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Issues: Challenge to General Circular No. 35/2003 under Companies Act, 1956 regarding compliance certificate for employing a whole-time company secretary.
Analysis: The petitioner challenged General Circular No. 35/2003, which clarified that a company employing a full-time company secretary is not required to obtain a compliance certificate from a company secretary in practice. The petitioner argued that this clarification contradicts the proviso to section 383A of the Companies Act, 1956, which mandates the issuance of such certificate by a company secretary in practice. The respondent contended that the intent of the statute is to have either an employed or practicing company secretary issue the compliance certificate based on the company's paid-up capital. For companies with a paid-up capital over Rs. 2 crores, employing a whole-time company secretary is compulsory, while it is optional for those with paid-up capital between Rs. 10 lakhs and Rs. 2 crores. The respondent argued that requiring a compliance certificate only from a practicing company secretary in cases where a full-time company secretary is employed is unnecessary. The court acknowledged the respondent's intent to correct an anomaly in the Circular but raised concerns about modifying the proviso through a general Circular. The court suggested the option of granting a general exemption under section 637A of the Act instead of issuing a Circular. The respondent was given time to seek instructions before the next hearing. This analysis highlights the key arguments presented by both parties regarding the interpretation of the Companies Act, 1956, in relation to the issuance of compliance certificates for companies employing full-time company secretaries. The court's consideration of the statutory provisions and the implications of the General Circular on the existing legal framework is crucial in determining the validity and impact of the Circular on companies' compliance requirements. The court's suggestion of an alternative approach through a general exemption under the Act indicates a potential resolution to the issue raised by the petitioner while ensuring compliance with the statutory provisions. The detailed examination of the legal principles and statutory provisions involved in this judgment provides a comprehensive understanding of the complexities surrounding the interpretation and application of company law regulations.
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