Sitting SC judge Justice Arjan Kumar Sikri slams parliament over poor drafting of Companies Act, 2013 and warned that it may lead to Tsunami of Litigations.
He Says that :
- Companies Act, 2013 been drafted in haste.
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There appears to be no thinking behind drafting of Cos Act
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Legislative authority of parliament has been delegated to rule making authorities within the MCA. Such delegation is not permitted under administrative laws.
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Cos act exposes lack of legislative competency.
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Legislative intent behind Cos Act is not clear.
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Unless remedial measures are taken, Cos Act will cause extensive litigation.
He wasn’t the only eminent person who criticised the new law, at a book release function. M Damodaran, former Securities and Exchange Board of India (Sebi) chairman, termed it “an excellent piece of badly drafted legislation”.
Companies Act 2013 is a badly drafted Law. But worse it is a sham law because rule making powers have got a precedent to legislative law. Parliament has submitted its powers to the Babus. Proof is in the numerous amendments of rules by way of notifications, clarifications, and circulars being issued every day. The Ministry itself is not aware of the law as it stands today. Now there could a situation where clarifications and notifications are doled out on a suitcase to suitcase basis rather than a case to case basis. I suggest dump this piece of legislation and go back to the 1956 Act.
There can be criticism of any legislation here and there but making such a whole sale comment needs a strong backing in the form of tsunami of anomalies, contradictions and other irregularities. Justice Sikri and Mr. Damodaran should not have trivialized the sanctity of parliament; apex law making body of the country. Such humiliating comments are unacceptable. On the other hand, we as the students of law would have been benefited had these dignitaries pin pointed the series of mistakes of whatever nature and provided a base for their opinion.
As per Company act 2013, Even Private limited companies have been prohibited to accept deposits from anyone except its directors. It can borrow only from directors with a condition that it should not be borrowed from others. Directors can not borrow and give loans to company. Earlier, a private company could accept deposits (Loans) from its Directors, relative of Directors and shareholders (members).
The above provision has been enacted without application of mind and will definitely prove to be lethal and kill private limited companies. Such a Draconian provision should immediately be dropped. The Provisions state that all deposits (already taken) have to be repaid within a year by 31st march 2015. Isn’t it ridiculous? Is it possible to repay when money is already invested in Business, Plant and Machinery, Working Capital etc. How is that possible. Could government make any Bank to pay all deposits and square off all deposit accounts once only? Do it this and see that even Largest Bank of India will become insolvent.
THIS PROVISION WILL CERTAINLY KILL SMALL AND MEDIUM BUSINESSMEN AND FORCE THEM CLOSE THE COMPANY.
I think CA 56 was serving its purpose Had it been modified or attuned to the current scenario or changing times, it would have been a better proposition. It was already a time tested enactment. With so many modifications/amendments being carried out every now and then, the Act seems to be losing its importance at inception itself.
This is a creation of a child who never had any practical experience of the industry nor had made any attempt to know about it.He arrogantly misused his powers in arrogant manner in his air conditioned chamber surrounded by the bureaucrats who had heads filled with air of creating the situation which shall be unbearable for the people and therefore the people will always remain bowed down before them and they can take sadistic pleasure.It is a shame that our nation has a law like the Cos Act 2013 intended to suffocate corporate whose wealth is really enjoyed by the politicians and the bureaucrats.