the business of a company is not or has not been conducted and managed by such person in accordance with sound business principles or prudent commercial practices; or

(c) that a company is or has been conducted and managed by such person in a manner which is likely to cause, or has caused, serious injury or damage to the interest of the trade, industry or business to which such company pertains; or

(d) that the business of a company is or has been conducted and managed by such person with intent to defraud its creditors, members or any other persons or otherwise for a fraudulent or unlawful purpose or in a manner prejudicial to public interest, the Central Government may state a case against the person aforesaid and refer the same to the 4[Company Law Board.] with a request that the 1[Company Law Board] may inquire into the case and 2[record a decision] as to whether or not such person is a fit and proper person to hold the office of director or any other office connected with the conduct and management of any company.

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1. Subs. by Act 65 of 1960, s. 148, for ” 310″

2. Ins. by s. 149, ibid.

3. Ins. by Act 53 of 1963, s. 9 (w.e.f. 1-1-1964).

4. Subs. by Act 31 of 1988, s. 67 (w.e.f. 31.5.1991)

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(2) Every case under sub-section (1) shall be stated in the form of an application which shall be presented to the 1[Company Law Board] or such officer thereof as it may appoint in this behalf.

(3) The person against whom a case is referred to the 1[Company Law Board] under this section shall be joined as a respondent to the application.

(4) Every such application

(a) shall contain a concise statement of such circumstances and materials as the Central Government may consider necessary for the purpose of the inquiry, and

(b) shall be signed and verified in the manner laid down in the Code of Civil Procedure, 1908, (5 of 1908.) for the signature and verification of a plaint in a suit by the Central Government.

(5) The 1[Company Law Board] may at any stage of the proceedings allow the Central Government to alter or amend the application in such manner and no such terms as may be just, and all such alterations or amendments shall be made as may be necessary for the purpose of determining the real questions in the inquiry.

Interim order by Company Law Board

388C. Interim order by Company Law Board.

(1) Where during the pendency of a case before the 1[Company Law Board] it appears necessary to the 1[Company Law Board] so to do in the interest of the members or creditors of the company or in the public interest, the 1[Company Law Board] may on the application of the Central Government or on its own motion by an order

(a) direct that the respondent shall not discharge any of the duties of his office until further orders of the 1[Company Law Board], and

(b) appoint a suitable person in place of the respondent to discharge the duties of the office held by the respondent subject to such terms and conditions as the 1[Company Law Board] may specify in the order.

(2) Every person appointed under clause (b) of sub-section (1) shall be deemed to be a public servant within the meaning of section 21 of the Indian Penal Code (45 of 1860).

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1. Subs. by Act 31 of 1988, s.67 (w.e.f.31.5.1991).

2. Subs. by Act 17 of 1967), s. 4 and Sch., for record a finding (w.e.f. 1-7-1967).

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388D. Decision of the Company Law Board.

At the conclusion of the hearing of the case, the 7[Company Law Board] shall record its decision] stating therein specifically as to whether or not the respondent is a fit and proper person to hold the office of director or any other office connected with the conduct and management of any company.

388E. Power of Central Government to remove managerial personnel on the basis of Company Law Board’s decisions.

(1) Notwithstanding any other provision contained in this Act, the 2[Central Government shall], by order, remove from office any director, or any other person concerned in the conduct and management of the affairs, of a company, against whom there is a 3[decision of the 1[Company Law Board under this Chapter]:

Provided that where a firm or a body corporate is concerned in the conduct and management of the affairs of a company as its managing agent or secretaries and treasurers, and the 4[decision of the1[Company Law Board] is against any partner in such firm, or any director of, or any person holding a general power of attorney from, such body corporate, the Central Government may also remove from the office of managing agent or secretaries and treasurers, such firm or body corporate.

5[(2) No order removing a firm or body corporate from the office of managing agents or secretaries and treasurers shall be made in pursuance of the proviso to sub-section (1) unless such firm or body corporate has been given a reasonable opportunity of showing cause against the same:

Provided that no matter shall be raised by such firm or body corporate before the Central Government if such matter has been decided by the 1[Company Law Board].

(3) The person against whom an order of removal from office is made under this section shall not hold the office of a director or any other office connected with the conduct and management of the affairs of any company during a period of five years from the date of the order of removal:

Provided that the Central Government may, with the previous concurrence of the 1[Company Law Board] permit such person to hold any such office before the expiry of the said period of five years.

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1. Subs. by Act 31 of 1988, s.67 (w.e.f. 31-5-1991).

2. Subs. by Act 17 of 1967, s. 4 and Sch., for “Central Government may “(w.e.f. 1-71967).

3. Subs. by s. 4 and Sch., ibid., for ” finding of the Tribunal under this Chapter or a decision of a High Court thereon ” (w.e.f 1-7-1967).

4. Subs. S. 4 and Sch., ibid., for “finding of the Tribunal or the decision of a High Court” (w.e.f. 1-7-1967).

5. Subs. by s. 4 and Sch., ibid., for sub-section (2) (w.e.f. 1-7-1967).

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(4) Notwithstanding anything contained in any other provision of this Act or any other law or any contract, memorandum or articles, on the removal of a person from the office of a director or, as the case may be, any other office connected with the conduct and management of the affairs of the company, that person shall not be entitled to, or be paid, any compensation for the loss or termination of office.

(5) On the removal of a person from the office of a director or, as the case may be, any other office connected with the conduct and management of the affairs of the company, the company may, with the previous approval of the Central Government, appoint another person to that office in accordance with the provision of this Act.

PART IV

SHARE CAPITAL AND DEBENTURES

Nature, Numbering and Certificate of Shares

82.        Nature of shares.

The shares or other interest of any member in a company shall be movable property, transferable in the manner provided by the articles of the company.

83.        Repealed by the Depositories Act, 1996 (22 of 1996) s.31 and Sch. (w.e.f. 20-9-1995).

84.        Certificate of shares.

1[(1)]     A certificate, under the common seal of the company, specifying any shares held by any member, shall be prima facie evidence of the title of the member to such shares.

2[(2)      A certificate may be renewed or a duplicate of a certificate may be issued if such certificate –

(a)        is proved to have been lost or destroyed, or

(b)        having been defaced or mutilated or torn is surrendered to the company.

(3)        If a company with intent to defraud renews a certificate or issues a duplicate thereof, the company shall be punishable with fine which may extend to ten thousand rupees and every officer of the company who is in default shall be punishable with imprisonment for a term which may extend to six months, or with fine which may extend to ten thousand rupees, or with both.

(4)        Notwithstanding anything contained in the articles of association of a company, the manner of issue or renewal of a certificate or issue of a duplicate thereof, the form of a certificate (original or renewed) or of a duplicate thereof, the particulars to be entered in the register of members or in the register of renewed or duplicate certificates, the form of such registers, the fee on payment of which, the terms and conditions, if any (including terms and conditions as to evidence and  indemnity  and the payment of out-of-pocket expenses incurred by a company in investigating evidence) on which  a  certificate may be renewed or a duplicate thereof may be issued, shall  be such as may be prescribed.]

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1.   S. 84 re-numbered as sub-section (1) of that section by Act 65 of 1960, s. 25.

2.   Ins. by s. 25, ibid.

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Kinds of Share Capital

85.        Two kinds of share capital.

(1)        ”Preference share capital” means, with reference to any company limited by shares, whether formed before or after the commencement of this Act, that part of the share capital of the company which fulfils both the following  requirements, namely –

(a)        that as respects dividends, it carries or will carry a preferential  right  to be paid a fixed amount or an amount calculated at a fixed rate, which may be either free  of or subject to income-tax; and

(b)        that as respects capital, it carries or will carry,  on a winding up or repayment of capital, a preferential right to be repaid the amount of the capital paid up or deemed to have been paid up, whether or not there is a preferential right to the  payment  of  either or both of  the following  amounts, namely –

(i)        any money remaining unpaid, in respect of  the  amounts specified in clause (a), up to the date of the winding up  or repayment of capital; and

(ii)        any fixed premium or premium on any fixed scale, specified in the memorandum or articles of the company.

Explanation.-Capital shall be deemed to be preference, capital, notwithstanding that it is entitled to, either or both of the following rights, namely –

(i)         that, as respects  dividends, in addition to the preferential right to the amount specified in clause (a), it has a right to participate, whether fully or to a limited extent,  with capital not entitled to the preferential right aforesaid;

(ii)        that as respects capital, in addition to the preferential right to the repayment, on a winding up, of the amounts specified in clause (b), it has a right to participate, whether fully or to a limited extent, with capital not entitled to that preferential right in any surplus which  may remain after the entire capital has been repaid.

(2)        ”Equity share capital” means, with reference to any such company, all share capital which is not preference share capital.

(3         The expressions “preference share” and “equity share” shall be construed accordingly.

86.        New issues of share capital to be only of two kinds.

The share capital of a company limited by shares formed after the commencement of this Act, or issued after such commencement, shall be of two kinds only, namely –

(a)        equity share capital; and

(b)        preference share capital.

87.        Voting rights.

(1)        Subject to the provisions of section 89 and sub-section (2) of section 92 –

(a)       every member of a company limited by shares and holding any equity share capital therein shall have a right to  vote, in respect of such capital, on every resolution placed before the company; and

(b)        his voting right on a poll shall be in proportion to his share of the paid up equity capital of the company.

(2)        (a)       Subject as aforesaid and save as provided in clause (b) of this sub-section, every member of a company limited by shares and holding any preference share capital therein shall, in respect of such capital, have a right to vote only on resolutions placed before the company which directly affect the rights attached to his  preference shares.

Explanation.- Any resolution for winding up the company or for the repayment or reduction of its share capital shall be deemed  directly to affect the rights attached to preference shares within the  meaning of this clause.

(b)        Subject as aforesaid, every member of a company limited by shares and holding any preference share capital therein shall, in respect of such capital, be entitled to vote on every resolution placed before the company at any meeting, if the dividend due on such capital or any part of such dividend has remained unpaid –

(i)         in the case of cumulative preference shares, in respect of an aggregate period of not less than two years preceding the date of commencement of the meeting; and

(ii)         in the case of non-cumulative preference shares, either in respect of a period of not less than two years ending with the expiry of the financial year immediately preceding the commencement of the meeting or in respect of an aggregate period of not less than three years comprised in the six years ending with the expiry of the financial year aforesaid.

Explanation.- For the purposes of this clause, dividend shall be deemed to be due on preference shares in  respect  of  any  period, whether a dividend has been declared by the company on such shares for such period or not –

(a)        on the last  day specified for the  payment of such dividend for such period, in the articles or other instrument executed by the company in that behalf; or

(b)        in case no day is so specified, on the day  immediately following such period.

(c)       Where the holder of any preference share has a right to vote on any resolution in accordance with the provisions of this sub-section, his voting right on a poll, as the holder of such share, shall, subject to the provisions of section 89 and sub-section (2) of section 92, be in the same proportion as the capital paid up in respect of the preference share bears to the total paid up equity capital of the company.

Prohibition of issue of shares with disproportionate rights

88.        Prohibition of issue of shares with disproportionate rights.

No company formed after the commencement of this Act, or issuing any share capital after such commencement, shall issue any shares (not being preference shares) which carry voting rights or rights in the company as   to   dividend, capital or otherwise which are disproportionate to the rights attaching to the holders of other shares (not being preference shares).

89.        Termination of disproportionately excessive voting rights in existing companies.

(1)        If at the commencement of this Act any shares, by whatever name called, of any existing company limited by shares carry voting rights in excess of the voting rights attaching under sub-section (1) of section 87 to equity shares in respect of which the same amount of capital has been paid up, the company shall, within a period of one year from the commencement of this Act, reduce the voting rights in respect of the shares first mentioned so as to bring them into conformity with the voting rights attached to such equity shares under sub-section (1) of section 87.

(2)        Before the voting rights are brought into such conformity, the holders of the shares in question shall not exercise in respect thereof voting rights in excess of what would have been exercisable by them if the capital paid up on their shares had been equity share capital, in respect of the following resolutions placed  before the company, namely –

(a)        any resolution relating to the appointment or reappointment of a director or of a managing agent or secretaries and treasurers, or to any variation in the terms of an agreement between the company and a  managing or whole time  director  thereof  or its managing agent or secretaries and treasurers;

(b)        any resolution relating to the appointment of buying or selling agents;

(c)        any resolution relating to the grant of a loan or to the giving of a guarantee or any other financial assistance, to any other body corporate having any person as managing agent or secretaries and treasurers who is also either the managing agent or the secretaries and treasurers of the company or an associate of such managing agent or secretaries and treasurers.

(3)        If, by reason of the failure of the requisite proportion of any class of members to agree, it is not found possible to comply with the provisions of subsection (1), the company shall, within one month of the expiry of the period of one year mentioned in that sub-section apply to the Court for an order specifying the manner in which the provisions of that sub-section shall be complied with, and any order made by the Court in this behalf shall bind the company and all its shareholders.

If default is made in complying with this sub-section, the company, and every officer of the company who is in default, shall be punishable with fine which may extend to one thousand rupees.

(4)        The Central Government may, in respect of any shares issued by a company before the 1st day of December, 1949, exempt the company from the requirements of sub-sections (1), (2) and (3), wholly or in part, if in the opinion of the Central Government the exemption is required either in the public interest or in the interests of the company or of any class of shareholders therein or of the creditors or any class of creditors thereof.

Every order of exemption made by the Central Government under this sub-section shall be laid before both Houses of Parliament as soon as may be after it is made.

1[90.     Savings.

(1)        Nothing in sections 85, 86, 88 and 89 shall, in the case of any shares issued by a public company before  the commencement of this Act, affect any voting rights attached to the shares save as otherwise provided in section 89, or any rights attached to the shares as to dividend, capital or otherwise.

(2)        Nothing in sections 85 to 89 shall apply to a private company, unless it is a subsidiary of a public company.

(3)        For the removal of doubts, it is hereby declared that on and from the commencement of the Companies (Amendment) Act, 1974 (41 of 1974), the provisions of section 87 shall apply in relation to the voting rights attached to preference shares issued by a public company before the 1st day of April, 1956, as they apply to the preference shares issued by a public company after that date.

Explanation.- For the purposes of this section references to a public company shall be construed as including references to a private company which is a subsidiary of a public company.]

Miscellaneous provisions as to share capital

91.        Calls on shares of same class to be made on uniform basis.

Where after the commencement of this Act, any calls for further share capital are made on shares, such calls shall be made on a uniform basis on all shares falling under the same class.

Explanation.-For the purposes of this section, shares of the same nominal value on which different amounts have been paid up shall not be deemed to fall under the same class.

92.        Power of company to accept unpaid share capital, although not called up.

(1)        A company may, if so authorized by its articles, accept from any member the whole or a part of the amount remaining unpaid on any shares held by him, although no part of that amount has been called up.

(2)        The member shall not however be entitled, where the company is one limited by shares, to any voting rights in respect of the moneys so paid by him until the same would but for such payment, become presently payable.

PART II

REPORTS TO BE SET OUT

1.         If unissued shares or debentures of the company are to be applied in the purchase of a business, a report made by accountants (who shall be named in the statement) upon –

(a)        the profits or losses of the business in respect of each of the five  financial years immediately preceding the delivery of the statement to the Registrar; and

(b)        the assets and liabilities of the business as at the last date to which the accounts of the business were made up.

2.         (1)        If unissued shares or debentures of the company are to be applied  directly  or indirectly in any manner  resulting  in  the acquisition  of  shares  in a body corporate which by reason  of  the acquisition  or anything to be done in  consequence  thereof or in connection therewith will become a subsidiary of the company, a report made by accountants (who shall be named in the statement) with respect to the profits and losses and assets and liabilities of the other body corporate in accordance with sub-clause (2) or (3) of this clause, as the case  may require, indicating how the profits or  losses  of  the other body corporate dealt with by the report would, in respect of the shares to be acquired, have concerned members of the company, and what allowance  would  have fallen to be made, in relation  to  assets  and liabilities so dealt with, for holders of other shares, if the company had at all material times held the shares to be acquired, (h)of  clause 3 (or, in the case of the first  return,  since the  incorporation of the company) by persons who  are  still members  or debenture holders and by persons who have  ceased to be members or debenture holders respectively, 1[the  dates of registration of transfers and the names of transferees or the relevant ledger folio containing particulars thereof];

(c)        if the names aforesaid are not arranged in alphabetical order, having annexed thereto an index sufficient to  enable the name of any person therein to be easily found.

6.         All such particulars, with respect to the persons who at the date of the company’s last annual general meeting are the directors of the company and with respect to any person who at that date is the managing  agent, secretaries and treasurers,  the  manager or the secretary, of the company, as are by this Act required to be contained with respect to directors, the managing agent, secretaries and treasurers, the manager and the secretary respectively in the register of the directors, managing agents, secretaries and treasurers, managers and  secretaries of a company 2[together  with all such particulars with respect to those who had ceased to hold such office (that is  the office of director, managing  agent,  secretaries  and treasurers,  manager or secretary) on or before the date of  the last annual  general meeting and since the date referred to in sub-clause (h)  of  clause  (3) or in the case of the  first  return, since  the incorporation of the company].

FORM

PART II

FORM

Limited

ANNUAL RETURN of Private Limited

made up to the day of 19 being the date of the last annual general meeting of the company.

1.         Address.

(Address of the registered office of the company.)

2.         Situation of Foreign Registers of Members and Debenture holders.

(a)        Name of every State or country outside India in which foreign register is kept.

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1    Subs. by G. S. R. 631, dated the 23rd April, 1966, for “and the dates of registration of the transfers “, see Gazette of India,  1966, Pt.  IT, See. 3(i), V. 789.

2    Ins. by Notifn.  No. G. S. R. 279, dated the 17th April, 1958, see Gazette of India, 1958, Pt. II See. 3(i), p. 206.

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(b)        Address of place in each such State or country in which a foreign register is kept.

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3.   Summary of Share Capital and Debentures

(a)        Nominal Share Capital.

Nominal share capital – Rs  divided into:

(Insert number and class) shares of  each

………………………shares of each

………………………shares of each

………………………shares of each

(b)        1[Subscribed Share Capital] and Debentures.

Number    Class

Number of shares of each class taken              shares up to the date of the last annual                 shares general m