Case Law Details
Colachel Vicariate Nidhi Limited Vs Union of India (Madras High Court)
NDH-4 Applications to Be Reconsidered as Court Orders Fresh Hearing on Compliance Defects; Madras High Court Grants Relief to Nidhi Companies After Delay in NDH-4 Rejection Orders; Court Directs Fresh Decision on NDH-4 Rejections After Petitioners Seek Chance to Explain Defects; Madras High Court Leaves Validity of Nidhi Rule Amendments Open While Ordering Reconsideration of NDH-4 Applications.
The Madras High Court disposed of writ petitions filed by Nidhi companies challenging orders rejecting their applications in e-Form NDH-4. The petitioners sought directions to accept the forms and also questioned the validity of amendments made to Section 406 of the Companies Act, 2013, and certain provisions inserted through the Nidhi (Amendment) Rules, 2019 and 2022.
During the hearing, both sides submitted that the issue was already covered by a Division Bench judgment dated 20.03.2025 in a batch of writ petitions. In that earlier decision, the petitioners had restricted their challenge and requested an opportunity to submit replies and explanations regarding defects pointed out in the rejection orders. The Division Bench observed that the applications filed in Form NDH-4 had been rejected after considerable delay and noted that the petitioners were willing to comply with the defects referred to in the impugned orders.
The Division Bench had permitted the petitioners to submit fresh replies and directed the authorities to provide an opportunity of hearing and pass fresh orders on merits and in accordance with law. At the same time, the Court left open the legal issue concerning the validity of the statutory provisions and amendments challenged in the petitions.
Relying on the same reasoning, the Madras High Court held that the present petitioners, who had already submitted replies on 21.03.2025 and 17.08.2024, would also be entitled to submit fresh replies regarding compliance with the defects pointed out in the impugned orders within two weeks from receipt of the order. The Court further directed the second respondent to provide an opportunity to the petitioners and pass final orders on merits and in accordance with law within four weeks from the filing of such replies. The Court clarified that the legal issue relating to the validity of the provisions of law remained open. With these directions, the writ petitions were disposed of without costs.
FULL TEXT OF THE JUDGMENT/ORDER OF MADRAS HIGH COURT
These writ petitions have been filed by the petitioners challenging the orders passed by the 1st respondent, rejecting the application in e-Form NDH-4 filed by the petitioners and to direct the respondents to accept the Form NDH-4 filed by the petitioners.
2.When these writ petitions were taken up for hearing, the learned counsel for the petitioners and the learned Central Government Standing Counsel appearing for the respondents, would submit that the issue involved in the present writ petitions is squarely covered by the common order of the Division Bench of this Court, dated 20.03.2025, passed in W.P.Nos.23402 & 23408 of 2024, etc., batch, whereby, the petitioners therein were granted an opportunity to file their reply. Hence, they would submit that the above said order will hold good for the present writ petitions also and prayed to dispose of the writ petitions. The order passed by the Hon’ble Division Bench reads as follows:
“The writ petitions have been instituted to assail the order passed by the second respondent dated 23.06.2023 rejecting the application filed by the petitioner in Form NDH-4 and to declare the amendment made substituting Section 406 of The Companies Act 2013 with new Section 406 as per The Companies (Amendment) Act 2017 (Act 1 of 2018) published vide gazette dated 03.01.2018 and notified with effect from 15.08.2019 requiring the Nidhi Companies which are already incorporated as Nidhi Companies to once again get a declaration as Nidhi by the Central Government is illegal, excessive, arbitrary and unconstitutional and strike down the same; to declare the amendment made to Nidhi Rules 2014 by Nidhi (Amendment) Rules 2019 vide notification dated 01.07.2019 with effect from 15.08.2019 by inserting Rule 3A and Rule 23A are illegal, excessive, arbitrary and unconstitutional and strike down the same; to declare the amendment made to Nidhi Rules 2014 by Nidhi (Amendment) Rules 2022 vide notification dated 19.04.2022 with effect from 19.04.2022 by inserting provisos to Rule 3A and Rule 23A are illegal, excessive, arbitrary and unconstitutional and strike down the same.
2.The learned counsel appearing on behalf of the writ petitioner restricted his prayer by submitting that the second respondent passed orders on the application beyond the time limit of 45 days fixed to dispose of the application. In the present case, the application in Form NDH-4 was filed by the petitioner on 15.04.2020, but the same was rejected by the second respondent in proceeding dated 23.06.2023.
3.A perusal of the impugned order would reveal that certain observations against the petitioner are made with reference to the particulars available in the application and consequently the rejection order was passed. The learned counsel for petitioner would submit that the petitioner will be satisfied if the subsequent reply/explanation given by the petitioner is taken into consideration and a fresh order is passed, by affording opportunity to the petitioner, on merits and in accordance with law.
4.The learned Senior Panel Counsel appearing on behalf of the respondents would submit that reasons are stated in the order impugned. The application was rejected on merits. The larger relief sought for in one of the writ petitions is to declare the provisions of law as null and void.
5.In view of the fact that the petitioner has restricted the relief as such sought for in the writ petitions, this Court is inclined to pass the following order:-
(i) The petitioner states that it has submitted reply to the impugned order dated 23.06.2023 on 14.07.2023. Apart from the reply dated 14.07.2023, the petitioner is at liberty to submit a fresh reply regarding the compliance of the defects stated in the impugned order dated 23.06.2023, within a period of four weeks from the date of receipt of a copy of this order.
(ii) On receipt of any such reply/explanation from the petitioner, the second respondent shall provide an opportunity to the writ petitioner and thereafter pass appropriate final orders on merits and in accordance with law as expeditiously as possible. However, the legal issue regarding the validity of the provisions of law is left open.”
3.Upon considering the submissions made by the learned counsel for the petitioner and the learned Central Government Standing Counsel appearing for the respondents and in view of the aforesaid order passed by the Hon’ble Division Bench, this Court passes the following order:
i) The petitioners state that they had submitted their respective replies to the impugned orders on 21.03.2025 and 17.08.2024. Apart from the said replies, the petitioners are at liberty to submit a fresh reply regarding the compliance of the defects stated in the said impugned orders, within a period of two weeks from the date of receipt of a copy of this order.
ii) On receipt of any such replies/explanations from the petitioners, the 2nd respondent shall provide an opportunity to the writ petitioners and thereafter, pass appropriate final orders on merits and in accordance with law, within a period of four weeks from the date of filing of replies by the respective petitioners. However, the legal issue regarding the validity of the provisions of law is left open.
4.With the above directions, these writ petitions are disposed of. No costs. Consequently, connected miscellaneous petitions are closed.
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