The Supreme Court on Wednesday sought response from the Centre on a plea against a notification which exempts public and private companies, having paid up capital of less than Rs 10 crore, from appointing a full time company secretary.
A bench comprising Chief Justice S A Bobde and justices A S Bopanna and V Ramasubramanian issued notice to the centre on a plea that has sought to form a high powered committee to look into the lapses which led to the closure of more than six lakh companies across the country.
It further sought to fix the corporate accountability and responsibility to the perpetrators who were responsible for the formation and operations of the fictitious and shell companies through which thousands of crores were manipulated to the detriment of financial infrastructure of the country.
The plea has sought to declare as ultra-virus of the Constitution a notification issued by the Centre on January 3.
It said that the notification necessitate that every private company which has a paid up share capital of Rs 10 crore or more shall have a whole time company secretary.
The consequence thereof, all the public and private company having the paid up capital of less than Rs 10 crore were totally exempted from the appointment of whole time company secretary, the plea, filed by advocate Shanshank Deo Sudhi, said.
It sought a direction to the Centre to issue guidelines for a robust mechanism for enforcement of corporate governance, lack of which leads to 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 nation.
The plea said there was no rational basis for such categorization and classification 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.