DISCUSSION ON THE
COMPANIES BILL IN THE RAJYA SABHA BY
SHRI HISHEY
LACHUNGPA, MP SIKKIM, Division No. 118
Sir,
I
rise to mention the serious objection which the State of Sikkim has to Section
1(ii) of the Companies Bill, 2012, extending the Act to the
whole of India and, Section 465(1)
repealing the Registration of Companies (Sikkim) Act, 1961, as these grossly
infringe upon the special provisions contained in Clause (k) of Article 371F of the Constitution of India,
which protects all laws in force in the State of Sikkim at the time of its
merger with the Union of India.
2. The necessity of consultation with
the State Government inherent under that Article, was not complied with, nor
its views sought for before the Bill was introduced.
3. Article
371F(k) reflects the solemn promises and assurances of the Union of India, when
Sikkim merged by the will of the people as its 22nd State. A repeal
of a pre-merger law of Sikkim in this inconsiderate manner without the State
Government even being consulted is contrary to the solemn trust placed by the
people of Sikkim when joining the Indian Union.
Article 371F begins with a non-obstante clause: “Notwithstanding
anything in this Constitution,- .........”
It follows that all
other provisions of the constitution will yield to Article 371F to the extent to which
they conflict with the Article.
4. In State
of Sikkim vs. Surendra Prasad Sharma and Others :
(1994) 5 SCC 282, the Hon’ble Supreme Court while dealing with the spirit
of Article 371F has held as under:-
“23. ………… Effect must be given to the intendment of the
said provision specially introduced in the Constitution to comply with the
understanding on which Sikkim had agreed to merge with India. ……….”
5. Therefore,
any action by the Centre or the Parliament displacing the present circumstance
shall amount to gross infraction of the overriding provisions of Article 371F.
6. The
proposed repeal of the Registration of Companies Act, 1961, Sikkim has been
seriously resented to by the people and this has the potential to disrupt the
peaceful ambience prevailing in the State. Sikkim is a strategic Himalayan
border State with three international borders where elements inimical to the Nation
are constantly making efforts to create such situation by fuelling discontent
and resentment. All political parties in the State, both National and Regional,
including the Ruling Party, are unanimous in their objections to it.
7. Additionally,
apart from transgressing upon the federal structure of our country, the
provisions will also negate the very object of exempting the minuscule population of the “Sikkimese” under Section 10 (26AAA) of the Income Tax Act, 1961,
from its purview. For these reasons the Companies Act, 1956, has neither
been extended nor enforced in the State thus far.
8. Sikkim
Registration of Companies Act, 1961, was amended in 1989 to be “confined to the
entries in List II (State List) of the Seventh Schedule to the Constitution of
India”.
The legislative lists in
the Seventh Schedule, which allocate power to the Union and States exclusively,
permit any State to have Corporate Laws for intra-State operations. It follows
that the Union cannot repeal Sikkim’s corporate legislation to the extent it
operates within Sikkim.
All local Companies in
the State have so far been functioning under the local Act. This sudden change
in the regulatory and legal framework will have an overwhelming impact on the
existing businesses and will stifle the nascent free enterprise in Sikkim.
Article 371F cannot be
read as divorced from the historical development before the merger, and a
legislation which tries to cater to local needs is not ipso facto unreasonable.
In Saurabh
Chaudri and Others v. Union of India and Others: (2003) 11 SCC 146, the Supreme Court
has held that:
“39. …. Whereas larger interest of the country must be
perceived, the lawmakers cannot shut their eyes to the local needs also. Such
local needs must receive due consideration keeping in view the duties of the
State contained in Articles 41 and 47 of the Constitution of India.”
9. I,
therefore, strongly propose that the bill, in the larger interest of the
Nation, the State and the Sikkimese people, and in direct conflict with the
spirit of Article 371F of the Constitution, be reconsidered and amended as
below:
In Section 1(67) page 9, line 9:
“(ix)
the Registration of Companies (Sikkim) Act, 1961;” be deleted.
In Section 465(1) page 231, lines 34 & 35:
“and
the Registration of Companies (Sikkim) Act, 1961” be deleted.
In Section 465(3) page 232, lines 47 to 50:
“(3) The mention of
particular matters in sub-section (2) shall not be held to prejudice the general application
of section 6 of the General Clauses Act, 1897 with regard to the effect of
repeal of the repealed enactments as if the Registration of Companies (Sikkim)
Act, 1961 were also a Central Act.” be deleted.
I also propose that the consent of
the State Government be taken into consideration.
Thank
you, 
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