Kerala High Court Asks Centre To Decide Whether SNDP Yogam Is Governed By Companies Act Or Kerala NTC Act

The Kerala High Court, in a recent decision, directed the Union government to comply with a 2009 Delhi High Court order and decide if the Sree Narayana Dharma Paripalana Yogam (SNDP Yogam) is governed by the Companies Act or the Kerala Non-Trading Companies Act.The Division Bench comprising Justice Devan Ramachandran and Justice M.B. Snehalatha set aside the Single bench judgment, which had set aside a 1974 government order that granted exemption to the Yogam, a company registered under the 1882 Companies Act. As per the order of the Government of India, the Yogam was exempted from the provisions of Sections 172(2), 219 and Article 14 of Table C of Schedule I of the Companies Act, 1956. Thereby, every member of the Yogam would not have the right to cast their votes in its General Body meeting and only their representatives would.As a result of the order, the Yogam amended its articles of association and brought in Article 44 to deprive its members from casting their votes. The order and the Article were challenged by certain members of the Yogam before the Single Judge, who allowed the pleas and set these both aside. This was challenged in appeal before the Division Bench.According to the petitioners, the Yogam came within the ambit of the 1956 Companies Act after its enactment and thereafter, within the purview of the Kerala NTC Act in 1961. They asserted that the Yogam's objects are confined to the State of Kerala, and since it is non-trading company, it is governed by the 1961 Act.It was further argued that even as per a 2005 order of the Union Government, it has been conceded that the Yogam is covered by the 1961 enactment. The 2005 order was passed when certain members tried to proceed against the Yogam under the 1956 Act under the grounds of oppression and mismanagement. However, the government did not permit the same saying that Yogam is not governed by the Companies Act but by the Kerala NTC Act. The Court was also informed that the 2005 order was set aside in 2009 by the Delhi High Court, which had then directed the government to consider the matter afresh. However, this was not done yet.As an additional argument, it was contended that even if it is found that the government had the competence to pass the impugned order at the time it was passed, it subsequently became ineffectual with the coming into force of the Companies Act of 2013. According to them, unlike the 1956 Act, the 2013 Act does not allow exemption from the provisions of the Act to any single company but only to certain class or classes of companies. Since Section 465 of the 2013 Act provides that every order inconsistent with its provisions would become inoperative, the 1974 order would also become inoperative since it gave exemption only to the Yogam instead of a group of companies.They further contended that the Yogam and the Union government is estopped from taking a position that the Yogam is not governed by the NTC Act, because of the 2005 government order.However, the Yogam and the Union government argued that the objects of the Yogam cannot be confined to the State of Kerala and hence, it cannot be said to be governed by the NTC Act. It was stated that the Yogam's Articles of Association shows that one of its objects was to promote the teachings of Sree Narayana Guru, which have universal appeal and are not confined to Kerala.The Union also submitted that it cannot comply with the Delhi High Court judgment since the Single Judge already held that the Yogam is governed by the NTC Act.After hearing both sides, the Court felt that it would not be appropriate for it to decide on the scope of the object of the Yogam at the first instance. Moreover, such a decision would render the Delhi High Court's direction as redundant.It observed:“It does not require us to say — being accepted without exception — that “Gurudevan's” message of universal brotherhood has transcended time and has obliterated all barriers. However, the focal issue before us is not whether the teachings of “Gurudevan” are universal — which undoubtedly are; but whether the objects of 'the Yogam' are confined to the State of Kerala. An assessment and evaluation of this surely would necessitate an in-depth investigation into not only the teachings of “Gurudevan” — which are professed to be propagated by 'the Yogam' — but may also be hinged on its membership demographic, as also the assets it owns and holds — whether it are in Kerala or beyond. We cannot hazard a guess, nor can we make an evaluation; but are of the firm view that these issues ought to have been left to be decided, at the first instance, by the competent Authority of the Government of India, especially in view of the judgment of the Hon'ble High Court of Delhi...”On the question of whether the Government or the Yogam is estopped from taking a stand that the latter is not governed by the NTC Act, the Court found that there is no such estoppel since the Delhi High Court already set aside the 2005...

Kerala High Court Asks Centre To Decide Whether SNDP Yogam Is Governed By Companies Act Or Kerala NTC Act

K. Salma Jennath

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