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Suraj Prakash Oberoi Vs. Institute of Company Secretaries of India and Another - Court Judgment

LegalCrystal Citation
Subject Company
CourtDelhi High Court
Decided On
Case NumberCivil Writ Petition No. 56 of 1979
Judge
Reported in[1986]60CompCas536(Delhi)
Acts Companies Act, 1956 - Sections 2(45), 25, 31, 32 and 383A
AppellantSuraj Prakash Oberoi
Respondentinstitute of Company Secretaries of India and Another
Cases Referred and Som Prakash Rekhi v. Union of India
Excerpt:
.....case focused on the effect of provision of section 32(4) of the company secretaries act, 1980 -the institute of company secretaries of india, registered under the companies act, 1956 was dissolved by virtue of section 31 of the 1956 act -in view of the fact, it was ruled that writ petition against the said dissolved institute was maintainable in view of the provision of section 32(4) of the act - section 13: [altamas kabir & cyriac joseph,jj] custody of child - welfare of child vis--vis comity of courts - the minor girl child of 3 1/2 years was brought to india by her mother. the minor girl was a citizen of u.k. being born in u.k. her parents had set up their matrimonial home in u.k. and had acquired status of permanent residents of u.k. the child with her mother was supposed to return..........seems, in para (b) of the notification dated may 15, 1975, no distinction has been drawn between a person working as a secretary of a public limited company having a paid-up share capital of rs. 25 lakhs is more and a persons working as a secretary in company having paid-up capital of less that rs. 25 lakhs. the only condition laid down is that he should be working as a secretary of a public limited company on august 1, 1972, besides the prescribed academic qualifications. 22. from the above discussion, i am of the view that on the qualification prescribed in the notification dated may 15, 1975, the petitioner was entitled to be enrolled as a member of the institute and his application was wrongly rejected by the executive committee. it is pertinent to mention here that in spite of the.....
Judgment:

Aggarwal, J.

1. The Instituted of Company Secretaries of India (herein after for the sake of brevity called 'the Institute') was incorporated as a company under the Companies Act, 1956, as a company limited by guarantee and licensed under section 25 of the companies Act, 1956. The main object of the Institute was to take over form the Government of India and/or the Company Law Board (constituted under section IOE) of the Companies Act the entire work connected with the company secretaries examination and to carry on the same in the all its branches, and to serve the interest of person belonging to or connected with the profession of company secretaries and person decease of pursuing the secretarial profession as their main occupation.

2. Clause 4 of the articles of association of the Institute specifies the category of person who are entitled to have their names entered in the register of members. The said article provides as under :

'4. Any of the following person shall be entitled to have his name entered in the register, viz. :

(i) any person who is a holder of Government Diploma in Company Secretaryship awarded by the Government of India;

(ii) any person who at the time of incorporation of this Institute is engaged in the service of the Secretarial Department of an established organisation even though does not possess the normal requisite qualification to be registered as a member of the Institute and fulfillls such conditions as the Council may specify with the approval of the Central Government;

(iii) any person who has passed such examination and completed such training as may be prescribed by the Institute;

(iv) any person who has passed such other examination and completed such other training without India as is recognised by the Government of India as equivalents to the examination and training prescribed for the Members of this Institute;

Provided that in the case of any person who is not a permanent resident of India, the Institute may impose such other conditions as it may deems fit.'

3. Article 17(a) provides that a person, who desires to have his name entered in the register shall submit to the secretary an application in the prescribed form together with documentary evidence about his eligibility for membership and the fee, as may be prescribed. Article 45 provides that there shall be a Council of the Institute for the management of its affairs and for discharging the functions assigned to it by these articles.

4. By the amending Act XLI of 1974, section 383A was introduced in the Companies Act and it provided that every company having a paid-up share capital of Rs. 25 lakhs or more shall have a wholetime secretary, and where the board of directors of any such company comprise only two directors, neither of them shall be the secretary of the company.

5. Section 2(45) defines the expression 'secretary' and it reads as follows :

'(45) 'secretary' means any individual, possessing the prescribed qualifications appointed to perform the duties which may be performed by a secretary under this Act and any other ministerial or administrative duties;'

6. Rules known as the companies (Secretary's Qualifications) Rules, 1975, were framed laying down qualifications for appointment as secretary of a limited company having a paid-up share capital of Rs. 25 lakhs or more. According to rule 2, a person has to be a member of the Institute for appointment as a secretary.

7. The Institute, in the wake of the amendment in the Companies Act in 1974, issued a notification on May 15, 1975, providing therein the categories of persons who were eligible to be considered for enrollment as members of the company. The said notification is important and it reads as follows :

'Admission of Members. - The Council of the Institute of Company Secretaries of India have decided to consider enrollment of the following categories of person as Associate Members :

(a) any person who is an Associate Member of the Institute of Chartered Secretaries and Administrators, London, and has either under gone practical training or acquired experience of secretarial work as prescribed under the Regulations of the Institute on the date of application :

Provided that in the case of person mentioned in this clause who are not on the date of their application, permanently residing in India, the Council may impose such further conditions as it may deem fit;

(b) any person who on August 1, 1972, was working as secretary of a public limited company (including a company deemed to be a public limited company under the Companies (Amendment) Act, 1974, and continues to hold that position on the date of application,

AND

Possesses one or more of the following qualifications :

(i) degree in law granted by a recognised university including barrister-at-law;

(ii) membership of the Institute of Cost and Work Accountants of India constituted under the Cost and Works Accountants Act, 1959;

(iii) post-graduate degree or diploma in management science granted by a recognised university or the India Institute of Management, Ahmedabad, Bangalore or Calcutta;

(iv) post-graduate degree in commerce granted by a recognised university;

(v) membership of the Institute of Chartered Accountants of India constituted under the Chartered Accountants Act, 1949;

(vi) any other qualification recognised by the Council for this purpose as equivalent to post graduate degree or diploma in law, management sciences or commerce.

NOTE : The Council has since recognised the following qualifications for purposes of clause (vi) above provided such persons have also obtained a degree from a recognised university :

(i) Diploma in company law awarded by the India law Institute;

(ii) Diploma in company secretaryship awarded by the Delhi Administration.

Details and prescribed application forms may be obtained form the offices of the Institute at New Delhi by sending a self-addressed stamped envelope (25 paise) of the size of 23 cm x 9cm.'

8. The petitioner, Suraj Prakash Oberoi, is a law graduate. He did his law form the University of Delhi in 1953. The petitioner joined the Delhi Safe Deposit Co. Ltd., on August 9, 1965, to look after their secretarial, legal and accounts work. The petitioner was appointed as secretary in the said company on August 1, 1971, and he worked in the said capacity with the said company uptill December 31, 1973 (annexures C and D).

9. The petitioner joined as secretary of M/s. Brake Linings Ltd., Dr. Jai Singh's Son and Co. Ltd. and Atlas Pharma Ltd. (sister concerns) and he was functioning as secretary of the said three companies on October 22, 1975, - the date on which the petitioner made an application to the Institute for associate membership. On April 26, 1976, the Institute informed the Petitioner that his application for associate membership had not been approved as the practical experience of the petitioner was not considered sufficient for direct admission as associate member of the Institute. The petitioner was, however, offered exemption form the preliminary and intermediate examinations provided he applied for the same within 10 days of the issuance of the letter. The petitioner, it seems, represented against the above decision to the Council but without any success. Against the decision of the Institute, the petitioner has filed the present writ petition.

10. The main contention of the petitioner is that he duly fulfillls the conditions but in the notification dated May 15, 1975, for enrollment as member of the Institute and the rejection of his application by the Institute for the reason that he did not possess sufficient practical is not legal and valid.

11. The respondents in their reply took up a preliminary objection that the Institute is not and 'authority' within the meaning of article 12 of the Constitution and, thereforee, not amenable to the writ jurisdiction. Mr. Saharya, learned counsel on behalf of the respondents, fairly conceded that in view of the decisions of the Supreme Court in Ajay Hasia v. Khalid Mujib Sehravardi, : (1981)ILLJ103SC , and Som Prakash Rekhi v. Union of India [1980] 57 FJR 370; [1981] 51 CompCas 71 (SC), it may not be open to the respondents to take the above objection.

12. Another objection taken is the Institute is not a statutory authority and, thereforee, it is under no statutory obligation to admit the petitioner as an associate member. I shall deal with this contention a little later.

13. On merits, Mr. Saharya contended that since the petitioner did not in the opinion of the executive committee possess sufficient practical experience to be considered for direct enrolment as an associate member of the Institute, his application was rightly rejected. Mr. Saharya during the hearing of the petition filed some documents to show that the executive committee in its meeting held on August 27, 1975, had taken a decision to admit those applicants as members who were working as secretary form August 1, 1972, and continued to be the secretary of the company having paid-up capital of Rs. 25 lakhs or more and possessed qualifications as given in the notification dated May 15, 1975, and the applications of persons who were serving as secretaries in companies having a paid-up capital of less than Rs. 25 lakhs were to be considered at a subsequent meeting. According to Mr. Saharya, the executive committee in consolation with the President and the Council had laid down some guidelines regarding the applicants who were working in companies having a paid-up capital of less than Rs. 25 lakhs and the application of the meeting of the executive committee held on March 28, 1976, and the executive committee was of the view that the petitioner did not possess the necessary experience and, thereforee, his application was rejected.

14. I have earlier observed that the notification dated May 15, 1975, was issued in the wake of the amendment made in the Companies Act in 1974. Paragraph (b) of the notification dated May 15, 1975, deals with the working secretaries and it in clear words provides that any person who on August 1, 1972, was working as secretary of a public limited company and continued to hold that position on the date of the application and further possessed the qualification as laid down in the said paragraph shall have the right to make an application for enrollment as an associate member. Paragraph (b) does not provide for any other qualification except the ones mentioned in it. The petitioner, admittedly, fulfillled the qualifications laid down in para (b) of the notification dated May 15, 1975.

15. Mr. Saharya pointed out to the note at the foot of the notification and contended that the details and the prescribed form of the application were to be obtained by an applicant form the office and the details which, according to Mr. Saharya, the petitioner was aware provided that in the case of an applicant who was working as secretary in a company was to be seen in the case of such an applicant in taking a decision for his enrollment. Mr. Saharya was asked to show if there was any such decision of the Council on May 15, 1975, regarding the secretaries working in a company having a paid-up capital of less than Rs. 25 lakhs. Mr. Saharya was unable to produce any such resolution or decision of the Council. He only referred to the decision of the Council taken on August 17, 1975. The said resolution reads as under :

'The Council considered the decision taken at the executive committee meeting held on May 15, 1975, and after discussion approved the amendment to regulations 6(c) and 6(d) as recommended by the executive committee. In this connection, the Council approved the procedures followed by the Secretary as under :

(a) application for Associate Membership not strictly falling within notification issued by the Institute on May 15, 1975, will be rejected by the secretary; however, marginal case may be withheld by the secretary at his discretion to be placed before the committee at its next meeting.

(b) When there is an appeal against the decision of the secretary in any particular case, he will place the appeal for consideration at the next executive committee.'

16. The above resolution shows that the Council had decided that the applications which did not strictly fall within the notification dated May 15, 1975, shall be rejected and the marginal cases may be withheld by the secretary to be placed before the committee. The Council had not in any way modified the notification dated May 15, 1975.

17. The next resolution pointed out by Mr. Saharya is dated August 27, 1975, passed by the executive committee. It reads as under :

'The committee, after considering the procedural requirements of the notification issued by the President in accordance with the decision taken at the 22nd executive committee meeting held on May 15, 1975, decided to consider only these applications where the applicants has been working and designated as secretary from August 1, 1972, and continues to be the secretary of the company for membership and possesses the qualifications as given in the notification ...

The secretary was directed to collect information on the turnover in respect of those applicants who were serving in companies having a paid up capital of less than Rs. 25 lakhs and submit those cases for consideration at a subsequent meeting.'

18. I may say that the notification dated May 15, 1975, did not draw any distinction between a secretary working in a company having a paid-up capital of Rs. 25 lakhs or more and secretary working in a company having a paid up capital of less than Rs. 25 lakhs. The requisite conditions were that an applicant should be working as a secretary in the company on August 1, 1972, and further he should possess the academic qualification laid down therein. It was only the Council which is competent to lay down the qualification for enrolment as a member of the Institute and that has to be in conformity with the qualification laid down in article 4 of the articles of association.

19. Mr. Saharya next pointed out to the decision of the executive committee taken in its meeting held on March 28, 1976. Mr. Saharya contended that the Council after extensive deliberations had authorised the executive committee to consider the application on merits and the President had indicated that following broad criteria to be kept in view while considering the individual applications for relaxation of the requirement with regard to experience as stated in the institute's notification of May 15, 1975 :

(a) academic qualification as given in the Institute's notification of May 15, 1975;

(b) age of the applicant;

(c) capital turnover of the company :

(d) experience of about 10 years in performing secretarial functions :

(e) presence or absence of a working secretary in the applicant's company.'

20. Mr. Saharya further contended that the application of the petitioner was considered in the light of the above criteria laid down by the President and his application was rejected as it was considered that he did not possess sufficient experience. I find that in clause (b) of the notification there is no requirement of any experience work for enrolment for enrolment as a member of the Institute. As already stated, the only two condition laid down are that an applicant must be working as a secretary of a public limited company on August 1, 1972, and secondly, he should possess the academic qualification laid down therein.

21. An examination of section 383A (introduced by the amending Act XLI 1974) shows that sub-section (1) makes it obligatory that every company having a paid-up capital of Rs. 25 lakhs or more is to have a whole time secretary. The effect of this provision read with the definition of the expression 'secretary' in section 2(45) is that a company having a paid up share capital of Rs. 25 lakhs or more has to have wholetime secretary and the secretary is to possess the prescribed qualifications. There is no statutory compulsion regarding the appointment of secretaries in the other companies but form the definition of the expression 'secretary', it is clear that when any company chooses to appoint a secretary, he is to possess the prescribed qualifications. That is why, it seems, in para (b) of the notification dated May 15, 1975, no distinction has been drawn between a person working as a secretary of a public limited company having a paid-up share capital of Rs. 25 lakhs is more and a persons working as a secretary in company having paid-up capital of less that Rs. 25 lakhs. The only condition laid down is that he should be working as a secretary of a public limited company on August 1, 1972, besides the prescribed academic qualifications.

22. From the above discussion, I am of the view that on the qualification prescribed in the notification dated May 15, 1975, the petitioner was entitled to be enrolled as a member of the Institute and his application was wrongly rejected by the executive committee. It is pertinent to mention here that in spite of the fact that this write petition is pending since 1979, the Council has not chosen to issue any amendment or clarification to the notification dated May 15, 1975.

23. I shall now revert to the second preliminary objection raised by Mr. Saharya, namely, that the Institute is not a statutory authority and, thereforee, it is under no statutory duty to admit the petitioner as an associate member. I do not agree with this contention. The petitioner has a legal right to be enrolled as a member of the Institute provided of course, he possesses that prescribed qualifications. There is corresponding legal duty on the institute to admit the petitioner as a member in case he fulfillls the prescribed conditions. This right is certainly a judicially enforceably right.

24. Before parting with the case, I may notice that the Institute of Company Secretaries of India registered under the Companies Act was replaced by the company Secretaries Act 1980 (Act No. 56 of 1980). Section 31 of the Act provides that on the commencement of this Act, the Company known as the Institute of Company Secretaries of India registered under the Companies Act shall and dissolved. Sub-section (4) of section 32 provides that if, on the commencement of this Act, any suit, appeal or other legal proceeding of whatever nature by or against the dissolved company is pending, the same shall not abate, be discontinued or be in any way prejudicially affected by reason of the transfer to the institute of the assets and liabilities of the dissolved company or of anything contained in this Act, but the suit, appeal or other proceeding may be continued, prosecuted and enforced by or against the Institute in the same manner and to the same extent assist would or may be continued, prosecuted and enforced by or against the dissolved company as if this Act has not passed. It is clear form the above provision that even after the company has been dissolved, the writ proceedings filed against the dissolved company can be prosecuted and writ, writs or any other directions passed against the dissolved company would be enforceable against the Institute.

25. For the reason stated, I allow the petition and quash the order dated April 26, 1976, rejecting the application of the petitioner for associate. membership and direct the respondents to admit the petitioner as its associate member. The parties are left to bear their own costs.


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