Select Committee on Companies (Amendment) Bill, 1963

Summary

This two-page minute of dissent by M. R. Masani and R. V. Bade argues that the Companies (Amendment) Bill, 1963, was unnecessarily referred to a Select Committee and that, despite some useful revisions, important defects remain. The authors welcome the removal of proposed powers allowing the Government to transfer court powers to a tribunal and the exclusion of certain government-loan defaults from a provision that could have allowed the state to convert itself unilaterally from creditor to shareholder. They argue that retrospective action of that kind would have breached contractual faith and damaged India’s credit.

Key points

• The dissent welcomes the removal of provisions transferring judicial powers to a government-created tribunal.
• It supports excluding specified pre-existing government loans from the bill’s default-related provisions.
• It condemns clauses 7 and 8 for enabling the deprivation of trustees’ voting rights in joint-stock companies without adequate safeguards.
• It calls for limits on the voting-rights provision, including application only to certain public charitable trusts holding shares in public limited companies.
• It proposes proof of wrongdoing, a hearing, and a right of appeal before a trustee can be deprived of voting rights.
• It criticises the narrow right of appeal from tribunal findings and asks that appeals extend to other questions with the Court’s leave.
• It objects to treating commercial prudence and sound business practice as grounds for removing company officers through tribunal or quasi-judicial proceedings.
• It opposes extending prior Central Government approval requirements to appointments beyond the offices covered by the Companies Act.