KASHMIR AND THE COMPANIES ACT

The Monday 5^th August 2019 witnessed a powerful and joyful celebration of Indian Unity and also an unfortunate revelation of various misconceptions of minds of thousands of Indians. Social media witnessed the flow of social and legal bias established by the most lethal weapon of human history – the half-knowledge. Soon, overflowing sentiments overpowered the knowledge, understanding and interpretation even of well dignified professional minds.

A section of professionals claimed that the Indian Companies Act, 2013 shall now be applicable to state (now Union Territory) of Jammu and Kashmir. Strange!!

We will try to remove the misconception of mind here.

The Companies Act, 2013 is applicable to the State of Jammu and Kashmir along with the rest of India since its original notification. The companies Act, 2013 has the largest territorial applicability in Independent India.

Section 1(2) of the Companies Act, 2013 read as under –

It extends to the whole of India.

In fact its predecessor, the Companies Act, 1956 was also applicable to the State of Jammu and Kashmir. The Companies Act, 1956 was not applicable to the State of Sikkim and not fully applicable to the state of Nagaland.

history

We should not look more in the history of Indian corporate laws in relation to this discussion as the Jammu and Kashmir earlier was a sovereign state independent of British India. As a passing, though it is good to shares:

• The Companies Act, 1913 was applicable to the whole of British India including British Baluchistan and the Sambhal Parganas with effect from 1st April 2011, yes 2011. The British Baluchistan is now a state in Pakistan and Sambhal Pargana is a sleepy town and district in the Indian state of Uttar Pradesh.
• The Companies Act, 1882 was applicable to the whole of British India with effect from 1st May 1882.

 British India

British India includes a substantial portion (60%) of India, Pakistan and Bangladesh except for all princely states which later merged with either India or Pakistan. At the time of the British withdrawal, 565 princely states were officially recognized in the Indian subcontinent. In 1947, these princely states covered 40% of the area of pre-independence India and constituted 23% of its population.

Please note Burma and Adan were also part of British India at a point of time and earlier (Indian) Companies laws were applicable to these geographies before their separation from British India. Burma (now Myanmar) was part of British India for a period from 1st January 1886 to 1st April 193 when it becomes an independent British Colony. Adan was administered by British India during a period from 1839 to 1st April 1937 when it becomes an independent British Colony.

Please note South Asia had Dutch India (1605-1825), Danish India (1620 – 1869), French India 1668 – 1954) and Portuguese India (1505 – 1961) in present days South Asia.

The Companies Act, 1913 was extended to Princely States, French India and Portuguese India when merged with independent India with effect to date of their accession or some other dates as notified that time. Accordingly, the Companies Act, 1913 and an earlier version were not applicable to Pondicherry, Goa, Daman and Diu. In relation to Goa, Daman and Diu, the Portuguese Commercial Code was applicable until the enactment of the Goa, Daman and Diu (Laws) No. 2 Regulation, 1963 was notified.

The Companies Act, 1956: interesting territorial Jurisdiction

 The companies Act, 1956 was enacted with Section 1(3) in its original form excluding the applicability to State of Jammu and Kashmir:

“It extends to the whole of India except the State of Jammu and Kashmir.”

However, immediately the Jammu and Kashmir (Extension of Laws) Act, 1956 made it applicable to the State of Jammu and Kashmir with certain modifications.

In the year 1965, the Companies Act, 1965 modified its applicability to the state of Nagaland, a newly established state having a special constitutional status like State of Jammu and Kashmir and other few states. The proviso inserted that time read:

“Provided (further) that it shall apply to the State of Nagaland subject to such modifications, if any, as the Central Government, by notification in the Official Gazette, Specify.”

I have not to access presently what kind of modification made for the State of Nagaland and applicable till 31^st March 2013.

The Central Laws (Extension to Jammu and Kashmir) Act, 1968 with effected form 15^th August 1968 deleted the first proviso to Section 1(3) and made the Companies Act, 1956 fully applicable without any modification to the State of Jammu and Kashmir.

 Sikkim

The Sikkim was one of the princely states become independent sovereign but Indian under Protection of India. Sikkim enacted its Companies Act, 1961. It contains a Preamble and 17 sections. When Sikkim become state of India on 16^th May 1975, all existing law of independent Sikkim continued to be in force. The Companies Act, 1956 was not applicable to the State of Sikkim. Section 465 of the Companies Act, 2013 finally repealed the Sikkim Companies Act, 1961.

Nagaland

The state of Nagaland has special constitutional privileges under Article 371A. However, the Parliament at its wisdom made the Companies Act, 2013 applicable to the state the Act does not affect any privilege granted to the state.

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