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The apex court on August 5, 2020, issued a notice, seeking a response from the center on a PIL filed against notification issued on January 1, 2020, and its subsequent enforcement from 1 April 2020 as being ultra virus and hence violates the Article 14,19(1)(g) of the Constitution of India.
Petitioner contended that the notification is unconstitutional as there is no rationale for the categorization and intelligible differentia involved.
“ In this respect, it is pertinently submitted that the said notification dated 03.01.2020 is constitutionally impermissible in as much as there is no rational basis for the categorization and classification for the purpose of the requirement of regulatory professionals i.e. Company Secretaries, as the necessity of compliance of Companies Act is sacrosanct and absolute and any compromise by way of classification on a ground of paid-up capital cannot be treated as a reasonable classification and exempting the companies from the regulatory compliances on the basis of irrational and unreasonable classification under the garb of paid-up capital is discriminatory in as much as it infringes Article 14 of the Constitution of India”
Further impugned notification is not standing to the scrutiny to both the test mentioned under Article 14.
As notification exempts public and private companies, having paid-up capital of fewer than 10 crores from appointing a whole-time company secretary.
Petitioner prayed before the apex court to seek a direction to the Centre to issue guidelines for a robust mechanism for enforcement of corporate governance, lack of which leads to a large number of companies being involved in financial shenanigans and misfeasance of the public money by the corporate fraudster which causes huge loss to the interests of the nation.
A bench comprising Chief Justice S A Bobde and justices A S Bopanna and V Ramasubramanian issued notice to the center on a plea that has sought to formulate a high powered committee to look into the lapses which lead to the closure of more than six lakh companies across the country.
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