KAR HC│ One of the most profound tenets of Constitutionalism is presumption of Constitutionality assigned to each legislation enacted

Karnataka High Court: P.S. Dinesh Kumar J dismissed the petition being devoid of merits.

The facts of the case are such that the petitioner, Devas Employees’ Mauritius Pvt. Ltd., a Company incorporated under the laws of Republic of Mauritius filed the instant  petition with prayers to declare Section 272(1)(e) of Companies Act, 2013 (‘the Act’ for short) as ultra vires Constitution of India; and to declare that the second proviso to Section 272(3) of the Act, must be read to be applicable to the petitions presented by persons falling under Section 272(1)(e) of the Act; and to issue a writ of certiorari quashing sanction order dated January 18, 2021 and consequently to quash all proceedings before NCLT.

Counsel for the petitioners Mr. Rajiv Nayyar and Mr. C.K. Nanda Kumar submitted that both Registrar of Companies and a ‘person authorized by the Central Government’ stand on the same footing. In the case of Registrar, before according sanction, Central Government is required to give an opportunity to the Company and the same is missing in the case of a ‘person authorized by Central Government.

Counsel for respondents Mr. Venkatraman, Mr. Saji P John, Mr. M.B Naragund and M.N. Kumar  that there is a classic distinction between the Registrar of Companies and a person authorized by the Central Government because Registrar is a regulator and stands on a different footing.

The Court observed that the Registrar falls in a different category as the powers and duties of the Registrar of Companies enumerated in Sections 77, 77(2), 78, 81, 83, 93, 137, 157, 206, 208, 209 and 248 of the Companies Act.

The Court relied on judgment K.B. Nagur v. UOI, (2012)4 SCC 483 wherein it was observed

“20. It is also a settled and deeply-rooted canon of constitutional jurisprudence, that in the process of constitutional adjudication, the courts ought not to pass decisions on questions of constitutionality unless such adjudication is unavoidable. In this sense, the courts have followed a policy of strict necessity in disposing of a constitutional issue. In dealing with the issues of constitutionality, the courts are slow to embark upon an unnecessary, wide or general enquiry and should confine their decision as far as may be reasonably practicable, within the narrow limits required on the facts of a case.”

The Court further relied on judgment Government of Andhra Pradesh v. P. Laxmi Devi, (2008) 4 SCC 720 wherein it was observed

“46. ………….. But before declaring the statute to be unconstitutional, the court must be absolutely sure that there can be no manner of doubt that it violates a provision of the Constitution. If two views are possible, one making the statute constitutional and the other making it unconstitutional, the former view must always be preferred. Also, the court must make every effort to uphold the constitutional validity of a statute, even if that requires giving a strained construction or narrowing down its scope vide Rt. Rev. Msgr. Mark Netto v. State of Kerala [(1979) 1 SCC 23 : AIR 1979 SC 83] SCC para 6 : AIR para 6. Also, it is none of the concern of the court whether the legislation I its opinion is wise or unwise.”

The Court observed that It is settled that when a provision of law is challenged, Courts are required to exercise restraint and be cautious in striking down a provision. It was further observed that one of the most profound tenets of Constitutionalism is presumption of Constitutionality assigned to each legislation enacted. Indubitably, Parliament has competence.

The Court held “The sanction accorded by the Central Government does not meet petitioner with any Civil consequence. Devas has not challenged the sanction order. Petitioner has failed to demonstrate infringement of any rights enshrined in Part-III of Constitution of India.”

The Court also held “Registrar and ‘a person authorized by the Central Government’ fall into different categories, it does not warrant reading down Section 272(3) of the Companies Act.”

In view of the above, petition was dismissed.

[Devas Employees Mauritius Private Limited v. Union of India, Writ Petition No.6191 OF 2021, decided on 28-04-2021]


Arunima Bose, Editorial Assistant has put this report together 

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