Chapter II
INCORPORATION OF COMPANY AND MATTERS INCIDENTAL THERETO
Provisions of the Companies Act, 2013:
Section 6: Act to override Memorandum, Articles,etc.
[Section 6 is not yet brought to force]
Corresponding provisions of the Companies Act, 1956:
Section 9
Applicability:
This provision is applicable to all companies.
The provisions of the Companies Act, 2013 shall have effect disregarding anything to the contrary contained in the following:
- Memorandum or Articles of association of a Company, or
- in any agreement executed by the Company, or
- in any resolution passed by the Company in general meeting or by its Board of Directors.
And provision shall be treated as void if it is contrary not only to express / specific matter found in any section of the Act but also if it is contrary to matter provided in section of the Act by necessary implication, as held in Cricket Club of India and Others v. Madhav L. Apte and Others (1975) Comp Cas 574 (Bom).
However, this does not affect position where the Act itself gives freedom to companies to include or decide any matter, be it by way of including matter in its Memorandum or Articles or by any agreement or by passing any resolution to that effect, either at general or Board meeting.
The above principle remains true irrespective of when in point of time the matter which is contrary to the Companies Act 2013 incorporated / inserted (before or after the commencement of the Companies Act, 2013) in the Memorandum or Articles or executed by any agreement or passed in any general meeting or Board meeting.
When any matter contrary to the Act is found in Memorandum or Articles of a company or in any agreement or in any resolution as aforesaid, the effect of law is that only that part of Memorandum or Articles or agreement or resolution, as the case may be, which is contrary to the Act becomes void and not the entire Memorandum or Articles or agreement or resolution.
Section 6 does not have effect of overriding other statutes:
It may be noted that this section provides for supremacy of the Act over contrary provision in any agreement, resolution or memorandum or articles but not any other statutes. Thus, where any rights conferred under the Act the same is not protected from all other statutes – as held in 20th Century Finance Corporation Ltd v. RFB Latex Ltd. [1999] 34 CLA 267 (CLB), where parties entered into arbitration agreement to resolve their disputes and then seeking shelter of section 9 of the Companies Act (corresponding to Section 6) does not survive in view of Section 8 of the Arbitration and Conciliation Act, 1996.
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