The Hindu Business Line : Burden of redundancy

WHERE a return is filed with the Registrar of Companies (RoC) containing stipulated information/disclosure as required under a particular provision of the Companies Act, 1956, is it necessary to file the same with the RoC under another provision of the Act?

This oft-raised question is based on the premise that the information required under the penal and other provisions are more or less identical. By now, it is a well-accepted administrative practice to avoid redundant returns, thereby eliminating multiplicity of returns being filed. Several committees which went into the act of simplification and rationalisation of the Act have often stressed the need to streamline the procedures.

Yet there is no denying the fact that even today there are several provisions in the Act mandating returns to be filed in the prescribed form with prescribed fees furnishing certain information/disclosures, even though the information filed under different sections is identical.

It is heartening to note that the judiciary has intervened in the matter.

While sanctioning the scheme of amalgamation under Section 394 filed by Saboo Leasing Pvt Ltd (2004 51 SCL 681 AP), the AP High Court held: "The scheme of arrangement or amalgamation if sanctioned by the High Court, the certified true copy of the High Court's order is required to be filed before the Registrar of Companies within 30 days from the date of the order under sub-section (3) of Section 394, for the purpose of its registration. The object behind such intimation, which is required under Section 94, Section 97 or Section 394(3) appears to be one and the same.

Again, the default in filing certified copy of the order of the High Court before the Registrar of Companies within 30 days entails penal consequences. Well, when the certified copy of the order sanctioning the scheme by the High Court is required to be filed before the Registrar for the purpose of its registration, there is no reason as to why it shall not be treated as notice to the Registrar as envisaged under Sections 95 and 97 inasmuch as the object being the same."

This is an important pronouncement. Applying this ratio, the same view can be taken in regard to other instances where multiple returns are prescribed under the Act. The Andhra Pradesh High Court has held that where a certified copy of a court's order (under Section 394(3)) sanctioning the scheme of amalgamation is filed, it can be treated as notice to the RoC as envisaged under Sections 95 and 97 of the Act.

This ruling opens up a plethora of similar situations under the Act where duplicity is involved. Illustrated herein are a few cases.

Consider, for example, the alteration of Memorandum and Articles of Association for increase in capital. Under Section 17, a resolution for modification of the memorandum is required. This is an ordinary resolution.

Where articles are amended pursuant to Section 31 of the Act, a special resolution is required for altering the capital clause in the Articles. Under Section 97 of the Companies Act notice of increase in capital has to be given to the RoC. Under Section 192 (4)(a), all special resolutions are to be filed in the prescribed manner within 30 days. Can the duplicity not be avoided?

Under Section 192(4)(c), all resolutions of the board of directors of a company relating to the appointment, reappointment or variations in the terms of appointment of managing director is required to be filed. Section 269 deals with the appointment of managing director in a public company.

Under this section, any appointment made will be subject to sub-section 2 and where such a person is appointed under Schedule XIII, he/she will be required to abide by the conditions under Schedule XIII, Part III of the said schedule which mandates that a resolution of the shareholder confirming the appointment is necessary.

Sub-section (2) of Section 269 mandates filing of return in the prescribed form for such appointment (Form 25C). The requirement under Section 192 (4)(c) can be dispensed with in the case of a public company, as returns under Section 269 are more comprehensive.

The instances suggested are merely indicative. It is time all duplicity and multiplicity were avoided for reasons of simplicity and clarity.

(The author is a Pune-based company secretary.)

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