REGISTERED No. D- (D) -72
रजिस्ट्री सं ० डी-( डी) -72
भारत का राजपत्र
The Gazette of India
असाधारण
EXTRAORDINARY
भाग II संण्ड 2
PART II Section 2
प्राधिकार से प्रकाशित
PUBLISHED BY AUTHORITY
मई विल्ली, बृहस्पतिवार, नवम्बर 24, 1977/ प्रग्रहायण 3, 1899
सं० 36]
No. 36] NEW DELHI , THURSDAY , NOVEMBER 24 , 1977 /AGRAHAYANA 3 , 1899
इस भाग में भिम्न पृष्ठ संख्या दी जाती है जिससे कि यह अलग संकलम के रूप में रखा जा सके ।
Separate paging is given to this Part in order that It may be filed as a separate compilation
LOK SABHA
The following Bill was introduced in Lok Sabha on the 24th Novem- ber, 1977. 一
BILL NO . 134 OF 1977
A Bill further to amend the Companies Act , 1956.
Be it enacted by Parliament in the Twenty- eighth Year of the Republic of India as follows.-
1. This Act may be called the Companies ( Amendment ) Act , 1977 Short title
1 of1956
5 of 1898
Amend- ment of section 10E .
2 of1974.
2. In the Companies Act, 1956 ( hereinafter referred to as the principal Act) , in section 10E , in sub - section ( 4D ) , for the words and figures " Chap- ter XXXV of the Code of Criminal Procedure , 1898 " , the words and figures " Chapter XXVI of the Code of Crımınal Procedure , 1973 " shall be substituted .
3. In section 58A of the principal Act , after sub - section ( 7 ) , but before the Explanation , the following sub - section shall be inserted, namely: -
Amend- ment of section 58A
41 of 1974
" ( 8) The Central Government may, if it considers it necessary for avoiding any hardship or for any other just and sufficient reason , by order , issued either prospectively or retrospectively from a date not earlier than the commencement of the Companies ( Amend- ment) Act , 1974 , grant extension of time to a company or class of companies to comply with , or exempt any company or class of com- panies from , all or any of the provisions of this section either gene- rally or for any specified period subject to such conditions as may be specified in the order:
(735) [PART II-
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Provided that no order under this sub - section shall be issued in relation to a class of companies except after consultation with the Reserve Bank of India " .
Amend- ment of section
108H .
54 of 1969 .
4. In section 108H of the principal Act , the words , figures , letters and brackets ' and , any reference in section 108A, 108B and 108C to " same management " shall be construed as a reference to " same management " as defined in clause ( g ) of section 2 of the Monopolies and Restrictive Trade Practices Act , 1969' shall be inserted at the end .
5. In section 220 of the principal Act.-
Amend- ment of section 220.
( 1) ın sub - section ( 7 ) , after the words " balance sheet and the profit and loss account were so laid " , the words " , or where the annual general meeting of a company for any year has not been held , there shall be filed with the Registrar within thirty days from the latest day on or before which that meeting should have been held in accordance with the provisions of this Act, " shall be inserted ;
(ii) in sub- section ( 2 ) , after the words " does not adopt the balance sheet " , the words " , or , if the annual general meeting of a company for any year has not been held , " shall be inserted .
6 In section 293 of the principal Act , in sub -section ( 1) , in clause ( e) , for the words " twenty-five thousand rupees " , the words " fifty thousand rupees shall be substituted
Amend- ment of section 293 .
7 In section 620 of the principal Act , for sub- section (2 ) , the following sub- section shall be substituted and shall be deemed to have been substi- tuted with effect from the 1st day of February , 1975 , namely -
Amend- ment of section 620.
" (2 ) A copy of every notification proposed to be issued under sub-section ( 1 ) , shall be laid in draft before each House of Parlia- ment , while it is in session, for a total period of thirty days which may be comprised in one session or in two or more successive ses- sions , and if, before the expiry of the session immediately following the session or the successive sessions aforesaid, both Houses agree in disapproving the issue of the notification or both Houses agree in making any modification in the notification , the notification shall not be issued or , as the case may be, shall be issued only in such modified form as may be agreed upon by both the Houses ." .
8. After section 634 of the principal Act , the following section shall be inserted , namely
Insertion of new section 634A
Enforce- ment of orders of Company Law Board .
" 634A. Any order made by the Company Law Board under sec- tion 17 , section 18 , section 19 , section 79 , section 141 or section 186 may be enforced by that Board in the same manner as if it were a decree made by a Court in a suit pending therein, and it shall be lawful for that Board to send , in the case of its inability to execute such order, to the Court within the local limits of whose jurisdic- tion,-
(a) in the case of an order against a company, the registered office of the company is situated , or SEC . 2 ]
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(b) in the case of an order against any other person , the person concerned voluntarily resides , or carries on business or personally works for gain . " .
9. In section 635 of the principal Act , after sub - section ( 3 ) , the follow- ing sub - section shall be inserted , namely
Amend- ment of section 635.
" ( 4 ) Where any order made by the Company Law Board under section 17 , section 18, section 19, section 79 or section 186 is required to be enforced by a Court, a certified copy of the order shall be pro- duced to the proper officer of the Court required to enforce the order and the provisions of sub - sections ( 2) and (3 ) shall , as far as may be , apply to every such order in the same manner and to the same ex- tent as they apply to an order made by a Court " .
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[PART II-
738
STATEMENT OF OBJECTS AND REASONS
In the Companies Act , 1956, section 58A relating to acceptance of deposits was inserted by the Companies (Amendment ) Act , 1974 , which came into force on the 1st February, 1975. Prior to the coming into force of this section , acceptance of deposits by companies was regulated by the directions issued by the Reserve Bank of India under Chapter IIIB of the Reserve Bank of India Act , 1934. Clause ( a) of sub - section ( 3 ) of section 58A provides that every deposit accepted by a company at any time before the commencement of the said amendment Act of 1974 , shall. if it is not renewed by a company in accordance with the provi- sions of that section, be repaid in accordance with the terms of such deposit . Clause ( c) of that sub - section provides that any deposit re- ceived by a company in contravention of the aforesaid directions of the Reserve Bank shall be repaid in full on or before 1st April , 1975 , Sub- section ( 5 ) of that section provides for penalty for the contravention of the provisions of the section A review of the cases of contraventions shows that sometimes they are due to circumstances beyond the control of the companies , namely , strikes , riots , power - cuts , recession , etc Sub- section ( 7) of section 58A empowers the Central Government to give total exemption to a company from the provisions of the section after consulting the Reserve Bank of India. There is, however , no power to grant partial relaxation like extension of time in deserving cases for the repayment of deposits A study group constituted by the Reserve Bank of India under the chairmanship of Shri James S. Raj recommended that section 58A of the Act may be suitably amended to grant extension of time to comply with or to exempt any company from the provisions of that section . It is proposed to accept this recommendation and amend section 58A suitably .
In the State of Bombay v Bandan Ram Bhandari [ AIR ( 1961 ) S.C. 186] , the question arose as to whether the company and its officers are hable to be prosecuted under the 1913 Act for not laying the balance- sheet and the profit and loss account before the company in annual general meeting where the annual general meeting of the company was not held In that case , the Supreme Court took the view that a person charged with an offence could not rely on his own default as a defence to the charge If he was responsible for not calling the annual general meeting , he could not be heard to say in his defence to the charge that as the annual general meeting was not held , the balance - sheet and profit and loss account could not be laid before the company in annual general meeting A different view has , however , been taken on the point by Supreme Court in the case of State of Andhra Pradesh v Andhra Pradesh Provincial Potteries Ltd [ AIR ( 1973) SC . 2429 ] .
Persons in charge of the management of some of the companies some times omit to convene the annual general meeting of the company and by such omission keep the shareholders as well as the creditors of the com- pany In the dark about the affairs of the company and its financial condi- tion Further, by such omission , they also evade the necessity of filing SEC . 2 ]
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the balance- sheet and the profit and loss account with the Registrar of Companies When a document is filed with the Registrar of Companies , it is open to any shareholder or creditor to inspect such document and to obtain a copy thereof . In the circumstances , it is absolutely essential that even where the annual general meeting of the company has not been held, the balance -sheet and profit and loss account should be filed with the Registrar of Companies to enable the shareholders and other persons to find out, from inspection of the said documents, the affairs of the com- pany and its financial condition The Bill seeks to amend section 220 to achieve the said object.
Under section 293 of the Companies Act , 1956 , a company is empowered to make donations for charitable purposes up to live per cent . of its average net profits during the preceding three years or up to Rs 25,000 , whichever is greater The ceiling of Rs 25,000 was fixed long ago and it is felt that in the present context , the said ceiling should be raised to Rs . 50,000. The Bill seeks to amend section 293 .
Section 620 of the Companies Act , 1956 , empowers the Central Govern- ment to modify , by notification, any of the provisions of the Act in its application to a particular Government company or to Government com- panies in general Every notification proposing to make such modifica- tion is required to be placed, in draft , before each House of Parliament for a period of not less than 30 days while it is in session Since the said period of 30 days cannot , sometimes , be completed in one session , it is necessary to amend the section to permit the period of 30 days to be com- pleted in one session or in two or more successive sessions . The Bill seeks to amend section 620 to achieve the said object .
Other amendments included in the Bill are of a consequential or formal nature .
SHANTI BHUSHAN
NEW DELHI ;
The 14th November , 1977
AVTAR SINGH RIKHY ,
Secretary
PRINTED BY THE GENERAL MANAGER , GOVERNMENT OF INDIA PRESS , MINTO ROAD , NEW DELHI AND PUBLISHED BY THE CONTROLLER OF PUBLICATIONS , DELHI , 1977