Kiit 2

P415
4th KIIT UNIVERSITY NATIONAL MOOT COURT COMPETITION, 2016
BEFORE THE HONOURABLE SUPREME COURT OF THE REPUBLIC OF ISLANDIA
IN THE MATTER OF:
PETITIONER
JAMES MCLINDEN
V.
CHRISTOPHER RYLAND
RESPONDENT
SPECIAL LEAVE PETITION NO. _________/2016
WRITTEN SUBMISSION OF THE COUNSELS APPEARING ON BEHALF OF THE

PETITIONER
TABLE OF CONTENTS
ABBREVIATIONS............IV
INDEX OF AUTHORITIES...V
STATEMENT OF JURISDICTION......IX
STATEMENT OF FACTS......X
STATEMENT OF ISSUES......XII
SUMMARY OF ARGUMENTSXIII
ARGUMENTS ADVANCED1-15
1. That the issue of limitation was required to be heard as a preliminary issue in
terms of Section 9A of the CPC.................................................................................1
1.1. That Section 9A, CPC is mandatory and not directory.1
1.2. That an issue raised on grounds of limitation is within the ambit of jurisdiction
pertaining to Section 9A of the CPC3
1.2.1 That the suit filed before the Winchester High Court was barred by the law
of limitation3
1.2.2 That jurisdiction in Section 9A, CPC includes bar of jurisdiction by
limitation4
2. That Section 196(3)(a) does operates as an immediate disqualification on the
appointment and continuance of a person as a Whole-Time Director, and the
same
is
an
eligibility
criterion
that
applies
at
the
time
of
appointment................................................................................................................5
2.1.That Section 196(3) is divided into eligibility criterion and disqualifications
operating independently of each other5
2.2. That Section 196(3)(a) is an eligibility criterion applicable at the time of
appointment and not a disqualification7
3. That the age limit of 70 years under section 196(3)(a) of the Companies Act,
2013 can not apply to a Whole-Time Director validly appointed prior to
01.04.2013?................................................................................................................10
II
MEMORIAL ON BEHALF OF THE PETITIONER

3.1. That a Whole-Time Director appointed validly prior to the Companies Act 2013
remains validly appointed..10
3.2. That Companies Act, 2013 does not have retrospective effect...11
4. That the word continue used in section 196(3) ought to be construed in context
of 196(3)(b), (c) and (d) alone and not 196(3)(a)....................................................13
4.1. That 196(3)(b), (c), and (d) are absolute disqualifications..13
4.2. That section 196(3)(a) is limited in its operation and does not cease
employment14
PRAYERXV
III
ABBREVIATIONS
Section
Paragraph
&
And
AIR
All India Reporter
ALJ
Allahabad Law Journal
BomCR
Bombay Cases Reporter
BomLR
Bombay Law Reporter
CLB
Company Law Board
CLR
Company Law Reporter
CompLJ
Company Law Journal
CPC
Code of Civil Procedure
Ed.
Edition
MhLJ
Maharashtra Law Journal
RAJ
Recent Apex Judgments
SC
Supreme Court
SCC
Supreme Court Cases
SCR
Supreme Court Reporter
SLP
Special Leave Petition
WTD
Whole-Time Director
IV
INDEX OF AUTHORITIES
STATUTES
Code of Civil Procedure, 1908
Companies Act, 1956
Companies Act, 2013
Constitution of India, 1950
Indian Companies Act, 1913
Limitation Act, 1963
BOOKS & ARTICLES
A. RAMMAIYA, GUIDE TO COMPANIES ACT: PART 2 (17th ed. LexisNexis Butterworths

Wadhwa 2010).
A. RAMMAIYA, GUIDE TO COMPANIES ACT: PART 2 (18th ed. LexisNexis 2014).
DICEY, MORRIS& COLLINS, THE CONFLICT OF LAWS: VOLUME 1 (Sir Lawerence Collins
et al eds., 14th ed. Thomson, Sweet & Maxwell 2006).
FRANK E. HORACK, CASES AND MATERIALS ON LEGISLATION (2nd ed. reprint 1954).
G.P. SINGH, PRINCIPLES OF STATUTORY INTERPRETATION (13th ed. LexisNexis

Butterworths Wadhwa2012).
JEHANGIR M.J. SETHIA, INDIAN COMPANY LAW (11th ed. Modern Law Publication 2005).
HALSBURYS LAWS OF ENGLAND (Lord Mackay of Clashfern ed., LexisNexis 4th ed., reissue Volume 7(1) 2004).
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).
U.N. MITRA, LAW OF LIMITATION AND PRESCRIPTION: VOLUME 2 2088 (JJ. Y.V.
Chandrachud and S.S. Subramani eds., 12th ed. LexisNexis Butterworths Wadhwa2011).
V
Justice S.U. Khan, Jurisdiction of the Civil Court and its Bar,
http://ijtr.nic.in/article_chairman2.pdf (retrieved on 24/8/2016, at 1500 IST).
LEXICONS
BLACKS LAW DICTIONARY (B.A. Garner ed., Thomson West 8th ed. 2004).
OXFORD ENGLISH DICTIONARY 492 (Catherine Soanes ed., Oxford University Press 9th
ed. 2001).
SHERARD OSBORN, CONCISE LAW DICTIONARY (Sheila Bone ed., Sweet & Maxwell 9th
ed. 2001).
ONLINE DATABASES
Manupatra (last accessed on 1/9/2016)
SCC Online (last accessed on 1/9/2016)
Taxmann (last accessed on 1/9/2016)
Westlaw (last accessed on 1/9/2016)
CASES
A.R. Antulay v. R.S. Nayak, AIR 1988 SC 1531.
American Home Products Corp. v. Mac Laboratories Pvt. Ltd., (1986) 1 SCC 465.
Bhatia International v. Bulk Trading, S.A., (2002) 4 SCC 105.
C. Gupta v. GlaxoSmithKline Pharmaceuticals Ltd., (2007) 1 SCC 171.
Delhi Airtech Pvt. Ltd. v. State of U.P. (2011) 9 SCC 354.
Employees State Insurance Corporation v. S.K. Agarwal & Ors.,1998 II CLR 518.
Foreshore Co-operative Housing Society Limited & Ors.v. Praveen D. Desai & Ors.,
AIR 2015 SC 2006.
Gem Granites v. CIT, (2005) 1 SCC 229.
Gikkul Kaur v. Guljeet Kaur, Civil Revision Application No. 56 of 2015, 16th Feb 2016.
Guru Raj Reddy v. P. Neeradha Reddy AIR 2015 SC 2485.
H.S. Vankani v. State of Gujarat, (2010) 4 SCC 301.
HCL Modi v. DLF Universal, AIR 2005 SC 4446.
Hitendra Vishnu Thakur v. State Of Maharashtra, 1994 SCC (4) 602.
Hyderabad Asbestos Cement Products Ltd. v. Union of India, (2000) 1 SCC 426.
VI
Ittavira Mathai v. Varkey & Anr., 1964 AIR 907.
ITW Signode India Ltd. vs. CCE, (2004) 3 SCC 48.
J.S. Yadav v. State of U.P. & Anr. (2011) 6 SCC 570.
Jaipal v. State of Rajasthan, 2009 Indlaw RAJ 275.
Jayesh Ramniklal Doshi v. Carbon Corp Ltd., 1992 (2) BomCR 588.
K. Prabhakaran v. P. Jayarajan, (2005) 1 SCC 754.
Kamlesh Babu vs. Lajpat Rai Sharma, (2008) 12 SCC 577.
Kline Beecham Cons v. Hindustan Lever (2003) 105 BomLR 547.
M.D. Army Welfare Housing Organization v. Sumangal Services (P) Ltd., (2004) 8 SCC
619.
Manick Chandra Nandy v. Debdas Nandy, (1986) 1 SCC 512.
Manindra canal and corporation ltd v. Bhutnath Banerjee, AIR 1964 SC 1336.
Meher Singh v. Deepak Sawhney, 1998 (3) MhLJ 940.
Mukund Ltd. v. Mumbai International Airport (2011) 2 MhLJ 936.
N. Kannadasan v. Ajoy Khose, (2009) 7 SCC 1.
National Thermal Power Corp. Ltd. v. Siemens Atkeingesellschaft, 2007 (4) SCC 451.
Nusli Neville Wadia And Others v. Ferani Hotels Private Limited,

Manu/SCOR/3985/2012.
Official Trustee, West Bengal &Ors. v. Sachindra Nath Chatterjee & Anr., 1969 AIR
823.
P. Suseela & Ors. v. University Grants Commission & Ors.,(2015) 8 SCC 129.
Pandurang Dhondi Chougule v. Maruti Hari Jadhav, AIR 1966 SC 153.
Prabhakaran v. P. Jayarajan, (2005) 1 SCC 754.
Punam Co-op. Housing Society v. Pratap Issardas Bhatia & Ors., Civil Appeal No. 3397
of 2015.
Rajasthan SRTC v. Bal Mukund Bairwa, 2009 (4) SCC 299.
Rajni Tandon v. Dulal Ranjan Ghosh Dastidar & Anr., (2009) 14 SCC 782.
Rakesh Wadhawan v. Jagdamba Industrial Corp., (2002) 5 SCC 440.
Rama Narang v. Ramesh Narang & Ors., 1995 SCC (2) 513.
Rama Vijay Kumar Oberoi thr. GPH v. Sunita Sudam Ranaware, Civil Appeal No(s).
3393-95 of 2015.
Razia Amirali Shroff & Ors. v. M/s Nishuvi Corporation & Ors.,2016 (1) BomCR 83.
VII
Re Kasturi Lal & Sons Ltd. (1995) 5 Comp LJ 316 (CLB Delhi).
Royal Palms (India) Pvt. Ltd. & Ors. v. Bharat Shantilal Shaha & Anr., 2009 (2)
BomCR 622.
Shyam Sunder v. Ram Kumar, (2001) 8 SCC 24.
Smith Kline Beecham Cons v. Hindustan Lever, (2003) 105 BomLR 547.
State v. Pyarey Mohan Srivastava, 1953 ALJ 339.
State Of Himachal Pradesh & Anr v. Kailash Chand Mahajan & Ors., 1992 AIR 1277.
State of M.P. v. Narmada Bachao Andolan, (2011) 7 SCC 639.
Syam Sundar Misra v. Municipal Chairman, Parlakimedi, AIR 1964 Orissa 111.
Tayabbhai M. Bagasarwalla & Anr. v. Hind Rubber Industries Pvt. Ltd., AIR 1997 SC
1240.
Tirath Singh v. Bachittar Singh, (1955) 2 SCR 457.
Trimbak Damodhar Raipurkar v. Assaram Hiraman Patil, 1962 SCR Supl. (1) 700.
Vaish Aggarwal Panchayat v. Inder Kumar AIR 2015 SC 3357.
Veluswami Thevar v. G. Raja Nainar, AIR 1959 SC 422.
Veluswami Thevar v. G. Raja Nainar, AIR 1959 SC 422.
Videocon International Ltd. v. Securities and Exchange Board of India, AIR 2015 SC
1042.
Vimalkumar Ravji Shah v. The Employees Provident Fund Organisation, Solapur &
Ors., (2009) 5 MhLJ 209.
Zile Singh v. State of Haryana, (2004) 8 SCC 1.
VIII
STATEMENT OF JURISDICTION
The Petitioner has approached the Honourable Supreme Court of Republic of Islandia under
Article 136 of the Constitution of Islandia, by way of Special Leave Petition.
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 the leave to appeal to the Petitioner on the 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 to date, it has 2,50,000
shareholders. On 25th of March, 2013 an ordinary resolution was passed in the Annual
General Meeting, appointing Mr. James McLinden (the Petitioner in the present case) as the
companys Whole-Time Director (WTD) for a period of five years with effect from 12th of
February 2013. This appointment was validly made under 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 (subject to added proviso), 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 12th 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.
IV. RESPONSE AND RESULTANT LITIGATION
1) Response: On 19th May 2016, Mr. McLinden filed a detailed reply. He raised a preliminary
issue under Section 9A CPC (as added by the State of Winchester) challenging the
maintainability of the suit on its jurisdiction. He pointed out that the suit was barred by
X

limitation, and thus the High Court did not have jurisdiction over that same. On merits, he
denied that Section 196(3)(a) had applicability on an appointment made prior to the
commencement of the 2013 Act. He also raised the issue that the Section did not have
retrospective applicability and could not affect the rights vested under the 1956 Act. Mr.
McLinden highlighted that the word continue used in the impugned provision did not
apply to the age criterion, as it could not be compared with insolvency, failure to pay
creditors, and conviction.
2) Order of the Single Judge: By an order dated 13th June 2016, the Honourable Single Judge
held that the High Court had an inherent jurisdiction that did not include limitation. The
issue under Section 9A CPC was not addressed as a preliminary issue. On merits, the Single
Judge decided in favour of Mr. Ryland and passed an interim injunction restraining Mr.
McLinden from continuing as WTD of Goodenough Ltd. pending disposal of the Suit.
3) Appeal before Division Bench: The Honourable Division Bench upheld the order of the
Single Judge by an order dated 28th July 2016.
4) Special Leave Petition: The aggrieved Mr. McLinden filed a Special Leave Petition before
the Honourable Supreme Court of the Republic of Islandia, which was granted on the 6 th of
August 2016.
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 2: Whether Section 196(3)(a) of the 2013 Act operates as an immediate

disqualification on the appointment and continuation of a person as Whole-Time Director or
whether the same is an eligibility condition which only applies at the time of appointment,
and whether there is any distinction between the two?
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
CONTENTION 1: That the issue of limitation was required to be heard as a

preliminary issue under Section 9A of the Code of Civil Procedure.
Section 9A was added to the CPC to ascertain the jurisdiction of the Courts at the threshold
by treating it as a preliminary issue. If the jurisdiction is found wanting, the suit is dismissed
at this stage itself. Limitation constitutes a part of jurisdiction, as has been held judicially. In
the present case, the suit was filed before the High Court of the State of Winchester was
barred by limitation. Section 9A being a mandatory provision, an issue raised under it
should have been decided as a preliminary issue which, in the present case, would have lead
to the dismissal of the present suit.
CONTENTION 2: That section 196(3)(a) of the 2013 Act does not operate as an
immediate disqualification on the appointment and continuation of a person as wholetime director and the same is an eligibility condition which applies at the time of
appointment.
Section 196(3) of the 2013 Act provides for eligibility and disqualifications that operate
independently and separately, as is evident from the use of the disjunctive or. The age
criterion under Section 196(3)(a) is merely an eligibility issue. If it is construed otherwise as
a disqualification, it will result not only in an anomalous and absurd position but also cause
injustice and inconvenience. Any constructions that result in such eventualities are strictly
against the established principles of interpretation of statutes and should be avoided.
CONTENTION 3: That the age limit of 70 years under section 196(3)(a) of the
companies act 2013, can not apply to a whole-time director validly appointed prior to
01.04.2013.
According to Section 465(2)(d) of the 2013 Act, all appointments made validly under a
previous company law will remain valid under the current Act. The valid appointment of the
Petitioner can thus not be impugned. Further, for the age limit introduced in the 2013 Act to
XIII

apply to appointments made prior to its commencement, it must have retrospective effect.
The 2013 Act is not retrospective since there is no such express provision contained, a
condition that must be fulfilled for the enactment to affect the operation of a previous law.
The Petitioner also has a vested right arising from the 1956 Act to remain in appointment.
Such vested right has a certain degree of permanency, which in this case runs for the
Petitioners tenure. In the absence of an express provision making the Act retrospective, the
vested rights continue unaffected.
CONTENTION 4: That 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).
Clauses (b), (c), and (d) of Section 196(3) were absolute disqualifications even in the 1956
Act and were contained in Section 267 of the erstwhile Act. The condition in relation to age
is an eligibility criterion to be fulfilled at the time of appointment. Further, the age criterion
is not absolute since a special resolution of the shareholders may allow such appointment. It
is also not possible to equate the attainment of 70 years of age with insolvency, failure to
pay creditors, or conviction, since the latter make the appointee unfit and untrustworthy to
continue in office, while the former poses no such risk.
XIV
ARGUMENTS ADVANCED
CONTENTION 1: THAT THE ISSUE OF LIMITATION WAS REQUIRED TO BE

HEARD AS A PRELIMINARY UNDER OF SECTION 9A OF THE CPC.
1. It is humbly contended before the Honourable Supreme Court that the issue of limitation
raised under Section 9A of the Code of Civil Procedure was required to be heard as a
preliminary issue, before deciding the case on merits. The submission in this regard is twofold:
1.1 That Section 9A, CPC is mandatory and not directory.
2. The Petitioner humbly submits before the Honourable Court that Section 9A of the CPC has
mandatory application, and thus must not be treated as a directory provision by the courts.
3. According to the Winchester State Amendment of 1977 that made the addition of Section
9A, any objection to the jurisdiction of the Court to entertain the suit is made by any of the
parties to the suit, the Court shall proceed to determine at the hearing of such application,
the issue of jurisdiction as a preliminary issue before granting or setting aside the order
granting interim relief. This amendment was intended by the Legislative Assembly of
Winchester to operate as a mandatory provision with a specific object to see that objection
with regard of jurisdiction of the Court is decided as a preliminary issue.1The word shall
used in the provision signifies such nature. It raises a prima facie presumption that the
particular provision is imperative in its application.2 Further, the provision provides for only
a single course of action, it does not provide an alternative. In such cases, where the
provision does not imply another manner of doing an act or prohibits such manner, no doubt
as to the intention of the legislature to make the provision mandatory can be entertained.3
4. In the case of Foreshore Co-operative Housing Society Limited & Ors.v. Praveen D. Desai
& Ors. 4 , a Division Bench of the Supreme Court held that the section is mandatory in
Meher Singh v. Deepak Sawhney, 1998 (3) MhLJ 940, at 3, 4, 5, & 13.
G.P. SINGH, PRINCIPLES OF STATUTORY INTERPRETATION 412 (13th ed. 2012).
3
MAXWELL, INTERPRETATION OF STATUTES 316(P. St. J. Langan Ed., 12th ed. 2003).
4
AIR 2015 SC 2006, at 58.
2

nature, while deciding several appeals 5 related to Section 9A CPC collectively, All the
appeals from the Bombay High Court, contested its imperative nature, as was held by the
Court. One such case was Razia Amirali Shroff & Ors. v. M/s Nishuvi Corporation & Ors.6,
wherein the appellants were aggrieved by the order passed by the learned Single Judge
whereby the prayer for grant of ad-interim relief was declined pending hearing on the
preliminary issue raised by the defendants under Section 9A, CPC, till the jurisdiction of the
court to entertain the suit is decided. The appeal against this order was dismissed, and
Section 9A, CPC was declared mandatory. It is further submitted that the amendment was
included with the intention to decide the issue relating to jurisdiction of the court as a
preliminary issue, so that the suit could be dismissed at the threshold itself wherever
jurisdiction is found lacking.7
5. In the present case, the Honourable High Court of Winchester has failed to hear the issue
raised under Section 9A, CPC as a preliminary issue, failing to appreciate its mandatory and
imperative nature. The Court has decided the case on merits, which has resulted in an
interim injunction against the Petitioner from continuing as a whole-time director of
Goodenough Ltd. Even though a mere objection to jurisdiction does not instantly disable the
court from passing any interim orders it also has a responsibility to decide the question of
jurisdiction at the earliest possible time.8 The intent behind hearing of the objection to the
jurisdiction of the court expediently was to save the courts time, since if the court does not
have jurisdiction over a case its subsequent decision not taking that into regard will be
coram non judice9 and stand null and void.10
6. Therefore, Section 9A of the CPC (Winchester Amendment Act) being mandatory in
operation, it is imperative for all courts to treat it as a preliminary issue. In the present case,
the High Court of the State of Winchester has not taken notice of the nature of the provision,
5
Nusli Neville Wadia And Others v. Ferani Hotels Private Limited, Manu/SCOR/3985/2012; Foreshore Co-op.
Housing Society Limited & Ors. v. Praveen D. Desai & Ors, AIR 2015 SC 2006; Razia Amirali Shroff & Ors. v.
Nishuvi Corp.& Ors.,2016 (1) BomCR 83; Punam Co-operative Housing Society v. Pratap Issardas Bhatia & Ors.,
Civil Appeal No. 3397 of 2015; Rama Vijay Kumar Oberoi thr. GPH v. Sunita Sudam Ranaware, Civil Appeal
No(s). 3393-95 of 2015.
6
2016 (1) BomCR 83, at 8.
7
Foreshore Co-operative Housing Society Limited & Ors. v. Praveen D. Desai& Ors, AIR 2015 SC 2006, at 57;
Gikkul Kaur v. Guljeet Kaur, Civil Revision Application No. 56 of 2015, at 14.
8
Tayabbhai M. Bagasarwalla & Anr. v. Hind Rubber Industries Pvt. Ltd., AIR 1997 SC 1240, at 16; ITW
Signode India Ltd. vs. CCE, (2004) 3 SCC 48, at 41; Official Trustee vs. Sachindra Nath Chatterjee, AIR 1969
SC 823, at 17, 21 & 24.
9
HCL Modi v. DLF Universal AIR 2005 SC 4446, at 33; M.D. Army Welfare Housing Organization v.
Sumangal Services (Pvt.) Ltd. (2004) 8 SCC 619, at 17.
10
Official Trustee, West Bengal &Ors. v. Sachindra Nath Chatterjee & Anr., 1969 AIR 823, at 17; Mukund Ltd.
v. Mumbai International Airport (2011) 2 MhLJ 936, at 3, 4 & 7; Rajasthan SRTC v. Bal Mukund Bairwa 2009
(4) SCC 299, at 10, 17 & 23; A.R. Antulay v. R.S. Nayak AIR 1988 SC 1531, at 21.

and has thus failed to hear the issue raised by the Petitioner, relating to its jurisdiction as a
preliminary issue.
1.2 That an issue raised on grounds of limitation is within the ambit of jurisdiction
pertaining to Section 9A of the CPC.
7. It is humbly contended before the Honourable Supreme Court that the jurisdiction
mentioned in Section 9A of the CPC includes limitation, and that the suit before the
Honourable High Court of Winchester was barred by limitation. The submission in this
regard is two-fold:
1.2.1 That the suit filed before the Winchester High Court was barred by the law of
limitation.
8. The Petitioner humbly submits before the Honourable Court that the suit filed against the
Petitioner was barred by the law of limitation and was therefore not maintainable.
9. Section 3 of the Limitation Act, 1963 clearly provides that every suit instituted, appeal
preferred and application made after the prescribed period of limitation, shall be dismissed
although the limitation has not been set up as a defence. The section makes question of
limitation a material one for determination in every case irrespective of whether it is raised
by the parties or not. 11 If the suit, appeal or application is barred by limitation, it
mandatorily stands illegal to try such suit.12
10. If the suit was barred by time and yet, the court decreed it, the court would be committing an
illegality.13 The right to sue and the commencement of the running of the time for purposes
of limitation depend on the date when the cause of action arose.14 In the present case, the
alleged cause of action arose on the date when the Petitioner attained 70 years of age. Under
Part X, Article 113 of the Limitation Act, 1963 the limitation period for any suit for which
no period of limitation is provided elsewhere in the schedule, stands at 3 years beginning
11
Manindra Canal And Corporation Ltd. v. Bhutnath Banerjee, AIR 1964 SC 1336, at 9; Royal Palms (India) Pvt.
Ltd. & Ors. v. Bharat Shantilal Shaha & Anr. 2009 (2) BomCR 622, at 17 & 21; Meher Singh v. Deepak
Sawhny, 1998 (3) MhLJ 940, at 3, 5 & 11.
12
Smith Kline Beecham Cons v. Hindustan Lever (2003) 105 BomLR 547, at 18; National Thermal Power Corp.
Ltd. v. Siemens Atkeingesellschaft, 2007 (4) SCC 451, at 3.
13
Ittavira Mathai v. Varkey & Anr., 1964 AIR 907, at 3 & 6.
14
Syam Sundar Misra v. Municipal Chairman, Parlakimedi, AIR 1964 Orissa 111, at 8 & 9.

from the cause of action when the right to sue accrues. Any suit under the Companies Act,
2013 falls under this provision, and is thus barred after a period of 3 years.15
11. In the present case, the cause of action arose on the 15th of April 2013, when the Petitioner
attained 70 years of age. The suit contesting the Petitioners continuance of appointment
was filed by the Respondent on 12th May 2016, which exceeds the period of limitation of 3
years by 26 days, which ended on 14th April 2016. Since the Respondent clearly filed the
suit after the limitation period was over, the suit was time-barred.
12. Therefore, in view of the above arguments, the Petitioner submits that the suit filed by the
Respondent before the Winchester High Court was barred under the Limitation Act, 1963.
The High Court therefore had no jurisdiction to try the suit.
1.2.2 That the word jurisdiction in Section 9A, CPC includes bar on jurisdiction by
limitation.
13. Any issue challenging jurisdiction, that has to be treated as a preliminary issue under
Section 9A of CPC, includes within its ambit the bar by limitation.
14. Jurisdiction is the power of the courts to hear and decide a case16. This power is subject to
certain restrictions, including limitation. This also the position under Section 9A where
under it is mandatory that if question of jurisdiction including a bar of limitation is raised by
the defendant it shall be decided as preliminary issue before delving into the temporary
injunction application.17 In the case of Foreshore Co-operative Housing Society Limited &
Ors.v. Praveen D. Desai & Ors., 18 it was pleaded that limitation was not bar on the
jurisdiction of the court. But the Supreme Court held that the Court was bound to dismiss a
suit barred by limitation, as it had no jurisdiction to entertain the same. The plea of
limitation was held to be a question of law that related to the jurisdiction of the court19 and
goes to the root of it and the court was thus held to be precluded from adjudicating the
matter on merits when the suit was barred by limitation20. Similarly, in the present case, the
suit was barred by the law of limitation. This being a question of jurisdiction comes within
15
U.N. MITRA, LAW OF LIMITATION AND PRESCRIPTION: VOLUME 2 2088 (JJ. Y.V. Chandrachud and S.S.
Subramani eds., 12th ed. 2011).
16
OXFORD ENGLISH DICTIONARY 492 (Catherine Soanes ed., 9th ed. 2001).
17
Justice S.U. Khan, Jurisdiction of the Civil Court and its Bar, http://ijtr.nic.in/article_chairman2.pdf (retrieved on
24/8/2016, at 1500 IST).
18
AIR 2015 SC 2006, at 12; Vaish Aggarwal Panchayat v. Inder Kumar, AIR 2015 SC 3357, at 15 &16; P.V.
Guru Raj Reddy v. P. Neeradha Reddy, AIR 2015 SC 2485, at 6 & 9.
19
Manick Chandra Nandy v. Debdas Nandy, (1986) 1 SCC 512, at 4, 5 & 11.
20
Kamlesh Babu vs. Lajpat Rai Sharma, (2008) 12 SCC 577, at 19, 20 & 21.

the ambit of Section 9A of the CPC and was an issue that should have been decided as a
preliminary issue.
15. The Petitioner thus submits that while hearing arguments on its jurisdiction, the Court must
take into regard all arguments on the basis of jurisdiction of which limitation is a
constituent, and a deciding factor.21 The issue of limitation raised under Section 9A of CPC
should therefore be treated as a preliminary issue.
CONTENTION 2: THAT SECTION 196(3)(a) DOES NOT OPERATE AS AN

IMMEDIATE
DISQUALIFICATION
ON
THE
APPOINTMENT
AND
CONTINUANCE OF A PERSON AS A WHOLE-TIME DIRECTOR, AND THE

SAME IS AN ELIGIBILITY CRITERION THAT APPLIES AT THE TIME OF
APPOINTMENT.
16. It is humbly contended before the Honourable Supreme Court that Section 196(3)(a) is
merely an eligibility criterion that has to be fulfilled at the time of the appointment of a
person as a whole-time director. The arguments in this regard are two-fold:
2.1 That Section 196(3) is divided into eligibility criterion and disqualifications
operating independently of each other.
17. The Petitioner humbly states before the Honourable Court that Section 196(3) is not a
disqualifying provision, but also contains within its ambit eligibility criteria, both which
operate independently.
18. Section 196(3) prohibits appointment and continuance in employment of persons appointed
as whole-time directors in case they fall under categories mentions from clause (a) to (d).
While the term appointment denotes eligibility, continue denotes disqualification. It is
imperative to highlight the difference between the two. Eligibility to the post will have to be
ascertained at the time of making the appointment, whereas disqualification may arise at the
time of appointment or at any time during the course of employment. The provision should
be so interpreted that it does not over-shadow the existence of either eligibility, or
disqualification. The difference between the two terms, and the source of these co-existing
terms in one sub-section is crucial.
21
Pandurang Dhondi Chougule v. Maruti Hari Jadhav, AIR 1966 SC 153, at 4 & 8.

19. The legislative intent of including both eligibility and disqualification in one provision is
clear from the use of the disjunctive or 22 joining the two separate conditions
appointment or continue in employment. A disjunctive condition requires the
performance of one of several acts23; it provides two distinct clauses that are can be fulfilled
independently of eachother. When the word or is used, one of the alternatives will suffice;
they do not have to fulfil conjointly. 24 In Vimalkumar Ravji Shah v. Organization 25 , the
Bombay High Court was interpreting Section 40 of the Factories Act 1948, wherein was the
phrase owner or occupier. It was observed that the words owner and occupier were
used disjunctively. While construing one, it was not necessary to refer to the other26.
20. If the provision is construed in its pure grammatical sense, which it must in accordance with
the established principles of statutory interpretation, the intent of the Parliament to create
both eligibility criterion and disqualifications will be clear. Therefore, in the present case,
the terms appointment and continue in employment must be understood independently,
and must not influence each others construction.
21. Section 196(3) is the result of the merger of Sections 267 and 269(2) of the erstwhile
Companies Act, 1956. While Section 267 contained absolute disqualifications, Section
269(2) contained conditions to be fulfilled at the time of appointment. These conditions of
eligibility were detailed under Schedule XIII of the previous Act (to which Schedule V of
the 2013 Act corresponds). These conditions of eligibility are required to be satisfied only
at the time of appointment or re-appointment. In case the appointee, after appointment, does
not satisfy any of the conditions they will not debar the person concerned from continuing
for the length of his tenure. 27 In Re Kasturi Lal & Sons Ltd. 28 the Company Appellate
Tribunal held that the conditions mentioned in Schedule XII were to apply at the time of
appointment. Schedule XIII was the predecessor of Schedule V, and remains largely the
same except the lowering the age limit of eligible appointment to 21 years. Thus, in the
present case, the appointment of the Petitioner was governed by this Schedule, and it being
an eligibility criterion it only applied at his appointment.
22. The eligibility previously contained in Schedule XIII of the 1956 Act has been brought out
into the main body of the legislation to provide greater autonomy to companies in selecting
22
Rajni Tandon v. Dulal Ranjan Ghosh Dastidar & Anr., (2009) 14 SCC 782, at 21.
BLACKS LAW DICTIONARY 313 (B.A. Garner ed., 8th ed. 2004).
24
Hyderabad Asbestos Cement Products Ltd. v. Union of India, (2000) 1 SCC 426, at 6.
25
(2009) 5 MhLJ 209, at 8.
26
Employees State Insurance Corporation v. S.K. Agarwal & Ors.,1998 II CLR 518, at 7.
27
Ministry of Corporate Affairs circular no. 3/89, dated 13/4/1989.
28
(1995) 5 CompLJ 316 (CLB Delhi), at 8.
23

their whole-time directors, managing directors, and manager and to lessen the control of the
Central Government. The intention of the legislature was to create a single provision that
contains both the older provisions, while not actually changing their effect by making whole
of Section 196(3) disqualifications or eligibility criteria. The merger of the disqualifications
and conditions of eligibility along with the conditions of Schedule V further signifies that
both parts of the provision are to be construed independently, neither affecting the operation
of the other.
23. Therefore, in view of the above arguments, it can be said that Section 196(3) can neither be
understood wholly as disqualifications nor as eligibility, but both. In the present case, the
Petitioners attainment of 70 years of age is not disqualification, but an eligibility criterion,
the source of both being Section 196(3).
2.2 That Section 196(3)(a) is an eligibility criterion applicable at the time of
appointment and not a disqualification.
24. The Petitioner humbly states before the Honourable Supreme Court that Section 196(3)(a) is
an eligibility criterion to be considered at the time of appointment. If otherwise construed,
Section 196(3)(a) will not only result in anomalous and futile circumstances but also cause
grave inconvenience and injustice.
25. Section 196(3) prohibits the appointment and continuance of employment of any person
below the age of 21 years or who has attained the age of 70 years [Section 196(3)(a)],
among three other grounds. It is submitted that under Section 196(3)(a) only appointment of
a person below 21 and above 70 years is prohibited, thus making it only an eligibility
criterion. If the phrase continuance of employment, contained in Section 196(3), were to
apply to clause (a) there will arise an anomaly.
26. A person below 21 years and above 70 years of age cannot be appointed a whole-time
director under the Companies Act, 201329, unless approved by the Central Government. If it
Section 196(3)(a) were to be interpreted as a disqualification and not as eligibility criterion,
it will mean that hypothetically, that either a person below the age of 21 years could be
validly appointed under this or the previous law (which was not the case 30), or that the
provision could allow the back-dating of an individuals age. An individual below the age of
21 years can never be eligible for appointment as a whole-time director; and if there is no
29
See 196(3)(a) and Schedule V, Part I(c) of Companies Act, 2013.

Schedule XIII, Part I(c) of Companies Act, 1956, wherein the lower age limit was 25 years without approval of
Central Government.
30

eligibility there can be no disqualification. It can only mean that the condition was meant as
an eligibility condition, as and not as a disqualification. It can thus be concluded that, the
legislature while providing for the lower and upper age limit in a single provision, intended
to make them eligibility conditions, and thus avoid any anomaly.
27. In interpreting the true meaning regard must be made to the consequences of alternative
interpretations. A construction that results in absurdity, anomaly or which leads to
inconsistency or uncertainty in the system which the statute purports to regulate has to be
rejected.31 It is also well settled that any construction that poses a practical impossibility or
futility must be avoided. Construction of a statute must subserve the tests of justice and
reason. It is a well-settled principle of law that in a given case with a view to give complete
and effective meaning to a statutory provision, some words can be read into; some words
can be subtracted. 32 A certain view of interpretation taken will be applied in myriad
situations which are likely to arise, and must stand true in all such situations 33. Thus, if
Section 196(3)(a) were to apply as a disqualification, it will apply to the entire clause, and in
that case its application on the lower limit will not be possible. This gives rise to the
conclusion that the age criterion of the lower 21 years and the upper 70 years cannot qualify
as a disqualification, and must therefore be an eligibility criterion.
28. In Delhi Airtech Pvt. Ltd. v. State of U.P. 34 , the Honourable Supreme Court, while
interpreting the Land Acquisition Act observed that the Court should adopt a more
reasonable interpretation that avoids anomalous constructions. A construction should not be
put upon a statute that which gives rise to a manifest absurdity or futility, or absurd
inconvenience or anomaly 35 . This, and several other judicial decisions 36 , support
interpretations that avoid anomalies and futilities. It is thus submitted that the construction
of Section 196(3)(a) of the Companies Act, 2013 as a disqualification will result in partial
non-applicability of the provision, and thus must be avoided.
29. The Honourable Court is also requested to give due consideration to the consequences of
interpreting Section 196(3)(a), Companies Act, 2013 as a disqualification on the Petitioner
and other presiding whole-time directors. It is a common practice within the corporate circle
31
Supra note 2, at 131.

N. Kannadasan v. Ajoy Khose, (2009) 7 SCC 1, at 55.
33
K. Prabhakaran v. P. Jayarajan, (2005) 1 SCC 754, at 32-33; Veluswami Thevar v. G. Raja Nainar, AIR 1959
SC 422, at 427-428.
34
(2011) 9 SCC 354, at 126.
35
American Home Products Corp. v. Mac Laboratories Pvt. Ltd., (1986) 1 SCC 465, at 66.
36
Rakesh Wadhawan v. Jagdamba Industrial Corp., (2002) 5 SCC 440, at 24; H.S. Vankani v. State of Gujarat,
(2010) 4 SCC 301, at 43-48; State of M.P. v. Narmada Bachao Andolan, (2011) 7 SCC 639, at 78-85; Tirath
Singh v. Bachittar Singh, (1955) 2 SCR 457, at 6 & 12.
32

to appoint senior and experienced persons as whole-time directors and managing directors.
Immediate disqualification on attaining the age of 70 years of this group of senior
appointees will amount to penalizing them for phenomenon over which they have no
control. In no statute an upper age limit could ever be a disqualification37. Even moving a
special resolution will cause inconvenience not only to the whole-time director whose fate
remains undecided but also to the company and its 2,50,000 shareholders who have to
comply with procedural requirements every time an appointee turns 70 years of age;
considering the number of senior appointees, this will be often.
30. In Bhatia International v. Bulk Trading, S.A. 38 , the Supreme Court observed that any
construction that will result in serious inconvenience and injustice must be avoided. Where
there is scope for the use of the Courts interpretation, it should give preference to a just and
reasonable construction, and polish and finish the legislation that comes to them in varying
degrees of need of processing. Similarly, in the present case, when the Companies Act, 2013
is still in its nascent stage and need of judicial interpretation, the Honourable Court must
construe the Act to avoid the injustice, inconvenience, and hardship that will be caused not
only to the Petitioner in the present case, but also to other such appointees.
31. The Petitioner therefore concludes that the Petitioners term as a whole-time director must
validly continue, as he was eligible to be appointed so under the Companies Act, 1956 and
the Companies Act, 201339. Section 196(3)(a) must be interpreted as an eligibility criterion
and not a disqualification, in view of the above arguments. The provision will thus not
hinder in any manner the Petitioners term.
CONTENTION 3: THAT THE AGE LIMIT OF 70 YEARS UNDER SECTION

196(3)(a) OF THE COMPANIES ACT, 2013 CAN NOT APPLY TO A WHOLETIME DIRECTOR VALIDLY APPOINTED PRIOR TO 01.04.2013.
32. It is humbly contended before the Honourable Supreme Court the age limit of 70 years
under Section 196(3)(a) of the Companies Act, 2013 cannot apply to the Petitioner, that is, a
whole-time director appointed prior the commencement of the Act on 1st April 2013. The
submission in this regard is two-fold:
37
State Of Himachal Pradesh & Anr v. Kailash Chand Mahajan & Ors., 1992 AIR 1277, at 5, 8, 12 & 21.
(2002) 4 SCC 105, at 15.
39
465(2)(d), Companies Act, 2013.
38

3.1 That a Whole-Time Director appointed validly prior to the Companies Act 2013
remains validly appointed.
33. The Petitioner states that as the he was validly appointed as a whole-time director of
Goodenough Ltd. under the Companies Act, 1956, he will also remain validly appointed
under the Companies Act of 2013.
34. According to Section 465(2)(d) of the Companies Act, 2013,
Any person appointed to any office under or by virtue of any repealed enactment shall be
deemed to have been appointed to that office under or by virtue of this Act.
35. This repealing provision makes it clear that the Act does not nullify the effects of the
erstwhile enactment. This provision also leads to the conclusion that the appointment of any
person cannot be challenged under the 2013 Act if it was made validly under the previous
Act, that is, the 1956 Act. All legislations replacing a previous legislation, introduce several
changes. These changes do not effect actions done under the Act it replaces, provided that
the action was valid under the previous law. Similarly, in the present case, the Petitioner was
validly appointed40 as the whole-time director of Goodenough Ltd. with effect from 12th
February 2013 for a tenure of 5 years by an ordinary resolution passed by the 2,50,000
shareholders. His appointment met all criteria prescribed under the 1956 Act. This validity
of appointment must be carried forward under the 2013 Act, in accordance with Section
465(2)(d).
36. It is thus humbly submitted before the Honourable Court that the Petitioner remains in his
valid appointment under the 2013 Act, which was validly made under the 2013 Act.
3.2 That Companies Act, 2013 does not have retrospective effect.
37. The Petitioner submits before the Honourable Court that the Companies Act, 2013 cannot
affect the appointment of the Petitioner, or any other whole-time directors, appointed under
the Companies Act, 1956 since the Act of 2013 is prospective, and does not operate
retrospectively.
38. It is a cardinal principle of construction that every statute is prima facie prospective unless it
is expressly made to have retrospective effect.41 In the absence of an express provision and
40
41
Moot Problem, at 2.
10

an implication that is necessary, the statute must be treated as prospective42. Unless the
statute uses express words to show its intent, nova constitutio futuris formam imponere
debet non praeteritis43, that is, the law ought to regulate what is to follow and not the past.
In the present case, the Companies Act, 2013 does not mention that Section 196(3)(a), or
any other provision, will have a retrospective effect. Neither does the Act create a necessary
implication of such effect. In the absence of such express intent or an implication beyond
doubt, the strong presumption of the prospective operation of the law cannot be denied.
39. It must also be noted by the Honourable Court that the Petitioners appointment secures for
him vested rights; here the presumption against retrospective operation is strengthened.
Vested rights are completed, consummated rights for present and future enjoyment. 44 Vested
rights are substantive rights, that is, their source lies in substantive law45. The Companies
Act, 1956 and 2013 being a substantive law, is a source of vested rights.
40. Rights are vested when right to enjoyment, present or prospective, has become property of
some particular person or persons as present interest; mere expectancy of future benefits, or
contingent interest in property founded on anticipated continuance of existing laws, does not
constitute vested rights. 46 These rights have to be distinguished from existing rights.
Existing rights exist at in the present, while vested rights have a source in a past law. A
statute operating in future cannot be said to be retrospective merely because within the
sweep of its operation all existing rights are included47.
41. In the present case, the right of the Petitioner to function as a whole-time director had
become vested in him due to valid appointment; it was a complete right operating in the
present, and not dependent upon any contingent event. A statute will not affect the rights
that accrued before the statute came into force, unless expressly mentioned. It must be
interpreted in a way that respects vested rights.48 It cannot be presumed that interference
with such rights is intended by the legislature. Where a repeal of provisions of an enactment
is followed by fresh legislation by an amending Act, such legislation is prospective in
operation and does not affect substantive or vested rights of the parties unless made
42
C. Gupta v. GlaxoSmithKline Pharmaceuticals Ltd., (2007) 1 SCC 171, at 23; Zile Singh v. State of Haryana,
(2004) 8 SCC 1, at 8; Gem Granites v. CIT, (2005) 1 SCC 229, at 296.
43
SHERARD OSBORN, CONCISE LAW DICTIONARY 224(Sheila Bone, 9th ed. 2001).
44
45
Hitendra Vishnu Thakur v. State Of Maharashtra, 1994 SCC (4) 602, at 26.
46
J.S. Yadav v. State of U.P. & Anr., (2011) 6 SCC 570, at 20.
47
Trimbak Damodhar Raipurkar v. Assaram Hiraman Patil, 1962 SCR Supl. (1) 700, at 6, 8 & 10.
48
N.S. BINDRA, INTERPRETATION OF STATUTES 430 (Amita Dhanda ed., 11th ed. 2014). See also State v. Pyarey
Mohan Srivastava, 1953 ALJ 1197, at 7.
11

retrospective either expressly or by necessary intendment.49 Acts that affect the vested rights
are construed strictly. The duty of justice is to presume that the Act is prospective and not
retrospective in operation. 50 This presumption continues to run unless it is rebutted
expressly by the enactment. In the absence of an express statement, the Companies Act,
2013 does not affect this right.
42. In the case of J.S. Yadav v. State of U.P. & Anr.,51 the appellant was appointed as a Principal
Secretary of the U.P. Human Rights Commission in 2006 for a period of 5 years. In 2006,
the Protection of Human Rights Act 1993 was amended which introduced an additional
eligibility criterion requiring 7 years experience as a District Judge. The appellant did not
fulfil the criteria. In accordance with the amended provisions, the State issued a notification,
which effected in the appellants removal from the post. It was contended on the appellants
behalf that the Amendment could not operate retrospectively and interrupt his tenure. The
Supreme Court, upheld this contention wherein it observed that the Amendment was not
intended to operate retrospectively, since it did not contain such express provision, and there
was no such implication beyond doubt. It was also contended that the appellant has a vested
right in his appointment. Observing that an enactment taking away such rights needs to
unambiguously express so, the Honourable Supreme Court held that the appellants
appointment remained valid in view of his vested rights.
43. Similar is the present case, where the Petitioners appointment is challenged on the grounds
of the commencement of the Companies Act, 2013. The Act does not intend to operate
retrospectively and thus cannot interrupt the Petitioners tenure before its completion.
44. In P. Suseela & Ors. v. University Grants Commission & Ors. 52, a Division Bench of the
Apex Court decided the dispute regarding the introduction of the additional eligibility
criterion of National Eligibility Test (NET) for the appointment of Lecturers. The Bench
observed, merely because an additional eligibility condition is laid down, it does not mean
that any vested right of the appellants is affected, nor does it mean that the regulation laying
down such minimum eligibility condition would be retrospective in operation. Such
condition would only be prospective as it would apply only at the stage of appointment.
This case is similar to the case currently in dispute. The additional eligibility criterion of age
in Section 196(3)(a), Companies Act will not apply to appointments made prior to its
49
Videocon International Ltd. v. Securities and Exchange Board of India, AIR 2015 SC 1042, at 28; Shyam
Sunder v. Ram Kumar, (2001) 8 SCC 24, at 28.
50
51
(2011) 6 SCC 570, at 3, 4, 16 & 24.
52
(2015) 8 SC 129, at 15.
12

commencement since the Petitioners rights had become vested and the Act was not
retrospective in operation.
45. In thus humbly submitted before the Honourable Supreme Court that the Companies Act,
2013 is not retrospective in operation, and therefore does not affect the rights vested under
the Companies Act, 1956. The Petitioners appointment created a vested right that remained
unaffected by the prospective commencement of Companies Act, 2013. He thus remains
validly appointed as a whole-time director of Goodenough Ltd.
CONTENTION 4: THAT THE WORD CONTINUE USED IN SECTION 196(3)

OUGHT TO BE CONSTRUED IN CONTEXT OF 196(3)(b), (c) AND (d) ALONE
AND NOT 196(3)(a).
46. It is humbly contended before the Honourable Supreme Court that the word continue
ought to be construed only in the context of Sections 196(3)(b), (c), and (d) and not in
context of Section 196(3)(a). The arguments in this regard are two-fold:
4.1 That 196(3)(b), (c), and (d) are absolute disqualifications.
47. The Petitioner humbly states before the Honourable Court the operation of disqualification
with regard to clauses (b), (c), and (d) is absolute. The phrase continue in employment
operates as an immediate disqualification in context of these clauses.
48. Sections 196(3)(b), (c), and (d) deal with insolvency, inability of repayment to creditors, and
conviction respectively. They are subject to no exceptions. A person meeting any of
mandatory53these criteria is disqualified and must vacate his position of appointment with
immediate effect. No special resolution can guard his appointment.54
49. The provisions of the section 196(3) of The Companies Act, 2013 are identical to the
provisions of section 267 of the erstwhile Companies Act, 1956; the difference lies in the
addition of the age eligibility criterion. These provisions have been disqualifications
historically and have resulted in immediate vacation of office. 55 The reason behind this has
been the cause of public policy. Each of these conditions is a situation where the manager,
managing director, and the whole-time director lose trust among the shareholders. The
continuance of employment of such persons will not be in the companys best interest.
53
Jayesh Ramniklal Doshi v. Carbon Corp Ltd., 1992 (2) BomCR 588, at 4.
196(3) clauses (b), (c), and (d), Companies Act 2013.
55
See 87B and 141A of Indian Companies Act, 1913.
54
13

50. In the case of Rama Narang v. Ramesh Narang & Ors., 56 the Managing Director was
convicted of an offence involving moral turpitude by the Additional Sessions Court, Delhi.
It was contended that since an appeal was pending, the MD should not be removed from its
position. The Apex Court held that provisions of Section 267 make the bar to the
appointment and continuation in employment absolute and immediate in operation. A
whole-time director who is thus subject to any of the three disqualifications cannot be
appointed nor be able to continue his office subject to the provisions of this Act.57 He is
immediately disqualified from holding his office.
51. In view of the above arguments, it can be established that the word continue is to be
construed with reference to clauses (b), (c), and (d) and must result in immediate
disqualification of persons who fulfil any of these conditions.
4.2 That section 196(3)(a) is limited in its operation and does not cease employment.
52. The Petitioner seeks to establish before the Honourable Supreme Court that Section
196(3)(a) is an eligibility criterion to be construed only in the sense of the word
appointment and not with reference to continue in employment under Section 196(3).
53. Sections 269(2) and 267 of the Companies Act, 1956 been merged into Section 196(3).
While Section 269(2) made a reference to Schedule XIII of the same enactment, that
prescribed eligibility conditions, Section 267 contained disqualifications. It is humbly
contended that even after the merger of these two provisions, they have retained their
inherent nature and continue to operate thus.
54. This is evident from the proviso contained in Section 196(3)(a) that provides for the passing
of a special resolution in case the appointment to be made is of a person above the age of 70
years. The addition of proviso is with the intention to remove certain cases from the general
enactment and provide for them specially. 58 The special provision in this case is the
exception made for persons over 70 years of age. No such exception has been provided
under clauses (b), (c), and (d). It must also be noted that the proviso begins with the words,
provided, that the appointment of a person denoting that the need of its application will
only arise at the time of appointment59; there is no need of the application for continuance
of employment since it is inapplicable to the age criteria.
56
1995 SCC (2) 513, at 8; Jaipal v. State of Rajasthan, 2009 Indlaw RAJ 275, at 13.
A. RAMMAIYA, GUIDE TO COMPANIES ACT: PART 2 3403 (17th ed. 2010).
58
FRANK E. HORACK, CASES AND MATERIALS ON LEGISLATION 572(2nd ed. reprint 1954).
59
A. RAMAIYA, GUIDE TO COMPANIES ACT: PART 2 3420-3421 (18th ed. 2014).
57
14

55. There is another exception to this eligibility criterion. This is Schedule V, Part I. This is an
elaboration of the factors to be considered at the time of appointment. According to this
Schedule, a person over the age of 70 years may be appointed with approval from the
Central Government. Here again, no approval from the Central Government can save a
persons appointment who faces disqualifications under clauses (b), (c), and (d).
56. It must also be noted that Section 196(3)(a) talks about age a natural and inevitable
phenomenon. The legislative intent could not have been to disqualify a person appointed as
a whole-time director, or a managing director on attaining the age of 70 years, treating him
on the same footing as that of an insolvent, a convict, or a bad debtor. The conditions
mentioned in Section 196(3)(b), (c), and (d) arise from artificial creation and can be
controlled. Age is not the same. Attainment of a certain age does not make a person unfit for
a managerial position like breach of fiduciary relationship, misappropriation, and failure to
comply with statutory duties does.60 Disqualifying a certain person for achieving a certain
age unjust; and the assumption that legislature intended to do this is incorrect.
57. It is therefore concluded that the word continue is used in strict sense in respect of clauses
(b), (c), and (d) of Section 196(3), but cannot be construed as the same in respect of clause
(a). It is therefore humbly suggested that the Petitioner must continue in his appointment as
a whole-time director since he fulfilled the eligibility conditions at the time of his
appointment.
60
HALSBURYS LAWS OF ENGLAND 399 (Lord Mackay of Clashfern ed., 4th ed., re-issue Volume 7(1) 2004).
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 Honourable High Court of the State of Winchester try the issue of limitation under
Section 9A of the CPC as a preliminary issue; and
2. That the interim order restraining the Petitioner from functioning as a Whole-Time
Director of Goodenough Ltd. is set aside, and the Petitioner be allowed to continue in
his appointment for his remaining tenure
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 Petitioner as in duty bound shall forever pray.
ALL OF WHICH IS RESPECTFULLY SUBMITTED
_________________________
Sd/COUNSELS FOR THE PETITIONER
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P415

4th KIIT UNIVERSITY NATIONAL MOOT COURT COMPETITION, 2016

BEFORE THE HONOURABLE SUPREME COURT OF THE REPUBLIC OF ISLANDIA

IN THE MATTER OF:

SPECIAL LEAVE PETITION NO. _________/2016

WRITTEN SUBMISSION OF THE COUNSELS APPEARING ON BEHALF OF THE

4th KIIT UNIVERSITY NATIONAL MOOT COURT COMPETITION, 2016

MEMORIAL ON BEHALF OF THE PETITIONER

4th KIIT UNIVERSITY NATIONAL MOOT COURT COMPETITION, 2016

MEMORIAL ON BEHALF OF THE PETITIONER

4th KIIT UNIVERSITY NATIONAL MOOT COURT COMPETITION, 2016

All India Reporter

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BOOKS & ARTICLES

A. RAMMAIYA, GUIDE TO COMPANIES ACT: PART 2 (17th ed. LexisNexis Butterworths

A. RAMMAIYA, GUIDE TO COMPANIES ACT: PART 2 (18th ed. LexisNexis 2014).

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4th KIIT UNIVERSITY NATIONAL MOOT COURT COMPETITION, 2016

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