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Published : April 22, 2012 | Author : ootsav
Category : Company Law | Total Views : 4006 | Rating :

  
ootsav
Utsav Gandhi Student, Institute of Law, Nirma University B.A. L.L.B. (Hons)
 

Section 3 (e) of the Land Acquisition Act defines ‘company’ as meaning a company registered under the Indian Companies Act, 1882, and includes a society registered under the Societies Registration Act, 1960 and a registered society within the meaning of the Co-operative Societies Act, 1912.

Various definitions and interpretations have been provided for the word ‘Company’ under various Acts. However, for the purpose of the present research, only the definition which is given under the Land Acquisition Act, 1894 will be dealt with in detail. The present research analyses the word ‘company’ under different legislations and then compares with the meaning given under the Land Acquisition Act, 1894. The word ‘company’ is also interpreted by the various Courts of India. These decisions have also been analysed by the research.

The aim of the present research is to understand the interpretation of the word ‘Company’ under the Land Acquisition Act. The research also analyses the response of the judiciary while interpreting the word ‘Company’.

Company: Definitions -
The expression ‘ Company’ has been defined in Sec. 3 of the Companies Act, 1956, as follows:
In this Act, unless the context otherwise requires, the expressions "company", "existing company", "private "company" and "public company" shall, subject to the provisions of subsection (2), have the meanings specified below:

1) "company" means a company formed and registered under this Act or an existing company as defined in clause (ii);

2) "existing company" means a company formed and registered under any of the previous companies laws specified below:

a. any Act or Acts relating to companies in force before the Indian Companies Act, 1866 (10 of 1866) and repealed by the Act;

b. the Indian Companies Act, 1866 (10 of 1866);

c. the Indian Companies Act, 1882 (6 of 1882);

d. the Indian Companies Act, 1913 (7 of 1933);

e. the Registration of Transferred Companies Ordinance 1942 (54 of 1942); and

f. any law corresponding to any of the Acts or the Ordinance aforesaid and in force-

i. in the merged territories or in a Part B State (other than the State of Jammu and Kashmir), or any part thereof, before the extension thereto of the Indian Companies Act, 1913 (7 of 1913); or

ii. in the State of Jammu and Kashmir, or any part thereof, before the commencement of the Jammu and Kashmir (Extension of Laws) Act, 1956 (62 of 1956), and

3) "private company" means a company which, by its articles,-
a. restricts the right to transfer its shares, if any;

b. limits the number of its members to fifty not including-

i. persons who are in the employment of the company, and

ii. persons who, having been formerly in the employment of the company, were members of the company while in that employment and have continued to be members after the employment ceased; and

c. prohibits any invitation to the public to subscribe for any shares in, or debentures of, the company;

Provided that where two or more persons hold one or more shares in a company jointly, they shall, for the purposes of this definition, be treated as a single member;

4) “Public Company means a company which is not a private company.
The expression ‘Company’ means –
i. A company as defined in Section 3 of the Companies Act, 1956, other than a Government company referred to in clause (cc);
ii. A society registered under the Society Registration Act, 1860, or under any corresponding law for the time being in force in a State, other than a society referred to in clause (cc);
iii. A co-operative society within the meaning of any law relating to co-operative societies for the time being in force in any State, other than a co-operative society referred to in clause (cc).

Thus, this definition of ‘company’ also includes a society registered under the Society Registration Act, 1860. Hence, for the purpose of this research, the definition of societies is requires. It is given under the Societies Registration Act as any seven or more persons associated for any literary, scientific, or charitable purpose, or for any such purpose as is described in section 20 of this Act, may, by subscribing their names to a memorandum of association, and filing the same with Registrar of Joint-stock Companies, form themselves into a society under this Act.

Memorandum of association is defined under this Act as an inclusive definition. It says that the memorandum of association shall contain the following things, that is to say,-
i. The name of the society;
ii. The object of the society;
iii. The names, addresses, and occupations of the governors, council, directors,
iv. Committee or other governing body to whom, by the rules of the society, the management of its affairs is entrusted.

A copy of the rules and regulations of the society, certified to be a correct copy by not less than three of the members of the governing body, shall be filed with the memorandum of association.

Acquisition: Judicial Interpretation –
The judiciary has given a wide weep to the term ‘Company’ as defined under the Land Acquisition Act. The judiciary has recognized that which entitites are covered under the scope of a ‘company’ and those which are not covered under the scope of the term ‘company’ under the Act. Some of the most important judicial interpretations are given and analysed below.

• Private companies –
It has been held that lands for ‘private company’ cannot be acquired for the purpose of erecting dwelling houses for workmen employed or for amenities directly connected therewith. A private company denotes a company of two or more persons, but not exceeding fifty excluding the employees and shareholder. A private company is nothing but the extension counter a partnership with limited liability. It prohibits any invitation to the public to subscribe for shares and restriction the right to transfer its shares. Private company is desirable in those cases where it is intended to take the advantage of corporate life, limited liability and the control of the business over the hands of few persons. Thus, a private company is a company whose shares are not traded on the open market.

• State Transport Corporation –
State Transport Corporation is a company within the meaning of S.3 (e) of the Land Acquisition Act and not a public authority and the provisions of Part VII of the Act have to be complied for the acquisition. In the present case , the Honourable Judges of the Supreme Court were pleased to hold that a State Transport Corporation having been incorporated by an Indian Law was a company within the meaning of Section 3 (e) of the Land Acquisition Act. This Supreme Court decision having been brought to the notice of the Division Bench decided in Raja Ram Baru v. State of Punjab, it was held amongst other things, that the Food Corporation of India would come within the definition of a company given in Section 3 (e) of the Act on the basis of the ratio of the Supreme Court ruling in Valjibhai’s case.

• Food Corporation of India –
The Food Corporation of India is an agency or instrumentality of the Central Government which has been incorporated by an Indian law and which has perpetual seal and succession and has an individuality apart from Government as per the Food Corporation Act. The Food Corporation of India would, however, come within the definition of a company under S. 3 (e) of the Act as it completely fulfills the requirements of the clause.

• Society –
The definition of Society is given under the Societies Registration Act. The definition has been dealt above. Bharat Sevasram Sangha registered under the Societies Registration Act, 1860 is a company within the meaning of S. 3 (e), and acquisition for Sangha have to comply with the requirements of Chapter VII of the Land Acquisition Act.

• Local Authority –
The Municipal Corporation is a local authority and not a company within the meaning of S. 3 (e) of the Land Acquisition Act as amended by the Mysore Act 17 of 1961. No statutory body could fall within Section 3 (e) (viii) if it is owned or controlled by the State Government. Chapter 28 of the Bombay Provincial Municipal Corporations Act, 1949, consisting of Ss. 448-452 makes it abundantly clear that the Corporation is in many matters controlled by the State Government. So was the Municipal borough which was the predecessor of the Corporation under Chapter 12 of the Bombay Municipal Boroughs Act, 1925.

It is plainly clear that the Corporation is a local authority and not a company. Section 3 (e) of the Land Acquisition Act as it stands amended by the Mysore Act 17 of 1961 defines a “local authority” and the definition is an inclusive definition. This definition makes it clear that the Corporation which is undoubtedly a local authority is a local authority for the purpose of the Act and includes in the definition other bodies which are also local authorities for that purpose.

• Co-operative society –
A society registered under the Bombay Co-operative Society Act 1925 does not come within the definition of ‘company’ under the Land Acquisition Act as it is not registered under the Co-operative Societies Act 1912. But is a “Company” within the meaning of S. (3) (e) by virtue of the retrospective effect of the validating S. 72 A of the Bombay Act 1925.

In acquisition of land for co-operative society, the notification under S. 4 did not indicate whether the society is one in which the Government holds 50 % of share capital or it is any other society. As the procedure of acquisition is different in case of a society in which the Government has substantial share and in case of other society, the matter remanded by the High Court to Government to decide the nature of the society for which the acquisition is required.

Acquisition of land for a co-operative society which is regarded as a ‘Company’ within the meaning of S. 3 (e) of the Act must comply with the legal requirements of S. 40 of the Act before taking aid of ss. 6-37 of the Land Acquisition Act, to promote its needed acquisition. For acquisition of land for housing co-operative society by treating it as public purpose, prior approval by Government of housing scheme presented by the society is a condition precedent. Housing scheme, contemplated by S. 3 (f) (vi) means a scheme which would serve maximum members.

Notification under ss. 4 and 6 were issued at the instance of agents/contractor appointed by the co-operative housing society to whom huge amounts were paid to influence the Government treating the acquisition as public purpose. Moreover, in the case prior approval to housing schemes of societies as required by S. 3 9f) (v) was not taken. Notifications were quashed.

Conclusion -
The project analysed the word ‘company’ under different legislations and then compared with the meaning given under the Land Acquisition Act, 1894. The conclusion of the entire research is that the definition of the word ‘company’ given under the Land Acquisition is wider than the definition given in other legislations.

Thus, to conclude, the interpretation of the word “company” under the Land Acquisition Act has been given a very wide and a broad interpretation by the judiciary in India. Thus, the hypothesis stands fulfilled. This research problem has determined the following hypothesis to achieve the following aims and objectives mentioned in: “The word Company as defined under the Land Acquisition Act of 1894 has been given a broad scope by the judiciary.”

References -
• Sarkar, P.K., Law of Acquisition of Land, 2nd ed., Eastern Law House, Lucknow, 2007.
• Beverley, H., Commentary on Land Acquisition Act, 1894, 9th ed., Delhi Law House, Delhi, 2010.
• Chakraborty, R., Law of Land and Compensation, 1st ed., Orient Publishing, 2008.
• Bansal, B.L. et al., Law of Acquisition of Land in India, 2nd ed., 2007.
• Goel, Hemant, Land Laws, New Era Law Publications, 2nd ed., 2009.

The  author can be reached at: ootsav@legalserviceindia.com




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Article Comments

Posted by AMIT RAY on July 05, 2012
Hi sir,

This is amit ray from Kolkata.I am having a private limited company in kolkata.My company name is"Arrowinfosys Pvt.Ltd.".We are three Friends holding 41% shares of this company.We were also the directors of this company but suddenly i got a mail from our partner that we have been terminated from the post of "director"of Arrowinfosys Pvt.Ltd.

We have not got any notice And suddenly we have got a mail regarding the termination.We have been removed under the companies act 1956 under section 248.They have blamed us very badly without any evidence..We are also the share holder of this company..Will we have to bear the liablities of the company?...Please suggest us..How to get our share value? We dont want to continue with this company.

I am sending you the documents which they have submited in "ROC"Please find attchement.
Waiting for your reply.

Thanks
Regards

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