As far as the Companies Act, 2013, is concerned, I was listening with great enthusiasm (to) all the speakers. And what was coming in my mind when one particular comment, which is the unanimous opinion of the speakers, and to which there is no dispute either, that the law was made in haste. Of course, such a law is not an exception, laws are made in haste.
We started debating the amendments to the 1956 (Companies) Act right from 1999. It gave its report and the Parliament made various amendments in 2002, but they were not enforced. In 2004, a new government came, and it was thought that some amendments in the existing Act would not suffice. So there should be a comprehensive law on this, a totally new law with a new look, and the existing law should be repealed, which is archaic or old fashioned law, going by the developments that have taken place in international trade. And particularly when there is a demand after globalisation that in order to attract FDI (foreign direct investment), our laws should also be internationally compliant.
In 2004, the idea was that this is not going to help a lot, let us come out with a completely new legislation. I still remember that in 2004, a concept paper was circulated by the Ministry of Company Affairs at that time, which was highly debated. Symposiums were held on that concept paper. Many suggestions were made. On that basis, a draft law was framed and later introduced in Parliament at that time. But nothing happened.
Come 2009, the term of that government (UPA-I) was over. After 2009, again a fresh exercise started. Meanwhile, all these committees thereafter - the Irani committee and Sinha Committee - were constituted. They have their reports also. Again, debates.
What I am trying to say is, here is a case where from 1999 we are struggling to bring out a new law. So much of exercise took place, but ultimately what is the product? When we get it, it is labelled, and rightly so, that there is no thinking behind it. See after 14 years, this is where we are landing.
The motive behind this law was bona-fide. The entire exercise was done with the intention that we should come out with a particular law, which should take care of all the ills that are in the current system or the Act. We now have one window in the form of quasi-judicial tribunal. Now, we don't have the Sick Industrial Companies Act (SICA), Company Law Board (CLB), or the jurisdiction of the high courts.
Tribunalisation of justice is the order of the day, which has to be accepted, but at the same time whether these tribunals are able to deliever or not is also an issue which should be debated.
What is more important is that the right people have to be appointed. It should not be the re-employment of retired bureaucrats and retired company law personnel. There should be a trained person there, really well-versed with these nuances of the Companies Law, who should have deep knowledge on how the economy works and how the companies function.
And one thing again, is a matter of jurisprudential debate, in a case like this - of delegated legislation or subordinate legislation. Yes, to some extent, it is the order of the day. And we have read this as students of administrative law also, that when the law is made by the lawmaker, he cannot think of all the possibilities that will arrive in future. This is, in a way, a recognised and accepted position. Therefore, the rule-making authority has to be there to fill up those gaps, in those situations.
But what I am trying to emphasise is, and this Act is an example of that, whether you can give it in the hands of rule-making authorities and subordinate legislation or delegated legislation, more powers than what even the legislature itself has. I remember, as a student of administrative law, also in LLB, we studied that essential legislative function cannot be delegated. So, when we talk of legislation, we talk of the will of the legislature. When even a particular provision is interpreted by the court, we always say in our judgment that we try to find out the intent of the legislature behind this provision. What the legislature meant? And the more unfortunate thing is that here, on some of the issues, the Ministry of Corporate Affairs and Ministry of Finance are not in tandem. So which rule will prevail ultimately? Which provision will prevail? So this is a matter really of a jurisprudential debate, whether power to this extent can be given to a rule-making authority.
Today, another thing that this legislation exposes is the lack of expertise in legislative draft-making, which is vanishing in our country. The priniciple is, and it is always said, that judgments are not to be read as statutes.
When this is the principle, that a judgment is not to be read as statute, that means - in a statute, each "word" of a particular section matters.
But that does not mean that law should be so indeterminate that even courts are struggling to find the intent of legislature.
We talk of the will of Parliament, where 90 per cent of the parliamentarians don't even know when the law comes, what is the law. And nowadays it is not even debated. So where is the will of the Parliament? Where is the will of the legislature?
What I dread is what Justice D A Desai said in his 1975 judgment of Arbitrations Act, 1940, that "'the way this law has come up, it makes the lawyers laugh and philosophers weep". I don't want that this should be the fate of this legislation also. Unless remedial steps are taken at the earliest, it will make the lawyers laugh but instead of philosophers, it will make us judges weep.
Edited excerpts from Supreme Court judge Justice A K Sikri's speech at the launch of the book "Companies Act 2013 - Impact Assessment" written by Satwinder Singh, Partner, Vaish Associates Advocates, on August 21 Speech transcribed by Deepak Patel
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