City in Companies Act, 2013


Companies Act, 2013 uses city 3 times (without taking subordinate legislations into account):

  • In section 12(5)(a) with reference to registered office;
  • In Section 27(1) for advertisement in news paper in the city of registered office;
  • In Section 96(2) for place of Annual General Meeting in city of registered office.

The Companies Act, 1956 also used this term in similar reference.

Dictionary Meaning

What it city? In general English a rural area is called village and urban settlement is a town. A city is basically a town with certain character.  Merriam – Webster dictionary primarily define city as an inhabited place of greater size, population, or importance than a town or village. This is very subjective definition. However, specified meaning of term “city” is an incorporated British town or incorporated municipal unit in Canada.

DEPARTMENTAL CLARIFICATION

For the purpose of the companies Act, 1956, the ministry has clarified by circular no. 1/1/80 CL – 5 date 16- 2- 1981 that postal or municipal limits, whichever is wider, is permissible for the conduct of Annual general meeting. Ministry further clarified Letter 2/M-1594/74 dated 29 – 4- 1988 that postal limit may be construed to mean city postal delivery area officially accepted by the postal authority.

We will examine term “city” along with these clarification these clarifications in light of ground realities.

Constitutional categories

In India, before 74th Constitutional Amendment Act, 1992 there was four major categories of:

  1. Municipal corporation;
  2. Municipality (municipal council, municipal board, municipal committee)
  3. Town area committee
  4. Notified area committee

After the 74th Amendment was enacted, there are only three categories of urban local bodies as per Article 243Q of the Constitution of India:

  1. Mahanagar nigam (municipal corporation) for larger urban area;
  2. Nagar palika (municipality) for smaller urban area; and
  3. Nagar panchayat (notified area council, city council) for an area in transition from rural area to and urban area.

Whenever, registered office is located in a city, city limits shall be understood as geographic limit of these limits. Where postal delivery limit is larger than these city limits, postal limits shall be taken into accounts.

METROPOLITAN MAYHEM

Metropolitan area or metropolitan region is a densely populated urban area with surrounding territories. A Metropolitan area may comprise multiple jurisdictions or municipalities or may expand to multiple states or even nations. Usually, urban area with more than one million (ten Lakh) populations is called metropolitan and metropolitan area. According to census of India, 2011, about 50 cities in India are metropolitan area.

In popular parlance, these metropolitan areas are one city. Legally these metropolitan area consist of multiple postal delivery areas, multiple municipalities and expand to multiple states.

According to Article 435P(c) of Indian Constitution, “Metropolitan area” means an area having a population of ten lakhs or more, comprised in one or more districts and consisting of two or more Municipalities or Panchayats or other contiguous areas, specified by the Governor by public notification to be a Metropolitan area for the purposes of this Part.

India presently has 12 metropolitan areas. [See table below]

Legal Constituents of Metropolitan Areas in India

Legal Constituents of Metropolitan Areas in India

Some of these metropolitan areas are single legal cities while others have multiple legal cities within one city. This make above said old clarification impractical presently. But, questions start unfolding.

Delhi Dilemma

I am taking Delhi as a case only.  Mumbai, Kolkata, Chennai, Hyderabad and Pune may be equally interesting. All these metropolitan aress have multiple municipal bodies, districts and postal delivery areas.

“National Capital Region of Delhi” (Delhi – NCR) comprises much bigger area spread outside city of Delhi. Anyone can clearly demark Delhi as “National Capital Territory of Delhi”

“National Capital Territory of Delhi” is official name of “Union Territory of Delhi”. This comprises practically cities and villages. Until recently, Delhi has one Municipal Corporation of Delhi, another New Delhi Municipal Corporation and Delhi Cantonment Board. These three municipal bodies reports Government of NCT – Delhi, Government of India through Union Ministry of Home Affairs and Government of India through Union Ministry of Defense, respectively. Whether these were or are three different cities?

Municipal Corporation of Delhi has been since trifurcated into North Delhi Municipal Corporation, South Delhi Municipal Corporation and East Delhi Municipal Corporation. This division created certainly three legal cities. Whether this division created actually three cities?

Whether a company having registered office in area of New Delhi Municipal Corporation can do Annual General Meeting at a place in Delhi Cantonment Board? Whether a company having registered office in area of Kolkata Municipal Corporation can do Annual General Meeting at a place in Howrah Municipal Corporation? Whether a Company having Registered Office in Borivili can do Annual General Meeting at Meera Road Area?

Similar question may be raised for shifting of corporate offices.

Cities always evolves and takeover nearly townships and villages. Delhi and Mehrauli was different cities for centuries but now Mehrauli is part of Delhi. Gurgaon and Noida is being merging slowly but definitely in Delhi. Law need suitable evolution.

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2 responses to “City in Companies Act, 2013

  1. Pingback: Index of Companies Law Posts | AishMGhrana

  2. G V PANDURANGA GUPTA

    Very interesting.

    Liked by 1 person

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