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TMI Blog2021 (8) TMI 165X X X X Extracts X X X X X X X X Extracts X X X X ..... s shown that Respondents Societies are persons incorporated or that the incorporation is with limited liability - reading Section 2 which prescribes the entities and individuals to which the I B Code applies when considered with definition of corporate person under Section 3(7) of the I B Code , the Respondents i.e. Societies cannot be said to be corporate persons to whom the provisions of the Code applies. A committee or any officer of the society authorized in that behalf by the bye-laws may sue or be sued in its name. 'Authorization' means to give right or authority to a particular person to act on behalf of the society to sue or be sued. 'To sue' means initiating or defending any legal proceedings in accordance with the provisions of the CPC. What appears from reading of Section 18 of the A.P. Act is that the registration of a Society shall render it a body corporate by the name under which it was registered having perpetual succession and a common seal. Thus, although the Society is not incorporated and it is registered, it is rendered a body corporate which can have perpetual succession and have a common seal. Section 18 makes it clear that a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... porate. Hence, this Appeal. 3. Both the Appeals have been heard together. For sake up convenience, we will refer to particulars and documents of parties from the record of Company Appeal (AT) (Insolvency) No. 495 of 2019 (unless mentioned otherwise). 4. The Application under Section 7 of the I B Code was filed claiming that the Respondent was in default of amount as mentioned in the Application. It was claimed that the Respondent is a Society governed by the special enactment called AP Societies Registration Act, 2001 ( A.P. Act for short) and that as per Section 18 of the said Act, the Registration of a Society shall render it a body corporate by the name under which it is registered having perpetual succession and a common seal. The Appellant thus claimed that the Respondent is governed by the definition of Corporate Person under Section 3(7) of the I B Code and the Application was maintainable. Before the Adjudicating Authority, the Respondent- Society claimed that it is a Society registered under the Societies Registration Act, 1860 (XXI of 1860) ( 1860 Act for short) and that it does not fall under the purview of Section 2 of the I B Code . The Respondent clai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Act was enforced. With the repeal of the 1860 Act in Andhra Pradesh, the Respondents- Societies for all material purposes are governed by the A.P. Act. The Learned Counsel referred to Section 32 of the A.P. Act which provides for the repeal and savings clause. According to the said provision, anything done or any action taken under the 1860 Act shall be deemed to have been done or taken in the exercise of the powers conferred by or under the A.P. Act as if the A.P Act was in force on the date on which such a thing was done or action taken. Thus, it is claimed that the Respondents are deemed to have been registered under the provisions of the A.P. Act. Section 2(n) of the A.P. Act defines a society to mean a society registered or deemed to be registered under the A.P. Act. 7. It is argued for the Appellant that Section 18 of the A.P. Act confers a society (whether registered under A.P. Act or deemed to be registered under the said Act) with the status of a body corporate by the name under which it is registered and would have a perpetual succession and common seal, and can acquire, hold and dispose of property, enter into the contracts, institute and defend suits and other l ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Central Government. 10. It is further argued by the Learned Senior Counsel for Respondents that if structure of the I B Code is perused, the Society cannot be comprehended to be covered under the provisions of the I B Code given the nature of proceedings under the I B Code . All the provisions of the I B Code are typically tailored to deal with insolvency of the company formed under the Companies Act or the limited liability partnership. The word used any other person in Section 3(7) has to be read ejusdemgeneris for the purpose of interpretation and a Society could not be construed to be Body Corporate . Even if the 1860 Act has been repealed in State of Andhra Pradesh, the status acquired under the 1860 Act will not cease to exist and the same shall continue under Section 6 of the General Clauses Act and Section 8 of the Andhra Pradesh General Clauses Act. Section 32 of the A.P. Act will not exclude the General Clauses Act, 1860. 11. Alternatively, Counsel for Respondents has argued that even if Section 18 of the A.P. Act was said to be applicable, it was only for limited purpose of carrying out the provisions of the A.P. Act and cannot go beyond the purpose ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... egistration Act, 2001 reads as under:- 32. Repeals and savings Central Act 21 of 1860. Act 1 of 1350 F. (1) The Societies Registration Act, 1860, in its application to the Andhra area of the State of Andhra Pradesh and the Andhra Pradesh (Telengana Area) Public societies Registration Act, 150 F are hereby repealed. (2) Not-withstanding such repeal, anything done or any action taken under the said Acts (including any order, rule, form, regulation, certificate or bye-laws) in the exercise of any power conferred by or under the said Acts shall be deemed to have been done or taken in the exercise of the powers conferred by or under this Act as if this Act was in force on the date on which such a thing was done or action taken. 15. In I B Code , the relevant Sections are:- 2. Application.- The provisions of this Code shall apply to- (a) any company incorporated under the Companies Act, 2013 or under any previous company law; (b) any other company governed by any special Act for the time being in force, except in so far as the said provisions are inconsistent with the provisions of such special Act; (c) any Limited Liability Partnership incorpora ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ility Partnership Act, 2008, Section 2(1) (n) reads as follows:- (n) limited liability partnership means a partnership formed and registered under this Act 18. It would be appropriate to carefully consider Section 2 along with relevant definition of corporate person in Section 3 of the I B Code . The best case claimed by the Appellant is that the Respondents are Societies registered under the 1860 Act which after coming into force of A.P. Act under Section 18 read with Section 32 of the A.P. Act should be deemed to be a body corporate under the Special Act. 19. The question is whether Section 2 would apply to such Society even if it is accepted to be deemed body corporate. If Section 2 is considered, it lays down that the provisions of the I B Code shall apply to entities and individuals as mentioned in this Section. (a) Section 2(a) shows that the Code applies to any company incorporated under the Companies Act, 2013 or under any previous company law. Admittedly, the Respondents are not Companies incorporated under the Companies Act, 2013 or under any previous company law. (b) Section 2(b) provides that the Code applies to any other company governed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... atyadeva Sannakaru Rythu Sangham vs. The State of Andhra Pradesh and Ors. [MANU/AP/0497/2011] [Writ Petition No. 488 of 2006] which was also relied on by the Adjudicating Authority which mentioned in Para 32, as under:- 32. It is pertinent to note that the Petitioner Sangham was registered under the provisions of the Act of 1860. The legal character of a society registered under the Act of 1860 has been determined by case law to mean that it would not be conferred the status of a body corporate or a corporation having a distinct legal entity from the members constituting it, in the sense of a company under the Companies Act, 1956 or a society registered under the Andhra Pradesh Co-operative Societies Act, 1964. However, it has its own identity, personality or entity for certain limited purposes which would set it apart from that of its members. It is only under Section 18 of the Andhra Pradesh Societies Registration Act, 2001 that a society registered thereunder is conferred the status of a body corporate having perpetual succession and a common seal. This status however was not afforded to societies registered under the Act of 1860. 23. Learned Counsel for the Appellant ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... how a society can be registered. Section 4 deals with Memorandum of Association of the society and Bye-laws to be filed with Registrar. Section 8 deals with amendment of Memorandum and Bye-laws. Section 14 deals with Committee of the society; Section 18 provides that society is to be a body corporate, which reads as follows: The registration of society shall render it a body corporate by the name under which it is registered having perpetual succession and a common seal. The society shall be entitled to acquire, hold and dispose of property, to enter into contracts, to institute and defend suits and other legal proceedings and to do all other things necessary for the furtherance of the aim for which it was constituted. 26. Section 19 of the Act, 2001 reads as follows: Legal Proceedings:- (1) The Committee or any officer of the society authorized in this behalf by its bye-laws, may bring or defend any action or other legal proceedings touching or concerning any property or any right or claim of the society and may sue and be sued in its name. (2) Any action or legal proceeding shall not abate or be discontinued by the death; resignation or removal from office of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... istered either under 1860 Act, or 2001 Act, becomes an artificial person, and is and would be entirely different from its members. Therefore, if the elections held for that Society are not in accordance with its Bye-laws, or constitution (Memorandum of Association), person aggrieved by those irregularities has to file a petition, but the society itself cannot file a petition questioning the elections held to its Governing Body. 26. Referring to the above judgments, the Learned Counsel for the Appellant stated that in the matter of Satyadeva Sannakaru Rythu Sangham in para 32 reproduced supra, the effect of Section 32 of the A.P. Act was not considered. It is explained that although the Respondents who are registered under the 1860 Act, the 1860 Act stood repealed and acts done under the 1860 Act need to be treated as done under the A.P. Act now applicable. 27. Against this, the Learned Counsel for the Respondents has relied on judgment in the matter of Illachi Devi v. Jain Society, Protection of Orphans India [(2003) 8 SCC 413]. That was a matter where the issue before the Hon ble Supreme Court was whether a society registered under the Societies Registration Act, 1860 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Company Act cannot sue in its own name. It is to be sued in the name of the president, chairman, or principal secretary or trustees as shall be determined by the rules and regulations of the society or in the name of such person as shall be appointed by the Government Body for the occasion in default of such determination. It is, therefore, not correct to contend that it is capable of suing or being sued in its own name. 28. Relying on the said judgment, it has been argued that the Society cannot be treated as a juristic person and thus, cannot sue or be sued. The Hon ble Supreme Court had in the judgment of Illachi Devi (supra) referred in para 38 to Section 2(7) of the Companies Act, 2013, which reads as under:- 38. Section 2(7) of the Companies Act states : 2(7) body corporate or corporation includes a company incorporated outside India but does not include - (a) a corporation sole; (b) a cooperative society registered under any law relating to cooperative societies; and (c) any other both corporate (not being a company as defined in this Act) which the Central Government may, by notification in the Official Gazette, specify in this behal ..... X X X X Extracts X X X X X X X X Extracts X X X X
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