Newsletter Cover June 2015 New

June, 2015 3 NIRC-ICSI Newsletter

From the Chairman

On 30th May, 2015, a study session was organised on thetopic "Role of CS in NCLT" at Mother's Global SchoolAuditorium, Preet Vihar, C Block, Delhi. CS RajeevGoswami was the guest speaker on the occasion. I wouldlike to thank CS Pawan Dubey, CS Manish Durga and CSRamakant Pathak, members of Study Sessions Committeeof NIRC, for taking initiative to organize this session.

On 1st June, 2015, a study session was organised on thetopic "Fraud Reporting" at ICSI-NIRC Building, 4, PrasadNagar Institutional Area, New Delhi. CS Sathya Kumarwas the guest speaker on the occasion.

On 8th June, 2015, a study session was organised on thetopic "Legal Compliances Specific to Food Industry" at ICSI-NIRC Premises. CS Harsh Arora, Director & CS, PerfettiVan Melle India Pvt. Ltd. was the guest speaker on theoccasion.

On 12th June, 2015, a study session was organised on thetopic "Secretarial Standard-I (Meetings of Board ofDirectors)" at YMCA Conference Hall, New Delhi. CS G PMadaan, Past Chairman, NIRC-ICSI was the guest speakeron the occasion.

Members attended these Study Sessions in large numbersand found these Study Sessions very useful for theirprofessional endeavours. I take this opportunity to placeon record my sincere thanks and gratitude to all the guestspeakers of the Study Sessions for sparing their time andsharing their rich knowledge and experience with thedelegates of these study sessions.

ICSI Convocation of Northern Region

Convocation is the important milestone in the educationaljourney of the student. It is an occasion when new batch ofqualified professionals are placed in the hands of the societyfor its development, enrichment and well-being. It marksthe culmination of a phase of learning. On 23rd May, 2015NIRC-ICSI organised ICSI Convocation of the NorthernRegion for newly qualified members of the Institute atManekshaw Centre Auditorium, New Delhi. Mrs. SushmaPaul Berlia, Co-Promoter & President, Apeejay Stya & SvranGroup President, Apeejay Education Society and Co-Founder & Chancellor, Apeejay Stya University was theChief Guest in the first session of the convocation. Ms.Kiran Maheshwari, Cabinet Minister, Govt. of Rajasthanand Ms Latika Sharma, MLA (Haryana) were the Chief Guest& Guest of Honor respectively in the second session of theConvocation. Approx. 650 newly admitted members andtheir relatives have attended the convocation. Theconvocation was organised in two shifts and the auditoriumwas full of enthusiasm and excitement.

Orientation Programme for Regional CouncilMembers

On 23rd & 24th May, 2015 NIRC-ICSI organised anOrientation Programme for the Regional Council Membersof NIRC-ICSI at NIRC premises. CS N K Jain, FormerSecretary & CEO, The ICSI and Shri Mukesh Kulothia,Division Governor, Toastmasters International were theguest speakers on the occasion. The programme was veryuseful for the leaders of our profession.

Management Skills Orientation Programme

NIRC-ICSI organised 213th Management Skills OrientationProgramme for students from 25.05.2015 to 11.06.2015. CSR K Khurana was the Chief Guest during inaugurationfunction and Shri D Bandopadhyay , Registrar of Companies,Delhi & Haryana, CS Subhash Setia, , Chief CorporateAffairs & Group Company Secretary, DLF Group, CSMonika Mehndiratta, Director - Senior Group Legal Counsel& Company Secretary, Ericsson were the Chief Guest,Distinguished Guest & Guest respectively on thevaledictory function of the programme. I take thisopportunity to place on record my sincere thanks andgratitude to all the guests for sparing their valuable timeand sharing their rich knowledge and experience with theparticipants of the programme.

On 16th & 17th June, 2015 NIRC-ICSI, for the first time,NIRC-ICSI organized CS Trainees Fair-2015 for studentsseeking training either 15 months or as per ModifiedTraining Structure at ICSI -NIRC premises. CS Trainees Fair2015 provided an excellent opportunity to both, theorganizations as well as the student to meet and explorethe possibility of fulfilling each other's requirement. Itturned out to be fruitful endeavour for both, theorganisations and the students. I take this opportunity toplace on record my sincere thanks and gratitude to theorganisations for participating in the CS Trainees Fair-2015.

Forthcoming Programmes:

NIRC-ICSI is organising the following forthcomingprogrammes:

" Summer Residential Conference on the theme"Company Secretary: Leading the way in expandinghorizons" on 19th-20th June, 2015, at Palanpur Palace,Mount Abu, Rajasthan.

" One day seminar on the theme "Ease of DoingBusiness- Aligning Companies Act" on 27th June,2015 at Hotel EROS, Nehru Place, New Delhi.

" Regional Level of 15th All India Company Law Quizfor students of the Institute on 23rd June, 2015 atNIRC premises.

" 214th Management Skills Orientation Programmefrom 24th June, 2015 to 10th July, 2015 at NIRCpremises.

I take this opportunity to request all of you to join theseprogrammes in large numbers and take the benefit oflistening to the rich deliberations of the learned speakers.

I look forward for your valuable suggestions for thebetterment of the profession. Feel free to interact with meat [email protected]

With warm regards,

CS NPS Chawla

Chairman, NIRC-ICSI

Cell: 9958535300

[email protected]


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*Views expressed by the Author are solely his own view and the Firm, NIRC of ICSI does not accept any responsibility.

A COMPARATIVE ANALYSIS OF THE EXEMPTIONS PROVIDED TO PRIVATECOMPANIES FROM COMPLIANCE OF CERTAIN PROVISIONS OF THE COMPANIESACT, 2013 (“THE ACT”)

– CS Satwinder Singh, Council Member– CS Satwinder Singh, Council Member– CS Satwinder Singh, Council Member– CS Satwinder Singh, Council Member– CS Satwinder Singh, Council Member, ICSI*, ICSI*, ICSI*, ICSI*, ICSI*


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Introduction:

In a recent landmark judgment by the Supreme Court('SC') in Madras Bar Association vs. Union of India[Writ Petition (C) No. 1072 of 2013], constitutionalvalidity of National Company Law Tribunal ('NCLT')and National Company Law Appellate Tribunal('NCLAT') under Companies Act, 2013 was upheld.Madras Bar Association ('the Association') filed awrit petition before SC alleging that provisionsrelating to establishment and constitution of NCLT/NCLAT were ultra vires the provisions of Article 14of the Constitution of India. Constitution Bench ofSC on May 14, 2015 rejected the Association'sallegation, upheld the constitutionality of Tribunalsand observed that it is "a common feature/practiceto provide one appellate forum wherever anenactment is a complete Code for providing judicialremedies".

Legislative Background:

Earlier, similar provisions regarding NCLT/NCLATwere inserted under Companies Act, 1956 byCompanies (Second Amendment) Act of 2002, whichtoo were challenged by the Association beforeMadras High Court. Madras High Court upheld thevalidity of such provisions. An appeal against theMadras High Court ruling was preferred before SC.Constitutional validity of such provisions wasexamined by a Constitution Bench in Union of IndiaVs. R.Gandhi, President, Madras Bar Association[2010 (11) SCC 1], whereby Madras High Court rulingwas affirmed. Though, constitutional validity ofTribunals was upheld, certain conditions, forqualification of members of Tribunals and SelectionCommittee, were postulated. Consequently,provisions relating to qualifications of members ofTribunals & Selection Committee were struck downand amendments / directions for appointment ofMembers and Selection Committee were suggested.

TRIBUNALIZATION OF JUSTICE - JUSTIFIED?

The above ruling of SC with regard to CompaniesAct, 1956 came in the year 2010. However, Tribunalsunder Companies Act, 1956 could not be established.Subsequently, Companies Act, 2013 ('the Act') wasenacted which repealed Companies Act, 1956.Chapter XXVII of Companies Act, 2013 comprisingof Sections 407 to 434 provided for establishmentand constitution of NCLT/NCLAT. Assailing suchprovisions, the Association filed a writ petitionbefore SC seeking a mandamus directingimplementation of directions as given in 2010judgement.

Supreme Court's 2015 judgment:

• Constitutional validity of NCLT/NCLAT

The Association contended that formation ofTribunals under the Act amounted to negating theRule of Law and trampling of the Doctrine ofSeparation of Powers which was the basic feature ofthe Constitution of India.

SC referred to the 2010 judgment and pointed outthe relevant observations that, "A legislature canenact a law transferring the jurisdiction exercisedby courts in regard to any specified subject (otherthan those which are vested in courts by expressprovisions of the Constitution) to any tribunal."

Further referring to 2010 judgement, it was observedthat all courts were tribunals and any tribunal towhich any existing jurisdiction of courts istransferred should also be a Judicial Tribunal which"means that such Tribunal should have as members,persons of a rank, capacity and status as nearly aspossible equal to the rank, status and capacity of thecourt which was till then dealing with such mattersand the members of the Tribunal should have theindependence and security of tenure associated withJudicial Tribunals."

Thus, it was held that when such issue was alreadyadjudicated and decided earlier, "it is not open to

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– CS Sneha Ghuriani*– CS Sneha Ghuriani*– CS Sneha Ghuriani*– CS Sneha Ghuriani*– CS Sneha Ghuriani*

*Views expressed by the Author are solely her own view and the Firm, NIRC of ICSI does not accept any responsibility.


the petitioner even to argue this issue as it clearlyoperate as res judicata".

The Association relying on SC's ruling in MadrasBar Association vs. UOI and another [TransferredCase (C) No. 150 of 2006] to contend that likeNational Tax Tribunals ('NTT') were struck down,being unconstitutional, same treatment should bemeted out to NCLT/NCLAT. SC rejected suchcontention holding "This adventurism on the partof the petitioner is totally unfounded.. ConstitutionBench judgment in the matter of National TaxTribunal would manifest that not only 2010judgment was taken note of but followed as well."

Distinguishing both the rulings, SC held that, "theNTT was a matter where power of judicial reviewhitherto exercised by the High Court in deciding thepure substantial question of law was sought to betaken away to be vested in NTT which was held tobe impermissible. In the instant case, there is no suchsituation."

• Qualifications of Members of Tribunals

SC noted that in 2010 judgement provision relatingto appointment of Technical member of NCLT/NCLAT was struck down and certain amendmentswere directed. It was held that only officers who heldranks of Secretaries or Additional Secretaries alonewere to be considered for appointment as technicalMembers of NCLT. SC observed that such directionswere given to ensure independence of judiciary,however, were not implemented in the Act. Thus, SCdirected to set right the defects in appointment ofTechnical members of Tribunals. In the words of SC,if such step was not taken, it "would evidently havethe potential of compromising with standards which2010 judgment sought to achieve".

• Constitution of Selection Committee for selectingmembers of NCLT/NCLAT

2010 judgment found fault with constitution ofSelection Committee and it specifically remarkedthat instead of 5 members Selection Committee, itshould be 4 members Selection Committee. Noting

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that directions given by 2010 judgment were notimplemented in the Act, SC observed that, "In theface of the all pervading prescript available on thisvery issue in the form of a binding precedent, thereis no scope for any relaxation as sought to beachieved through the impugned provision and wefind it to be incompatible with the mandatory dictaof 2010 judgment. Therefore, we hold that provisionsof Section 412(2) of the Act, 2013 are not valid anddirection is issued to remove the defect by bringingthis provision in accord with sub-para (viii) of para120 of 2010 judgment."

NCLT vs NTT:

One most distinguishing feature that sets out NTTon a totally different footing is that a completely newAct (National Tax Tribunal Act) was formulatedestablishing NTT, however, NCLT/NCLAT areestablished under Companies Act, 2013, which is initself a complete code.

It is further important to point out that theConstitution Bench in case of NTT case also heldthat it was open to the Parliament to substitute theappellate jurisdiction vested in the jurisdictionalHigh Courts and constitute courts/tribunals toexercise the said jurisdiction. Thus, reading the NTTruling in true spirit, both the rulings go hand inhand, and not contradictory to each other.

NCLT valid - Justified or unjustified?

Formation of Tribunals, with the object of unloadingpressure on overloaded High Courts, is definitely apositive step. However, until and unlessadministrative and judiciary powers are keptcompletely independent, no such step would proveto be a success. Thus, independence of judiciary ismust for providing justice whether by Tribunals orCourts.

Further talking about the positive angle of formationof Tribunals, there would now be more opportunitiesfor practising professionals l ike CompanySecretaries & Chartered Accountants. They wouldnow be able to represent in such Tribunals.


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*Views expressed by the Author are solely his own view and the Firm, NIRC of ICSI does not accept any responsibility.

BOARD'S REPORT (UNDER SECTION 134 OF THE COMPANIES ACT, 2013)– CS Rajiv Bajaj, Council Member– CS Rajiv Bajaj, Council Member– CS Rajiv Bajaj, Council Member– CS Rajiv Bajaj, Council Member– CS Rajiv Bajaj, Council Member, ICSI*, ICSI*, ICSI*, ICSI*, ICSI*

I. Introduction:

The Directors Report is the part of Annual Report inwhich the details of Company has been mentioned.There is no restriction to put any matter in theDirectors Report if the Directors have intention tomention there apart from legal provisions. In view ofthis various company put a lot of matters, issues andpublications which are not mandatory for putting inthe Directors Report but if directors do, they may.

The Boards Report need to be annexed to the financialstatements to be presented to the members at theAnnual General Meeting. Apart from section 134, alot of other sections of Companies Act, 2013, makesit mandatory to disclose certain facts in the Board'sReport.

II. Requirements (Disclosure) as per CompaniesAct,1956 :

a) State of the Company's affairs.b) Amounts proposed to be carried to reserves.c) Amount recommended by way of dividend.d) Material changes and commitments affecting the

financial position.e) Statement of employees receiving remuneration

above a certain limit (Dropped).f) Directors Responsibility statement.III. Requirements (Disclosure) as per Companies Act,2013:

a) Extract of Annual Return.b) No. of Board meetings.c) Ratio of remuneration of each director to median

employees remunerationd) Company's policy on director's appointment &

remuneration.e) Explanation to qualification / remarks of auditors

/PCS in auditor's report or secretarial audit report.f) Statement on declaration by ID's.g) Particulars of loans, Guarantees or investments.h) Particulars of contract or arrangement with

related party.i) Annual evaluation of its own & Board committees

performance.

j) Implementation of risk management policy.k) Policy on CSR initiatives (Including reasons for

unspent amount on CSRIV. Conten ts to be disclosed (Boards Report) in termsof Section 134 :

As per Section 134(3) of the Companies Act, 2013read with Companies (Accounts) Rules, 2014, theBoard's Report shall include:

(a) The extract of the annual return as provided undersub-section (3) of section 92 -in prescribed FormMGT-9;

(b) Number of meetings of the Board;(c) Directors' Responsibility Statement as per section

134(5);(d) A statement on declaration given by independent

directors under sub-section (6) of section 149;(e) In case of a company covered under sub-section

(1) of section 178, company's policy on director'sappointment and remuneration including criteriafor determining qualifications, positive attributes,independence of a director and other mattersprovided under sub-section (3) of section 178;

f) Explanations or comments by the Board on everyqualification, reservation or adverse remark ordisclaimer made-

(i) by the auditor in his report; and(ii) by the company secretary in practice in hissecretarial audit report;

(g) Particulars of loans, guarantees or investmentsunder section 186;

(h) Particulars of contracts or arrangements withrelated parties referred to in sub-section (1) ofsection 188 in the prescribed Form AOC-2;

(i) The state of the company's affairs;(j) The amounts, if any, which it proposes to carry to

any reserves;(k) The amount, if any, which it recommends should

be paid by way of dividend;(l) Material changes and commitments, if any,

affecting the financial position of the companywhich have occurred between the end of thefinancial year of the company to which the


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financial statements relate and the date of thereport;

(m) ** The conservation of energy, technologyabsorption, foreign exchange earnings and outgo,in the manner as prescribed in Rule 8(3) of theCompanies (Accounts) Rules, 2014 [Chapter IX];

(n) A statement indicating development andimplementation of a risk management policy forthe company including identification therein ofelements of risk, if any, which in the opinion ofthe Board may threaten the existence of thecompany;

o) The details about the policy developed andimplemented by the company on corporate socialresponsibility initiatives taken during the year;

(p) In case of a listed company and every other publiccompany having paid-up share capital of twentyfive crore rupees or more, calculated at the end ofthe preceding financial year, a statementindicating the manner in which formal annualevaluation has been made by the Board of its ownperformance and that of its committees andindividual directors;

(q) ** Such other matters as may be prescribed.* As per Section 134(5) of the Companies Act, 2013,the Directors' Responsibility Statement shall statethat-

(a) in the preparation of the annual accounts, theapplicable accounting standards had beenfollowed along with proper explanation relatingto material departures;

(b) the directors had selected such accounting policiesand applied them consistently and madejudgments and estimates that are reasonable andprudent so as to give a true and fair view of thestate of affairs of the company at the end of thefinancial year and of the profit and loss of thecompany for that period;

(c) the directors had taken proper and sufficient carefor the maintenance of adequate accountingrecords in accordance with the provisions of thisAct for safeguarding the assets of the companyand for preventing and detecting fraud and otherirregularities;

(d) the directors had prepared the annual accountson a going concern basis;

(e) the directors, in the case of a listed company, hadlaid down internal financial controls to be

followed by the company and that such internalfinancial controls are adequate and wereoperating effectively; and

(f) the directors had devised proper systems toensure compliance with the provisions of allapplicable laws and that such systems wereadequate and operating effectively.

Explanation- For the purposes of this clause, theterm "internal financial controls" means the policiesand procedures adopted by the company forensuring the orderly and efficient conduct of itsbusiness, including adherence to company'spolicies, the safeguarding of its assets, theprevention and detection of frauds and errors, theaccuracy and completeness of the accountingrecords, and the timely preparation of reliablefinancial information.

** Such other matters as may prescribed has beengiven in Rule 8 of the Companies (Accounts) Rules,2014

Rule 8** of the Companies (Accounts) Rules, 2014:

Rule 8(1): The Board's Report shall be prepared basedon the stand alone financial statements of thecompany and the report shall contain a separatesection wherein a report on the performance andfinancial position of each of the subsidiaries,associates and joint venture companies included inthe consolidated financial statement is presented.

Rule 8(2): The Report of the Board shall contain theparticulars of contracts or arrangements with relatedparties referred to in sub-section (1) of section 188 inthe Form AOC-2.

Rule 8(3): The report of the Board shall contain thefollowing information and details, namely:-

(A) Conservation of energy -

(i) the steps taken or impact on conservation ofenergy;

(ii) the steps taken by the company for utilisingalternate sources of energy;

(iii) the capital investment on energy conservationequipments;

(B) Technology absorption -

(i) the efforts made towards technology absorption;


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(ii) the benefits derived like product improvement,cost reduction, product development or importsubstitution;

(iii) in case of imported technology (imported duringthe last three years reckoned from the beginningof the financial year)-

(a) the details of technology imported;(b) the year of import;(c) whether the technology been fully absorbed;(d) if not fully absorbed, areas where absorptionhas not taken place, and the reasons thereof;and

(iv) the expenditure incurred on Research andDevelopment.

(C) Foreign exchange earnings and Outgo -

- The Foreign Exchange earned in terms of actualinflows during the year and the Foreign Exchangeoutgo during the year in terms of actual outflows.

Rule 8(4) Every listed company and every otherpublic company having a paid up share capital oftwenty five crore rupees or more calculated at theend of the preceding financial year shall include, inthe report by its Board of directors, a statementindicating the manner in which formal annualevaluation has been made by the Board of its ownperformance and that of its committees andindividual directors.

Rule 8(5) In addition to the information and detailsspecified in sub-rule 8(4), the report of the Boardshall also contain -

(i) the financial summary or highlights;(ii) the change in the nature of business, if any;(iii) the details of directors or key managerial

personnel who were appointed or have resignedduring the year;

(iv) the names of companies which have become orceased to be its Subsidiaries, joint ventures orassociate companies during the year;

v) the details relating to deposits, covered underChapter V of the Act,-

(a) accepted during the year;(b) remained unpaid or unclaimed as at the endof the year;(c) Whether there has been any default inrepayment of deposits or payment of interest

thereon during the year and if so, number ofsuch cases and the total amount involved-

(i) at the beginning of the year; (ii) maximum during the year;(iii) at the end of the year;(vi) the details of deposits which are not in compliance

with the requirements of Chapter V of the Act;(vii) the details of significant and material orders passed

by the regulators or courts or tribunals impactingthe going concern status and company'soperations in future;

(viii) the details in respect of adequacy of internalfinancial controls with reference to the FinancialStatements.

V Other Mandatory Sections for Boards Report :


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VI. Additional Compliances for Listed Companies:

Further, listed companies are also required todisclose the following in terms of the Companies Act,2013:

? As per Section 197(12) of the Companies Act, 2013read with Rule 5 of the Companies (Appointmentand Remuneration of Managerial Personnel) Rules,2014 [Chapter XIII], every listed company shalldisclose in the Board's report, the ratio of theremuneration of each director to the medianemployee's remuneration and such other details asgiven in Rule 5 of the Companies (Appointment andRemuneration of Managerial Personnel) Rules, 2014[Chapter XIII].

Rule 5 of the Companies (Appointment andRemuneration of Managerial Personnel) Rules,2014 is as under:

Rule 5(1): Every listed company shall disclose in theBoard's report-

(i) the ratio of the remuneration of each director tothe median remuneration of the employees of thecompany for the financial year;

(ii) the percentage increase in remuneration of eachdirector, Chief Financial Officer, Chief ExecutiveOfficer, Company Secretary or Manager, if any,in the financial year;

(iii) the percentage increase in the medianremuneration of employees in the financial year;

(iv) the number of permanent employees on the rollsof company;

(v) the explanation on the relationship betweenaverage increase in remuneration and companyperformance;

(vi) comparison of the remuneration of the KeyManagerial Personnel against the performanceof the company;

(vii) variations in the market capitalisation of thecompany, price earnings ratio as at the closingdate of the current financial year and previousfinancial year and percentage increase overdecrease in the market quotations of the shares ofthe company in comparison to the rate at whichthe company came out with the last public offerin case of listed companies, and in case of unlistedcompanies, the variations in the net worth of the

company as at the close of the current financialyear and previous financial year;

(viii) average percentile increase already made in thesalaries of employees other than the managerialpersonnel in the last financial year and itscomparison with the percentile increase in themanagerial remuneration and justificationthereof and point out if there are any exceptionalcircumstances for increase in the managerialremuneration;

(ix) comparison of the each remuneration of the KeyManagerial Personnel against the performanceof the company;

(x) the key parameters for any variable componentof remuneration availed by the directors;

(xi) the ratio of the remuneration of the highest paiddirector to that of the employees who are notdirectors but receive remuneration in excess ofthe highest paid director during the year; and

xii) affirmation that the remuneration is as per theremuneration policy of the company.Explanation-

For the purposes of this rule-

(i) the expression "median" means the numericalvalue separating the higher half of a populationfrom the lower half and the median of a finite listof numbers may be found by arranging all theobservations from lowest value to highest valueand picking the middle one;

(ii) if there is an even number of observations, themedian shall be the average of the two middlevalues.

Rule 5(2): The Board's report shall include astatement showing the name of every employee ofthe company, who-

(i) if employed throughout the financial year, w a sin receipt of remuneration for that year which, inthe aggregate, was not less than sixty lakh rupees;

(ii) if employed for a part of the financial year, wasin receipt of remuneration for any part of thatyear, at a rate which, in the aggregate, was notless than five lakh rupees per month;

(iii) if employed throughout the financial year or partthereof, was in receipt of remuneration in thatyear which, in the aggregate, or as the case maybe, at a rate which, in the aggregate, is in excessof that drawn by the managing director or whole-


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time director or manager and holds by himself oralong with his spouse and dependent children,not less than two percent of the equity shares ofthe company.

Rule 5(3): The statement referred to in sub-rule (2)shall also indicate -

(i) designation of the employee;(ii) remuneration received;(iii) nature of employment, whether contractual or

otherwise;(iv) qualifications and experience of the employee;(v) date of commencement of employment;(vi) the age of such employee;(vii) the last employment held by such employee before

joining the company;(viii) the percentage of equity shares held by the

employee in the company within the meaning ofclause (iii) of sub-rule (2) above; and

(ix) whether any such employee is a relative of anydirector or manager of the company and if so,name of such director or manager;

VII. Penalty Clause :

As per Section 134(8) of the Companies Act, 2013, ifa company contravenes the provisions of Section 134relating to Board's Report, the company shall bepunishable with fine which shall not be less thanRs. 50,000 but which may extend to Rs. 25 lacs andevery officer of the company who is in default shallbe punishable with imprisonment for a term whichmay extend to 3 years or with fine which shall notbe less than Rs.50,000 but which may extend to Rs.5lacs, or with both. Thus, it is very important that atthe time of framing of the Board's Report it is essentialto keep the various provisions of the Companies Act,2013 as well as Listing Agreement relating to thedisclosure of contents in the Board's Report in mind,being the minimum contents that should beincorporated therein.

However, certain contents which are required to bedisclosed in the Board's Report in terms of twodifferent statutory requirement of law but which arecommon, needs to be taken care of.

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LIGHTER SIDE OF THE PROFESSIONLIGHTER SIDE OF THE PROFESSIONLIGHTER SIDE OF THE PROFESSIONLIGHTER SIDE OF THE PROFESSIONLIGHTER SIDE OF THE PROFESSION

"Paramjeet Singh, what are all this celebrations all about? Who has given a festival like look tothe office by putting up all these balloons and buntings in the office?"" Sir, it is all contributory.""What is the occasion?""Sir, sorry for the mistake. Since you did not come yesterday, we all thought that you havegone out to avail your week-long holiday."

*********************"Sir, last month you had indicated that you have added zero to the salaries of both theExecutive Presidents.""Yes.""But Sir, I have still got the same salary.""In your case, the zero has been added at the beginning."

—CS PARAMJEET SINGH, [email protected]

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Payment of Annual Membership and Certificate of Practice Fee for the Year 2015-16The annual membership fee and certificate of practice fee for the year 2015-16 has become due for paymentw.e.f. 1st April, 2015. The last date for payment of fee is 30th June, 2015. For details visit: www.icsi.edu

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One of the most important doctrines of interpretingconstitution is doctrine of pith and substance. The basicpurpose of this doctrine is to determine under whichhead of power or field i.e. under which list (provided inthe Seventh Schedule of Constitution) a given piece oflegislation falls. This doctrine has been constantlyadopted by the Apex Court to ascertain the validity of aparticular legislation, when it is challenged on thegrounds of legislative competence.

Pith means 'true nature' or 'essence of something' andSubstance means 'the most important or essential partof something'. Thus, doctrine of Pith and Substance saysthat where the question arises of determining whethera particular law relates to a particular subject(mentioned in one List or another), the court looks to thesubstance of the matter. Hence, if the substance fallswithin Union List, then the incidental encroachment bythe law on the State List does not make it invalid.

There are hundreds of judgments that have applied thisdoctrine to ascertain the true nature of a legislation. Oneof the first important judgments of the Supreme Courtthat took recourse to the Doctrine of Pith and Substanceis The State of Bombay And Another vs F.N. Balsara,

AIR 1951 SC 318. The Supreme Court upheld theDoctrine of Pith and Substance in this case and furthersaid that this doctrine is important to ascertain the truenature and character of a legislation for the purpose ofdetermining the List under which it falls.

Thereafter, the Supreme Court in the case of Mt. AtiqaBegam And Anr. v. Abdul Maghni Khan And Ors. AIR2010 SC 2633 held that in order to decide whether theimpugned Act falls under which entry, one has toascertain the true nature and character of the enactmenti.e. its 'pith and substance'. The court further said that"it is the result of this investigation, not the form alonewhich the statute may have assumed under the hand ofthe draughtsman, that will determine within which ofthe Legislative Lists the legislation falls and for thispurpose the legislation must be scrutinized in itsentirety". Till present time, the doctrine of pith andsubstance is regarded as one of the most importantdoctrines whenever a question is raised over legislativecompetence of the Legislature in enacting anylegislation.

Contributed by: Mr. Adarsh Tripathi, Associates,Vaish Associates Advocates

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Date post:	02-Jan-2017
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