Case Note & Summary
The petitioner, Devas Employees Mauritius Private Limited, a company incorporated under the laws of Mauritius and a shareholder of Devas Multimedia Private Limited (in provisional liquidation), filed a writ petition under Articles 226 and 227 of the Constitution of India before the High Court of Karnataka. The petition sought a declaration that Section 272(1)(e) of the Companies Act, 2013 is ultra vires the Constitution of India and that the second proviso to Section 272(3) of the Companies Act, 2013 must be read to apply to petitions presented by persons falling under Section 272(1)(e). The respondents were the Union of India, Antrix Corporation Ltd, and Devas Multimedia Pvt Ltd. The petitioner argued that Section 272(1)(e) is arbitrary and violates Article 14 of the Constitution as it allows the Central Government to authorize any person to file a winding-up petition without any guidelines. The respondents contended that the provision is constitutional and serves public interest. The court, after hearing arguments, held that Section 272(1)(e) is not ultra vires the Constitution as it is a valid legislative provision enabling the government to act in public interest. The court also held that the second proviso to Section 272(3) applies only to petitions under Section 272(1)(a) to (d) and not to those under Section 272(1)(e). The writ petition was dismissed.
Headnote
A) Constitutional Law - Ultra Vires Challenge - Section 272(1)(e) Companies Act, 2013 - The petitioner, a foreign shareholder, challenged the constitutional validity of Section 272(1)(e) of the Companies Act, 2013, which allows any person authorized by the Central Government to present a petition for winding up. The court held that the provision is not ultra vires the Constitution as it serves a legitimate purpose of enabling the government to act in public interest. (Paras 1-10) B) Company Law - Winding Up - Interpretation of Second Proviso to Section 272(3) - The petitioner sought a declaration that the second proviso to Section 272(3) must be read to apply to petitions under Section 272(1)(e). The court held that the second proviso, which requires security for costs, applies only to petitions under Section 272(1)(a) to (d) and not to those under Section 272(1)(e), as the latter is a distinct category. (Paras 11-15) C) Company Law - Locus Standi - Foreign Shareholder - The petitioner, a shareholder of the company in provisional liquidation, challenged the winding-up provision. The court noted that the petitioner's locus standi was not in question but dismissed the petition on merits. (Paras 1-5)
Issue of Consideration
Whether Section 272(1)(e) of the Companies Act, 2013 is ultra vires the Constitution of India, and whether the second proviso to Section 272(3) of the Companies Act, 2013 must be read to apply to petitions presented by persons falling under Section 272(1)(e).
Final Decision
The writ petition is dismissed. Section 272(1)(e) of the Companies Act, 2013 is not ultra vires the Constitution. The second proviso to Section 272(3) does not apply to petitions under Section 272(1)(e).
Law Points
- Constitutional validity of Section 272(1)(e) Companies Act
- 2013
- Interpretation of second proviso to Section 272(3)
- Ultra vires challenge
- Winding up of companies
- Locus standi of foreign shareholder
