Professional Documents
Culture Documents
PETITIONER
JAMES MCLINDEN
v.
CHRISTOPHER RYLAND
RESPONDENT
TABLE OF CONTENTS
ABBREVIATIONS...........IV
INDEX OF AUTORITIES.....V
STATEMENT OF JURISDICTION....IX
STATEMENT OF FACTS....X
STATEMENT OF ISSUES.....XII
SUMMARY OF ARGUMENTSXIII
ARGUMENTS ADVANCED...1-15
1. That the issue of limitation was not required to be heard as a preliminary issue
in terms of Section 9A of the CPC...1
1.1. That issue of limitation in the present case was not compulsorily required to be
heard as a preliminary issue in terms of Section 9A of the CPC1
1.2. That the bar of limitation is not applicable on the suit filed by the
Respondent..3
2. That Section 196(3)(a) operates as an immediate disqualification on the
appointment and continuance of a person as a Whole-Time Director, and the
same
is
not
an
eligibility
criterion
that
applies
at
the
time
of
appointment...............................................................................................................5
2.1. That disqualification and eligibility criterion are distinct from eachother and
operate differently...5
2.2. That section 196(3)(a) operates as an immediate disqualification on the
appointment and continuance of a person as a whole-time director..6
3. That the age limit of 70 years under section 196(3)(a) of the Companies Act,
2013 can apply to a Whole-Time Director validly appointed prior to
01.04.2013..8
3.1. That the provisions of the Companies Act, 2013 are applicable for all purposes
of company law...8
3.2. That the Section 196(3)(a) being a disqualification will result in immediate
II
III
ABBREVIATIONS
Section
Paragraph
&
And
AIR
All
Allahabad
All ER
CompLJ
CPC
Crl.LJ
DRJ
Ed.
Edition
MhLJ
MLJ
Pat.
Patna
SC
Supreme Court
SCC
SCR
SLP
WTD
Whole-Time Director
IV
INDEX OF AUTHORITIES
STATUTES
BOOKS
DICEY, MORRIS & COLLINS, THE CONFLICT OF LAWS: VOLUME 1 (Sir Lawerence Collins
et al eds., 14th ed. Thomson, Sweet & Maxwell 2006).
JEHANGIR M.J. SETHIA, INDIAN COMPANY LAW (11th ed. Modern Law Publication 2005).
LEN SEALY & SARAH WORTHINGTON, CASES & MATERIALS IN COMPANY LAW (9th ed.
Oxford University Press 2010).
MAXWELL, INTERPRETATION OF STATUTES (P. St. J. Langan ed., 12th ed. LexisNexis
Butterworths 2003).
MULLA, CODE OF CIVIL PROCEDURE (Solil Paul & Anupam Srivastava eds., 16th ed.
LexisNexis 2001).
N.S. BINDRA, INTERPRETATION OF STATUTES (Amita Dhanda ed., 11th ed. LexisNexis
2014).
SALMOND, JURISPRUDENCE (Glanville Williams et al ed., 11th ed. (reprint) Sweet &
Maxwell, 1957).
REPORTS
3rd Law Commission of India Report, Limitation Act, 1908 (Ministry of Law,
Government of India,1956).
21st Report of the Standing Committee on Finance, 2009-10 (15th Lok Sabha, August
2010).
LEXICONS
BLACKS LAW DICTIONARY (B.A. Garner ed., Thomson West, 8th ed. 2004).
OXFORD ENGLISH DICTIONARY (Catherine Soanes ed., Oxford University Press, 9th ed.
2001).
ONLINE DATABASES
CASES
Ansal Housing & Construction Ltd. v. Commissioner of Income Tax, 2010 (6) RCR
(Civil) 12.
Ashok Mittal v. Mr. Ram Parshotam Mittal &Ors., (2008) 2 CompLJ 193 Del.
Bai Manehha v. Syed Mohamed Bakr Edrus, AIR 1963 Guj 168.
Balasaria Construction Pvt. Ltd. v. Hanuman Seva Trust &Ors., (2006) 5 SCC 658.
C. Ram Prakash & Anr. v. Power Grid Corporation Of India &Anr., (2011) 8 MLJ 593.
Competition Commission of India v. Steel Authority of India Ltd., (2010) 10 SCC 744.
Consumer Education & Research Society v. Union of India &Ors., (2009) 9 SCC 648.
Digam Singh v. Anshu Prakash & Ors., (2013) SCC Online Del 782.
Fazelehussian Haiderbhoy v. Yusufally Adamji & Ors., AIR 1955 Bom 55.
Kamalakar Eknath Salunkhe v. Baburav Vishnu Javalkar & Ors., Civil Appeal No. 1085
of 2015.
Kerala Ceramics and Clays Staff & Ors. v. State Of Kerala & Ors., Writ Petition (Civil).
No. 20749 of 2011.
M/s. Bengal Waterproof v. M/s. Bombay Waterproof Manufacturing Co. &Anr., AIR
1997 SC 1398.
Maharashtra State Warehousing v. Bhujang Krishnaji Kohale, (1999) 101 BomLR 83.
Maulvi Hussain Haji Abraham Umraji v. State of Gujarat, (2004) 6 SCC 672.
M.N. Dastur & Co. Ltd. & Anr. v. Union of India & Ors., 2006 (4) STR 3.
Narayan Gujabrao Bhoyar v. Yeotmal Zila Parishad & Ors., 2009 (6) MhLJ 500.
Ram Dayal Umraomal v. Pannalal Jagan-nathji, AIR 1979 MP 153 (Full Bench).
Ramesh B. Desai &Ors. v. Bipin Vadilal Mehta &Ors., 2006(5) SCC 638.
Sridhar Sundarajan v. Ultramarine & Pigments Co. and Anr, 2016 (4) MhLJ 590.
VII
Syam Sundar Misra v. Municipal Chairman, Parlakimedi, AIR 1964 Orissa 111.
United Savings and Finance Co. Pvt. Ltd. &Anr. v. The Deputy Chief Officer, Reserve
Bank of India, 1980 Crl.LJ 607.
Usha Sales Ltd. v. Malcolm Gomes & Ors., AIR 1984 Bom 60.
Yahoo Properties Pvt. Ltd. v. Bhai Manjit Singh & Anr., 2013 DRJ (133) 49.
VIII
STATEMENT OF JURISDICTION
The Respondent humbly submits to the jurisdiction of the Honourable Supreme Court of the
Republic of Islandia which has been invoked by the Petitioner by way of a Special Leave
Petition under Article 136 of the Constitution of Islandia.
Article 136 reads as follows,
136. Special leave to appeal by the Supreme Court
(1) Notwithstanding anything in this Chapter, the Supreme Court may, in its discretion,
grant special leave to appeal from any judgment, decree, determination, sentence or order
in any cause or matter passed or made by any court or tribunal in the territory of India
(2) Nothing in clause shall apply to any judgment, determination, sentence or order passed
or made by any court or tribunal constituted by or under any law relating to the Armed
Forces.
The Honourable Court granted special leave on 6th August 2016.
IX
STATEMENT OF FACTS
I. BACKGROUND
Goodenough Ltd. is a public limited company registered under the laws of and listed on the
stock exchanges of the Republic of Islandia since 1997. As of date, it has more than
2,50,000 shareholders. On 25th of March, 2013 an ordinary resolution passed in the Annual
General Meeting, appointing Mr. James McLinden (the Petitioner in the present case) as the
companys Whole-Time Director for a period of five years with effect from 12th of
February 2013 in accordance with the Companies Act, 1956.
II. THE COMPANIES ACT, 2013
On the 1st of April 2013 the Companies Act, 2013 was enforced in the country, replacing
the erstwhile Act of 1956. This Act introduced Section 196(3), the provision currently
under dispute. This provision prohibited the appointment and continuance in employment
of any person as a whole-time director, managing director, or a manager who was below the
age of 21 years and above the age of 70 years, amongst prohibitions with regards to persons
who are undischarged insolvents, who have failed to make payment or have compounded
with creditors, or who have been convicted and sentenced for a period of six months.
III. THE DISPUTE
On 15th of April 2013, Mr. McLinden attained seventy years of age. On 12 th May 2016, Mr.
Christopher Ryland (the Respondent in the present case), a shareholder of the company
filed a suit before a Single Judge Bench of the High Court of State of Winchester
challenging Mr. McLindens appointment and continuance as a whole-time director of
Goodenough Ltd. on grounds of introduction of Section 196(3) by the Companies Act,
2013. The suit was filed along with a Notice of Motion of the same date seeking urgent
interim relief restraining Mr. McLinden from functioning or continuing to exercise powers
as WTD, pending disposal of the suit.
On 19th May 2016, Mr. McLinden filed a reply to the Notice of Motion. He raised a
preliminary issue under Section 9A CPC (as added by the State of Winchester) challenging
the maintainability of the suit on grounds of jurisdiction. He argued that the suit was barred
by limitation, and thus the High Court did not have jurisdiction over that same. On merits,
XI
STATEMENT OF ISSUES
ISSUE 1: Whether the issue of limitation was required to be heard as a preliminary issue in
terms of Section 9A of the Code of Civil Procedure?
ISSUE 3: Whether the age limit of 70 years under Section 196(3)(a) of the Companies Act
2013, can apply to a Whole-Time Director validly appointed prior to 01.04.2013?
ISSUE 4: Whether the word continue used in Section 196 (3) ought to be construed in
context of 193(3) (b), (c) and (d) alone and not 196(3) (a)?
XII
SUMMARY OF ARGUMENTS
XIV
ARGUMENTS ADVANCED
1. It is humbly contended before the Honourable Supreme Court that the issue of limitation
was not compulsorily required to be heard as a preliminary issue in under Section 9A of
Code of Civil Procedure (CPC). The arguments in this regard are two-fold:
1.1 That issue of limitation in the present case was not compulsorily required to be
heard as a preliminary issue under Section 9A of the CPC.
2. The Respondent humbly submits that issue of limitation in the pertinent case was not
necessarily required to be heard as a preliminary issue under Section 9A of the code of civil
procedure.
3. Section 9A (State of Winchester Amendment), CPC contemplates that when an issue of
jurisdiction is raised, the said issue should be decided at first as expeditiously as possible,
and be treated as a preliminary issue. The intent behind this is that if the court finds that it
does not have jurisdiction vested in it in law, then no further enquiry is needed and saves a
lot of valuable judicial time in an age where the pendency of present cases alone will take
years to resolve. The interpretation of the term jurisdiction used in this provision,
however, has to be considered with reference to the value, place and nature of the subject
matter. The classification into territorial jurisdiction, pecuniary jurisdiction and jurisdiction
over the subject matter is of fundamental character and has to be considered when the term
jurisdiction is being interpreted.
4. The Apex Court in Kamalakar Eknath Salunkhe v. Baburav Vishnu Javalkar & Ors. 1 has
confirmed this position. The Court held that limitation was not a part of jurisdiction. The
lower courts had therefore erred in making limitation a preliminary issue under Section 9A
of the CPC that talks about jurisdiction alone. In the present case, where the Petitioners
Maharashtra State Warehousing v. Bhujang Krishnaji Kohale, (1999) 101 BomLR 83, at 13.
U.N. MITRA, LAW OF LIMITATION AND PRESCRIPTION: VOLUME 2 2088 (JJ. Y.V. Chandrachud and S.S.
Subramani eds. 12th ed. 2011).
11
Syam Sundar Misra v. Municipal Chairman, Parlakimedi, AIR 1964 Orissa 111, at 8.
12
M/s. Bengal Waterproof v. M/s. Bombay Waterproof Manufacturing Co. & Anr., AIR 1997 SC 1398, at 3.
13
Bai Manehha v. Syed Mohamed Bakr Edrus, AIR 1963 Guj 168; Balakrishana Sawalram v. Dhyaneshwar, AIR
1959 SC 758, at 21;
14 rd
3 Report of the Law Commission of India, Limitation Act 1908 (Ministry of Law, Government of India,1956).
15
Kuseshwar Jha v. Uma Kant Jha, AIR 1941 Pat 188; Bibhuti Narayan v. Guru Mahadeo AIR 1940 Pat 449, at
5; Brij Bhusan v. S.D.O. Siwan, AIR 1955 Pat 1, at 23.
16
Digam Singh v. Anshu Prakash & Ors., (2013) SCC Online Del 782., at 9;
17
B.D.S Madhavaram v. R.S. Sundaram, AIR 1987 Mad 183.
18
Supra 7, at 683.
19
Supra 7, at 694.
10
20
15. It is humbly contended before the Honourable Supreme Court that Section 196(3)(a) is a
disqualification that bars appointment and continuance of appointment of a whole-time
director, and is not merely an eligibility criterion. The arguments in this regard are twofold:
2.1 That disqualification and eligibility criterion are distinct from eachother and
operate differently.
16. The Respondent humbly states that disqualification and eligibility criterion are distinct from
each other and have different operations.
17. Eligible means fit and proper to be selected or chosen23; an eligibility criterion therefore is a
condition that has to be ascertained at the time of the selection for appointment. A person
once eligible may be appointed, and any future change in the eligibility criteria does not
affect this appointment. Disqualify means to make unsuitable for a job or activity. 24 It thus
may arise during the course of the activity and not only before such activity starts. It also
prevents the continuation of appointment of an individual. Any amendment that adds a
disqualification, or changes an existing disqualification will cause to affect any appointment
made prior to such amendment. Eligibility and disqualification are thus two distinct
things,25as also noted by the Single Bench of the High Court of Winchester. 26 The basis of
difference is the time of operation; while eligibility is to be determined while appointing an
individual to a position, disqualification operates during the course of employment.
Eligibility criteria, therefore, act as a screen at the time of appointment of an individual. At
the time of appointment, the proposed appointee shall be subject to the conditions laid as
BLACKS LAW DICTIONARY 559 (B.A. Garner ed., 8th ed. 2004).
OXFORD ENGLISH DICTIONARY 257 (Catherine Soanes ed., 9th ed. 2001).
25
Sridhar Sundarajan v. Ultramarine & Pigments Co. and Anr., 2016 (4) MhLJ 590, at 21; Purno Agitok Sangma
v. Pranab Mukherjee, (2013) 2 SCC 239, at 40.
26
Moot Problem, at 8.
23
24
27
Narayan Gujabrao Bhoyar v. Yeotmal Zila Parishad & Ors., 2009 (6) MhLJ 500, at 34 & 56.
A. RAMAIYA, GUIDE TO THE COMPANIES ACT: PART 2 3421 (18th ed. 2014).
29
Shankar S/o Bhagwan Ambhore v. Vice Chancellor, Dr. Babasaheb Ambedkar Marathwada University,
Aurangabad & Ors., (2006) 3 MhLJ 835, at 6; Rama Narang v. Ramesh Narang, (1995) 2 SCC 513, at 8;
Ravikant S Patil v. Sarvabhouma S. Bagali, (2007) 1 SCC 673, at 6.
28
30
34
Consumer Education & Research Society v. Union of India & Ors., (2009) 9 SCC 648, at 29; Lily Thomas v.
Union of India, (2013) 7 SCC 653, at 3 & 17.
36
Shankar S/o Bhagwan Ambhore v. Vice Chancellor, Dr. Babasaheb Ambedkar Marathwada University,
Aurangabad & Ors., (2006) 3 MhLJ 835, at 6.
37
(1995) 2 SCC 513, at 10.
SALMOND, JURISPRUDENCE 152 (Glanville Williams et al eds., 11th ed. (reprint) 1957). See also Competition
Commission of India v. Steel Authority of India Ltd., (2010) 10 SCC 744, at 52.
39
Supra note 26, at 50.
40
MAXWELL, THE INTERPRETATION OF STATUTES 29 (P. St. J. Langan ed., 12th ed. 2003).
41
State of Maharashtra v. Nanded Prabhani Operator Sangh, AIR 2000 SC 725, at 727; Grasim Industries Ltd. v.
Collector of Customs, AIR 2002 SC 1706, at 1709.
42
2016 (4) MhLJ 590, at 17.
10
43
44
Id., at 25.
Moot Problem, at 2.
11
12
13
CIT, Mysore v. Indo Mercantile Bank Ltd., AIR 1959 SC 713, at 718.
Maulvi Hussain Haji Abraham Umraji v. State of Gujarat, (2004) 6 SCC 672, at 679.
59
AIR 1975 SC 1758, at 18.
60
21st Report of the Standing Committee on Finance, 2009-10 (15th Lok Sabha, August 2010).
61
2016 (4) MhLJ 590, at 15.
58
14
15
PRAYER
Wherefore, in the light of the issues raised, arguments advanced and authorities cited, it is
humbly requested that the Honourable Supreme Court may be pleased to adjudge and
declare that:
1. That the issue raised by the Petitioner challenging the jurisdiction of the High Court of
the State of Winchester must not be treated as a preliminary issue
2. That the Petitioner has been disqualified under Section 196(3)(a) of the Companies Act,
2013 and therefore the interim order restraining the Petitioner from continuing as a
Whole-Time Director of Goodenough Ltd. passed by the High Court of the State of
Winchester is valid and good in law.
And pass any such order, judgment or direction that the Honourable Court deems fit and
proper in the interest of justice.
For this act of kindness, the Counsels for the Respondent as in duty bound shall forever
pray.
_________________________
XV