Skip to content


Kalyan Kumar Mukherjee Vs. Institute of Company Secretaries of India and anr. - Court Judgment

LegalCrystal Citation
SubjectCompany
CourtKolkata High Court
Decided On
Case NumberCivil Rule No. 9960 (W) of 1980
Judge
Reported in[1987]42CompCas466(Cal)
ActsConstitution of India - Articles 12, 14 and 226; ;Company Secretaries Act, 1980; ;Companies Act, 1956 - Section 2(45); ;Companies (Amendment) Act, 1974
AppellantKalyan Kumar Mukherjee
Respondentinstitute of Company Secretaries of India and anr.
Appellant AdvocateBhasker Gupta and ;Abhijit Chatterjee, Advs.
Respondent AdvocateHirak Mitra and ;Jayanta Dasgupta, Advs.
DispositionPetition allowed
Cases ReferredSuraj Prakash Oberoi v. Institute of Company Secretaries of India
Excerpt:
- ajit kumar sengupta, j.1. this application under article 226 of the constitution of india is directed against the refusal of the institute of company secretaries of india (hereinafter referred to as 'the said institute') to enrol the petitioner as an associate member of the said institute.2. the case of the petitioner briefly stated is that he has been discharging duties and functions as a secretary ever since he joined the services of the india steamship co. ltd. in the year 1962. accordingly, in terms of the notification dated may 15, 1975, being notification no. 1 of 1975 issued by the president of the institute as regards admission of members, the petitioner is eligible for being enrolled as an associate member of the said institute.3. the contention of the respondents is that the.....
Judgment:

Ajit Kumar Sengupta, J.

1. This application under Article 226 of the Constitution of India is directed against the refusal of the Institute of Company Secretaries of India (hereinafter referred to as 'the said Institute') to enrol the petitioner as an associate member of the said Institute.

2. The case of the petitioner briefly stated is that he has been discharging duties and functions as a secretary ever since he joined the services of the India Steamship Co. Ltd. in the year 1962. Accordingly, in terms of the Notification dated May 15, 1975, being Notification No. 1 of 1975 issued by the president of the Institute as regards admission of members, the petitioner is eligible for being enrolled as an associate member of the said Institute.

3. The contention of the respondents is that the petitioner did not fulfil the conditions as prescribed by the said notification and accordingly, he was not eligible for being enrolled as an associate member of the Institute and accordingly his application for membership was rejected.

4. In order to appreciate the respective contentions, it is necessary to set out the facts.

5. From 1961, the Department of Company Affairs, Government of India, started holding examinations for company secretaryship and awarded a diploma called the Government Diploma in Company Secretaryship. In 1962, the petitioner joined the services of M/s. India Steamship Co. Ltd. as an officer. According to the petitioner, from the very beginning, he was constrained to undertake the responsibilities and duties of the secretary of the company.

6. In 1968, the Government decided to promote a separate institution under Section 25 of the Companies Act, 1956. Accordingly, the Institute of Company Secretaries of India was incorporated under the Companies Act, 1956, as a company limited by guarantee and licensed under Section 25 of the Companies Act, 1956.

7. The main object of the Institute was to take over from the Government of India and/or the Company Law Board the entire work connected with the company secretary examination and to carry on the same in all its branches and to serve the interest of persons belonging to or connected with the profession of company secretaries and persons desirous of pursuing the secretarial profession as their main occupation.

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

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

(i) Any person who is a holder of the 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 fulfils such conditions as the Council may specify with the approval of the Central Government.

(iii) Any person who has passed such other examinations and completed such other 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 equivalent to the examination and training prescribed for the members of the 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 deem fit.'

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.'

9. It is the case of the petitioner that he was assigned secretarial work and started discharging various functions of the company secretary, such as convening meetings of the board of directors and committee of board of directors, attending the meetings of the committee of the board of directors and/or board of directors, taking notes of the proceedings of such meetings, etc. This assignment was made some time in November, 1969. On December 15, 1973, the committee of board of the directors of the India Steamship Co. Ltd. passed a resolution appointing the petitioner as the assistant secretary of the company.

10. The Companies Act, 1956, was amended in 1974 by the Companies (Amendment) Act, 1974, and Section 383A was introduced in the Companies Act which requires every company having a paid -up share capital of Rs. 25 lakhs or more, to appoint a whole-time secretary and where the board of directors of any such company comprises of only two directors, neither of them shall be the secretary of the company.

11. In exercise of the powers conferred by Clause (a) of Sub-section (1) of Section 642, read with Clause (45) of Section 2 of the Companies Act, 1956, the Central Government made rules known as the Companies (Secretary's Qualifications) Rules, 1975. These rules prescribed the qualifications which an individual must possess in order to be appointed as secretary of any company. The qualifications prescribed are not uniformly applicable to all companies nor are the qualifications uniform even for the same category of companies. Rule 2(a) of the said Rules, inter alia, requires that in order to be eligible for appointment as a secretary in a company having a paid-up share capital of Rs. 25 lakhs or more, a person shall possess membership of the Institute of the Company Secretaries of India.

12. The Institute, in the wake of the amendment made in the Companies Act in 1974, issued a notification on May 15, 1975 (Notification No. 1 of 1975), providing therein the categories of persons who were eligible to be considered for enrolment as members of the Institute. 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 enrolment of the following ategories of persons as associate members :

(a) Any person who is an associate member of the Institute of Chartered Secretaries and Administrators, London, and has either undergone practical training or acquired experience of secretarial work as pre scribed under the Regulations of the Institute on the date of application ;

Provided that in the case of persons 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 Works 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 Indian 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 Indian Law Institute,

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

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

13. On July 4, 1975, the petitioner made an application to the Institute requesting it to enrol the petitioner as an associate member in accordance with the said notification dated May 15, 1975, on the ground that the petitioner fulfilled the conditions prescribed for such enrolment by the said notification. Under Rule 2 of the Companies (Secretary's Qualifications) Rules, 1975, a person has to be a member of the Institute for appointment as a secretary of a limited company having a paid-up share capital of Rs. 25 lakhs or more.

14. By a letter dated August 9, 1975, the Institute alleged that as the experience stated in the petitioner's application was not in accordance with the stipulations contained in the notification dated May 15, 1975, the Institute regretted its inability to entertain the said application. By a letter dated August 21, 1975, the employer of the petitioner, India Steamship Co. Ltd., made a representation to the president of the Institute to consider the case of the petitioner for enrolment as he fulfilled all the conditions.

15. By a letter dated November 6, 1975, the Institute informed that all applications such as the one made by the petitioner were still under consideration and as and when a final decision was taken by the Council, it would be communicated to the petitioner. By a letter dated April 23, 1976, the Institute regretted its inability to approve the petitioner's application for associate membership. It was also alleged that on the basis of the petitioner's academic qualification and experience, it had been decide4 to offer an exemption to the petitioner from the preliminary and intermediate examinations provided the petitioner applied for the same within 10 days from the date of issue of the said letter.

16. The petitioner accepted the said offer. This was withdrawn when a representation was made to the Institute on April 14, 1977, and then again on June 7, 1977, by the India Steamship Co. Ltd. On May 5, 1977, the Institute informed the company that the Institute had considered the petitioner's application and regretted its inability to approve the same as the petitioner's practical experience as assistant secretary was not considered sufficient to the satisfaction of the Institute for direct admission as associate membership. However, it was alleged that on the basis of the academic qualification and experience, the Institute had decided to offer the petitioner an exemption from the preliminary and intermediate examinations. In response to the letter dated June 7, 1977, of the India Steamship Co. Ltd., it was alleged by the Institute that the petitioner's application for membership would be placed before the Council for its reconsideration. When the matter was pending before the Institute, on April 17, 1978, the petitioner was designated as secretary of the company the India Steamship Co. Ltd., by the board of directors by its circular dated April 17, 1978, which was confirmed at the board meeting held on May 29, 1978. In a letter dated July 15, 1978, written by the Institute, it was alleged that the representation to the Institute for reconsideration of the petitioner's application for associate membership was receiving attention. By a letter dated July 19, 1978, the Institute informed that the question of direct associate membership is decided only by the Council and, therefore, his representation would be placed before the Council for its consideration when the question of direct admission of members would be taken up by the Council. One of the Council members of the Institute, Sri Neelakantan, wrote to the president of the Institute immediately after the meeting of the Institute held on July 6, 1980, that the criteria laid down in the notification dated May 15, 1975, were not strictly adhered to and certain members had been admitted after the said notification came into force although they did not strictly fulfil the conditions laid down in the said notification. It may, however, be mentioned that the said Shri Neelakantan was the Joint Secretary of the Department of Company Affairs and was a Government nominee in the Council of the Institute. On September 10, 1980, the Institute by a letter informed the petitioner that the appeals of the petitioner for reconsideration of his case for Associate Membership of the Institute stood rejected.

17. Immediately thereafter on September 29, 1980, the petitioner moved this application under Article 226 of the Constitution challenging the said decision of the Institute. During the pendency of this writ application, on January 1, 1981, the Company Secretaries Act came into force. By the said Act, the company which has known as the Institute of Company Secretaries of India was dissolved and a body corporate also known as the Institute of Company Secretaries of India has been constituted. The new body corporate is the successor-in-interest of the previous company.

18. Mr. Bhaskar Gupta, learned counsel appearing for the petitioner, has urged mainly two grounds. Firstly, he urged that it is not disputed that the petitioner was performing the functions of the secretary since 1962 and in 1978 he became a full-fledged secretary of the company. Accordingly, he fulfilled the conditions laid down in the notification dated May 15, 1975, and the Institute illegally rejected the application of the petitioner for enrolment as associate member. His second contention is that such rejection was arbitrary inasmuch as in many of the cases, the Institute granted the membership to less qualified persons and some persons who were not even performing the functions of a secretary. It is his contention that designation is not the criterion and one has to look at the functions performed by a person irrespective of the designation of the post. It has not been disputed that the petitioner was acting as the assistant secretary when the application was made by him for enrolment as a member of the Institute.

19. The contention of the respondents is that the petitioner firstly made an application for being enrolled as a student of the Institute in 1973. He wanted to qualify himself through examination. After the notification dated May 15, 1975, the petitioner wanted to become an associate member and presented his application accordingly. He was not found to possess the requisite qualification and accordingly he was not taken to be an associate member. It is also contended that the petitioner was not working as a secretary of a public limited company from August, 1972, till May, 1975, as was required by the notification. It is pointed out by the learned counsel for the respondents that in the application for being enrolled as an associate member, the petitioner stated that he was an assistant secretary from November 1, 1969, and was reporting to the chief executive of the company. He was not the secretary as it is understood. Mr. Mitra has relied on the decision of the Court of Appeal in the case of Panorama Developments (Guildford) Ltd. v. Fidelis Furnishing Fabrics Ltd., [1971] 3 All ER 16; [1971] 3 WLR 440 ; [1971] 2 QB 711, to emphasise the status and extensive duties and responsibilities of the secretary of a company. The powers and duties of a secretary are normally contained in the articles of association of the company. In this case, the petitioner has not informed this court as to what are the relevant articles of association of India Steamship Co. Ltd. regulating the powers and duties of the secretary. It was and is incumbent upon the petitioner to show that he was in fact discharging the functions of the secretary (although there was a secretary of the company) as prescribed in the Companies Act, 1956.

20. Mr. Mitra has also drawn my attention to various provisions of the Companies Act, 1956, namely, Section 75 (delivering for registration returns of allotments and contracts relating to allotment of shares for consideration other than cash) ; Section 97 (giving notice to the Registrar of an increase of share capital) ; Section 113 (issuing certificates of shares, debentures and debenture stock) ; Section 118 (allowing inspection of the debenture register); Sections 125 to 127 (delivering particulars of mortgages and charges for registration) ; Section 149 (making the statutory declaration for commencement of business); Sections 160, 161 and 162 (signing the annual return and certifying the documents annexed thereto) ; Section 304 (allowing inspection of and furnishing copies of register of members) ; Section 322 (where a director's liability is made unlimited giving the notice required to be given to him) ; Section 388A (certain companies to have secretaries) ; Section 454 (assisting in the making of the statement of affairs of the company in a winding up).

21. A secretary is directly answerable to the board of directors and reports to the board unlike an assistant secretary as was Kalyan Kumar Mukherjee, the petitioner, who was reporting to the chief executive.

22. The main contention, however, of the respondents is that there is no evidence before this court that the petitioner was performing any of the functions as enjoined by the said provisions of the Companies Act, 1956. He did not have the powers and privileges of the secretary. My attention has also been drawn to the letter dated May 25, 1975, of the India Steamship Co. Ltd., addressed to the Institute where Article 168 of the articles of association of India Steamship Co. Ltd., was reproduced which is in the following terms :

'The directors may at any time appoint a temporary substitute for the secretary who shall for the purpose of these articles be deemed to be the secretary.'

23. This article gives power to the board of directors to appoint a temporary substitute. The letter, however, does not show that the petitioner was ever appointed by the board as a temporary substitute for the secretary. It thus appears that the claim made on the basis of the said letter is without jurisdiction and should not be accepted.

24. It is further contended that the notification provided that any person who on August 1, 1972, was working as secretary of a public limited company and continues to hold that position on the date of the application would be qualified to be enrolled as an associate member. There is nothing to show that the petitioner was working as a secretary during the aforementioned period. Thereafter, it was submitted that this court should not disturb the decision of the Institute. A properly constituted body has investigated the relevant facts and materials and has found that the petitioner was not working as a secretary. He has also submitted that the letter dated September 10, 1980, cannot be looked into in isolation but it has to be considered in the background of the correspondence exchanged by and between the Institute and the petitioner.

25. On the facts of this case, it is difficult to accept the contention raised on behalf of the respondents. It is true that at a point of time when this notification had not come into force, the petitioner made an application for student membership. But thereafer it was specifically pointed out by the petitioner and his employer that the petitioner wanted direct admission as an associate member as he fulfilled the conditions laid down in the said notification dated May 15, 1975.

26. The facts of this case as set out in detail would demonstrate that the Institute has taken an attitude which is not only arbitrary but to some extent mala fide. In the affidavit-in-opposition, it has been alleged that the petitioner was denied membership because of lack of experience but the said letter dated September 10, 1980, makes it amply clear that lack of experience was not the ground. In any event, experience is not a condition under the notification dated May 15, 1975. Three conditions have been laid down in the said notification for admission of a member. Firstly, the applicant must possess one of the qualifications mentioned in the said notification. One of such qualifications is a degree in law or postgraduate degree or diploma in management science or post-graduate degree in commerce ; secondly, the applicant for membership must be working as a secretary of a public limited company as on August 1, 1972; thirdly, the applicant must continue to do so on the date of the application made for enrolment as a member of the Institute.

27. All these three conditions are cumulative and one must fulfil all the aforesaid three conditions to be eligible for being admitted as a member of the Institute.

28. There is no dispute that the petitioner possesses LL. B. degree and he also holds a membership of the British Institute of Management, apart from other degrees or diplomas. Thus, the first condition was satisfied. The bone of contention is with regard to the second condition as to whether the petitioner could be said to be working as a secretary of a public limited company as on August 1, 1972. From November, 1969, he was assigned secretarial work and had been discharging various functions of a company secretary, such as convening meetings of the board of directors and committee of directors, attending meetings of the committee of directors and of the board of directors as also members' meetings, taking notes of the, proceedings in such meetings, drafting minutes, carrying on correspondence with shareholders, signing transfer deeds of shares and share certificates, negotiating and signing agreements on behalf of the company on different matters, discharging independently legal functions comprising company law matters, labour matters and also independently discharging administrative and ministerial functions.

29. The committee of directors of India Steamship Co. passed a resolution on December 15, 1973, appointing the petitioner as assistant secretary of the company. This was approved by the board of directors in accordance with Article 138 of the articles of association of the said company.

30. It may be mentioned that after the Companies (Secretary's Qualifications) Rules, 1975, had been made, it was felt that in view of the qualifications prescribed by Rule 2(b) of the said Rules, the company as well as the secretary may have to face practical difficulties. Accordingly, the Department of Company Affairs had decided that the Members of the Institute of Company Secretaries should be drawn liberally in the beginning by admitting the existing company secretaries. In one of the press statements, it was stated that the provisions of Rule 2(b) be relaxed so as to facilitate mobility of secretaries. A person who has worked at least for three years as a secretary of a company should be allowed to take up secretaryship of some other company in case he wishes to change the job. It was also announced that the Department of Company Affairs was persuading the Institute of Company Secretaries to be liberal in regard to accommodating persons having requisite experience of working as secretaries. The Institute, in fact, had been admitting such persons as associate members if they satisfy the stipulated conditions and the Department had asked the Institute to be more flexible in cases of persons already working as secretaries.

31. By a letter dated August 21, 1975, India Steamship Co. Ltd., the employer of the petitioner, made a representation to the president of the Institute. In the said letter, the attention of the Institute, was drawn inter alia, to the following facts :

'We have noted that our Mr. Kalyan Kumar Mukherjee qualifies for your associate membership, as far as his qualifications are concerned, he being a graduate in law and also holding post-graduate diploma in Management Science granted by the Calcutta University. As for his working experience in the organisation, we mention that he has been officiating as secretary from time to time since January, 1971, and in fact he has been continuing to perform the function of the secretary of the company since that date. As you will appreciate, in a big organisation, like ours, the secretarial function is being managed by two officers, one designated as secretary and the other designated as assistant secretary, but the function of the secretary is essentially shared and distributed between the two. We strongly recommend that in view of the circumstances explained and since Mr. Kalyan Kumar Mukherjee is required to perform the job of the secretary, his case may be very carefully considered for enrolment as Associate Member of your Institute. In a period of two years' time, Mr. Kalyan Kumar Mukherjee will be required to take over full charge of secretarial function.'

32. When the matter was pending before the Institute for reconsideration, on April 17, 1978, the petitioner was designated as secretary of India Steamship Co. Ltd. by the board of directors by circular resolution dated April 17, 1978, which was confirmed at the board meeting held on May 29, 1978. The contents of the said resolution are as follows :

'Resolved that the services of Sri Kalyan Kumar Mukherjee as secretary of the company be continued and re-designated as secretary of the company with immediate effect.'

33. Thus, the petitioner fulfilled the other two conditions, that is to say, on August 1, 1972, he was working as secretary and on the date of the application, i.e., on July 4, 1975, he continued to act as such. The employer of the petitioner categorically stated that the petitioner discharged the functions of the secretary. Accordingly, there could not be any reason for rejecting the application of the petitioner for membership. It is true that the designation of the petitioner was not secretary as on August 1, 1972, but the function which he had been discharging was undoubtedly secretarial function. Section 2(45) of the Companies Act, 1956, defines the expression ' Secretary ' as follows :

''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.'

34. The notification read with the definition of 'secretary' makes it amply clear that an individual who, in fact, discharges the functions of a secretary can be regarded as a secretary for the purpose of admission to the membership of the Institute. It is also evident from the relevant provisions of the Companies Act that there can be more than one secretary of a company. In fact, Section 303(2) of the Companies Act uses the word 'secretaries'. It cannot be disputed that by the said notification, relaxation has been made of the rigour of the regulations. This was done because a secretary with prescribed qualifications, that is to say, a member of the Institute may not be immediately available and accordingly the protection was given to the existing secretaries so that they could be taken as members of the Institute upon fulfilment of conditions prescribed in the said notification. Accordingly, the attention was focussed on the nature of the work performed and not on the designation. Till it became obligatory to appoint a duly qualified secretary, the company was at liberty to get the secretarial functions performed by officers without giving them the designation of secretary. That is why under the notification dated May 15, 1975, experience was not made a condition of enrolment as member. The Institute did not dispute the categorical assertions made by the company, the employer of the petitioner, that the petitioner who became the secretary in 1978, had been performing the functions of a secretary since 1971. The statements made by the petitioner in paragraph 10 of the petition regarding the functions discharged by him have not been denied by the respondents.

35. In paragraph 14 of the affidavit-in-opposition, it has been stated by the respondents that 'the Government of India had made a temporary amendment in 1978-79 for allowing the persons discharging the function as secretary for a period of ten years or over for their protection as secretary in that company. Presumably, to avail of the benefit, the petitioner got a resolution passed by the board on May 29, 1978, which redesignated him as secretary of the company with effect from April 17, 1978, and the existing secretary, one Mr. A. Mukherjee, as senior secretary with effect from the said date.'

36. Second proviso to Rule 2(a) of the Companies (Secretary's Qualifications) Rules, 1975, was added by the Amendment Rules, 1979, which came into force on October 31, 1979. According to the said proviso, as amended in 1980, for a period of one year from the commencement of the Companies (Secretary's Qualifications) Amendment Rules, 1979, from October 31, 1979, any person having a total of 10 years' experience in performing secretarial duties or discharging secretarial functions in the company of which he is an employee shall be eligible to be appointed as secretary of that company. It is, therefore, admitted by the respondents that as on October 31, 1979, the petitioner had experience of performing secretarial duties or discharging secretarial functions for the preceding 10 years, i.e., since 1969, otherwise he could not have been appointed as a secretary of India Steamship Co. Ltd. The respondents have taken different stands at different stages. In the affidavit-in-opposition, it has been alleged that the petitioner was denied membership because he did not have any experience. In the letter dated September 10, 1980, it was alleged that relaxation was not possible having regard to the standard to be maintained. In the argument, the contention raised was that the petitioner did not perform the functions of a secretary. None of these stands taken by the respondents is tenable. As I have already indicated, the petitioner performed the functions of a secretary from 1971 till the date he made an application for membership. From 1978, he became a full-fledged secretary. The contention raised in letter dated September 10, 1980, would show that the relaxation was not made in the case of the petitioner. I shall revert to this aspect of the matter shortly. Lack of experience cannot be a ground for rejection of the application made by the petitioner if the petitioner otherwise fulfilled the conditions prescribed by the notification dated May 15, 1975.

37. In the case of Panorama Developments (Guildford) Ltd. [1971] 3 WLR 440 (CA), Lord Denning M. R. quoted the observation of Lord Esher M.R. in Barnett, Hoares & Co. v. South London Tramways Co. [1887] 18 QB 815 (CA) at page 817 :

'A secretary is a mere servant ; his position is that he is to do what he is told, and no person can assume that he has any authority to represent anything at all ;...'

38. Then Lord Denning M.R. observed (at page 443 of [1971] 3 WLR):

'Those words were approved by Lord Macnaghten in George White-church Ltd. v. Cavanagh [1902] AC 117, 124. They are supported by the decision in Ruben v. Great Fingall Consolidated [1906] AC 439 ; [1904-07] All ER 460 (HL). They are referred to in some of the textbooks as authoritative.

But times have changed. A company secretary is a much more important person nowadays than he was in 1887. He is an officer of the company with extensive duties and responsibilities. This appears not only in the modern Companies Acts, but also by the role which he plays in the day-to-day business of companies. He is no longer a mere clerk. He regularly makes representations on behalf of the company and enters into contracts on its behalf which come within the day-to-day running of the company's business. So much so that he may be regarded as holding out as having authority to do such things on behalf of the company. He is certainly entitled to sign contracts connected with the administrative side of a company's affairs, such as employing staff, and ordering cars, and so forth. All such matters now come within the ostensible authority of a company's secretary.'

39. But the functions of a company secretary prior to amendment in 1975 have to be considered in the light of the prevalent practice and not on the basis of what a company secretary in England performs. The nature of the work performed by the petitioner would show that the petitioner had extensive duties and responsibilities and accordingly he was ultimately redesignated as the secretary of the company. It is the confidence reposed by the employer on the skill of the concerned employee who could discharge the responsibilities entrusted upon him that really mattered and not the degrees or diplomas. Such confidence is evident in this case from the letters written by the company to the Institute.

40. Having regard to the facts and circumstances of this case, I have no doubt in my mind that the petitioner fulfilled all the three conditions prescribed by the notification and he had a legal right to claim membership of the Institute on the basis of the said notification. One has to look into the substance of the matter and the object for which the notification was issued. The condition is that the applicant must be working as a secretary of the company from August I, 1972. In this context, the expression 'secretary' would include any person who was performing the functions of a secretary although his designation was not secretary. Mr. Mitra, learned counsel for the respondents, has made criticism that the secretarial functions assigned to the petitioner were not specified in the resolution of the board and the secretary must perform certain statutory functions. But a too rigid view cannot be taken in this case. One must look at the substance of the matter. The designation given to the post in the context of this case is not material. The emphasis was on the functions : thus refusal of the application of the petitioner on the ground that he lacked experience is not tenable.

41. Even assuming that the petitioner did not strictly fulfil the conditions prescribed by the said notification, the respondents have admittedly relaxed the requirements of the said notification in many cases, but in the case of the petitioner, that was not done. It is contended that there has been a hostile discrimination against the petitioner. There is violation of Article 14 of the Constitution. Before I deal with this contention, it is necessary to dispose of one other contention that no writ will lie against the Institute as the Institute is not an 'authority' within the meaning of Article 12 of the Constitution and, therefore, not amenable to the writ jurisdiction. This contention has, however, no substance in view of the decision of the Supreme Court in the case of Ajay Hasia v. Khalid Mujib Sehrawardi, : (1981)ILLJ103SC . It cannot be disputed that the Institute is an instrumentality or agency of the Government. It must be held to be an 'authority' within the meaning of Article 12. Accordingly, the Institute is subject to the same basic obligation to obey the fundamental rights as the Government. It is, in this context, necessary to find out whether the contention of the petitioner that hostile discrimination has been made against him, is sustainable. At this stage, a reference has to be made to the letter dated September 10, 1980, which is, inter alia, to the following effect :

'I am to inform you that the Council has now taken a decision that in the larger interest of regulating and maintaining status and standard of qualification of the profession of company secretaries, it would not be expedient to relax the regulations of the Institute any further. It has accordingly come to the conclusion not to review once again cases received up to December 31, 1976, for admission as associate members on the basis of other qualifications and experience'.

42. It is, therefore, admitted by the Institute that regulations had been relaxed to accommodate some applicants. No reason has been given why the petitioner was left out of consideration. Mr. Mitra, learned advocate for the respondents, has submitted that this observation of the Institute could not be looked into in isolation. It has to be looked in the light of the correspondence that passed between the petitioner and the Institute. This contention has no substance. The reasons for rejection of the petitioner's application are contained in the said letter. Where reasons for making an order appear in the order itself, the court has to examine the merits of the said order on the basis of the said reasons.

43. In the said letter dated September 10, 1980, the ground given is that in the larger interest of regulating and maintaining status and standard of qualification of the profession of company secretary, it would not be expedient to relax the regulations of the Institute any further. It is difficult to appreciate what the Institute wants to convey by the expression 'larger interest'. This is not only vague but no indication has been given in the affidavit-in-opposition, as to what is 'larger interest' and how this 'larger interest' is affected by enrolling the petitioner as member. It is also significant to note that in the said letter, the Institute has used the expression 'any further' which shows that relaxations have been made in the past. But such relaxations would not be made in the case of the petitioner. On the basis of the notification dated May 15, 1975, respondent No. 1 has granted membership to several persons and a list has been annexed to the petition (annexure E). It has been specifically mentioned in the said list what was the designation and experience of those persons mentioned in the said list on the date of their respective application for membership. Except for denying that no person was admitted to the Institute with lesser qualification and experience than the petitioner, the particulars were not disputed. Records were produced and the following facts would emerge from the records in respect of the eight persons specified by the petitioner in the list annexed to the petition.

1. Mr. N.K. Ghosal--He was appointed as secretary of ITC on August 1, 1976. Form 32 was filed with the Registrar of Companies for his designation as secretary in 1976. Mr. Ghosal joined ITC in Secretary's Dept. on October 1, 1975, when Mr. S.K. Banerjee was the secretary of the company. The Institute granted membership to Mr. Ghosal on July 21, 1976, i.e., within 10 months of his working in Secretary's Dept. He was a law officer in a company under the Bird Group prior to his joining ITC (Source ITC Annual Reports 1976 and 1977. Institute's Register of Members).

2. Mr. B. Gooptu--B. A., Assistant Secretary, Coal India Ltd.: The Institute granted membership to Mr. Gooptu on July 21, 1976, (Source Institute's Register of Members).

In the aforesaid two cases, the Institute did not at all abide by the notification dated May 15, 1975.

3. Mr. C.D. Desai--B. A. (Special) Assistant Secretary : The Institute's own remarks in the application of Mr. Desai are that :

(i) The company had a fullfledged secretary, and

(ii) Mr. Desai lacked qualification. And, therefore, Mr. Desai did not fulfil the condition of qualification and experience.

In this case also, the Institute did not follow the criteria prescribed by the notification. The qualification is also relaxed in this case.

4. Mr. K.A. Patel, Assistant Secretary : Institute's own remark is that the case was referred to by Sri H.M. Patel, MP to Sri P.B. Menon, Council Member. Here, the recommendation was the only qualification.

5. M. N. Parasuraman, SSLC (Matriculation Standard) Retd. Secretary : It is not known how he could be admitted having no requisite degree.

6. Mr. R. Balaganghadharan--Retd. Secretary (retired on March 31, 1968) : Institute's own records show that Mr. Balagangadharan senta telegram to Mr. Subbaraman, Secretary of the Institute, in April, 1978, requesting him to accept his grateful thanks for assistance in awarding membership.

This is another glaring example of how the Institute admitted one as member who was not eligible to apply for membership at all.

7. Mr. G.M. Rama Rao--Finance Manager. His letter to the Institute dated August 4, 1976, thanking for admission and sending fees/certificate application form, etc., which were required prior to admission (Application made in July, 1976).

8. Mr. K.S. Vasudeva Murthy--Factory Manager : (Institute's own remarks are that Mr. Murthy was a registered student of the Institute and did not pass any of the examinations. The company was having a fullfledged secretary. Central Council considered the case at its meeting on March 28, 1976, but rejected).

44. The aforesaid facts would amply demonstrate that the action of respondent No. 1 is arbitrary and unjust. If these persons could be granted membership, it is not known why the petitioner cannot be granted the membership. In this connection, reference may be made to the letter of the Department of Company Affairs and one of the Council members to the president of the Institute :

1. I write with reference to item No. 8 of the agenda of the meeting of the executive council of the Institute held on July 6, 1980, in the office of the Institute. The item on the agenda reads as follows :

'To review the cases and appeals received for admission as associate members of the Institute under the earlier regulations and resolutions of the Council.' 2. The above item was discussed threadbare by the Council when the secretary gave a complete background of the circumstances under which the problem has arisen. One of the main points that I stressed was that it will be arbitrary, capricious, unfair and unjust to reject the applications for membership of the applicants (or admit further members) in terms of May 15, 1975, notification of the Council or in relaxation thereof since some of the applicants have been so admitted. It transpires that even the criteria laid down in the May 15, 1975, notification was not strictly adhered to and certain members who do not strictly conform to those criteria including the case of one who is only a matriculate have been admitted after that notification. It also transpires that about 80 to 100 members who do not strictly conform to the criteria laid down in the abovesaid notification were admitted after the said notification. In that case, I saw no principle or fairness in rejecting on grounds of expediency. Each and every applicant has put in his application with the hope of getting membership. Their applications have not been properly considered by the Institute. At the same time, certain other applications, which were also received under similar circumstances, were considered and the applicants admitted as members even though they did not satisfy the qualifications prescribed in the May 15, 1975, notification. In other words, the lucky ones have got away with it and the unlucky ones, whose applications were not considered for reasons not known, are losing only because the Institute did not consider their applications earlier. This will be unjust and discriminatory and without any principle or justification. I am not considering any legal aspect in this case, but for an All India Institute like ours, will it be right in rejecting all the pending applications only on the ground that it is not expedient to give further relaxation having given such relaxation in the case of about 80 to 100 members, and these relaxations have been given without any guidelines or without observing any principles. As you know, the preamble to the Constitution is a watchword to the Government and as a Government nominee, I could not persuade myself to be a party to a decision to reject such pending applications and, therefore, I requested you to record my solitary minute of dissent.'

45. The said letter amply demonstrates the arbitrary manner in which the Institute proceeded in disposing of the applications for membership. The action of the Institute works extreme prejudice, economic hazard and injustice to the petitioner. There are no legitimate reasons for refusing to accord the benefit of membership to the petitioner. The action suffers from the vice of arbitrariness and unreasonableness. Since the Institute is an 'authority' under Article 12 of the Constitution, it has a public element in it and it must, therefore, be informed with reason and guided by public interest. The said letter of Shri Neelakantan would make it crystal clear that arbitrariness is the foundation of the action of the respondents and as a result whereof there has been unequal treatment. The Institute has not adopted any rational, relevant and non-discriminatory standard or norm in accepting the membership of some and rejecting the cases of others. The eight cases referred to above unmistakably point out to only one conclusion, viz., that all the norms have been departed from to accommodate them.

46. In the premises, the action of the Institute in refusing to admit the petitioner as associate member be held to be violative of Article 14 of the Constitution. The petitioner having fulfilled the conditions prescribed by the notifications has a legal right to be enrolled as a member of the Institute. The Institute failed in its duty to admit the petitioner. In the case of Suraj Prakash Oberoi v. Institute of Company Secretaries of India [1984] 3 Comp LJ 205 ; [1985] Tax LR NOC 19 ; [1986] 60 Comp Cas 536, R.N. Aggarwal J. of the Delhi High Court held, and in my view rightly, that the right to be enrolled as a member of the Institute is a judicially enforceable right. There the learned judge observed as follows (at page 544 of 60 Comp Cas) :

'I shall now revert to the second preliminary objection raised by Mr. Saharya, namely, that the Institute is not a statutory authority and, therefore, 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 the prescribed qualifications. There is a corresponding legal duty on the Institute to admit the petitioner as a member in case he fulfils the prescribed conditions. This right is certainly a judicially enforceable right.'

47. For the reasons aforesaid, this application succeeds. The rule is made absolute. As I have held, that the petitioner fulfils all the conditions for being enrolled as an associate member of the Institute in terms of Notification No. 1, dated May 15, 1975, or the relaxation made thereunder, respondent No. 1 shall forthwith admit the petitioner as an associate member of the Institute. There will be no order as to costs.

48. Let a plain copy of the operative portion of this order be given to the advocate for the parties countersigned by the Assistant Registrar (Court) A. S.


Save Judgments// Add Notes // Store Search Result sets // Organizer Client Files //