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Company Law Express (Part-1 )

Company Law Express – A Series by Lawgical Search.

Welcome on board the Company Law Express — an initiative by Lawgical Search to guide you through the entire Companies Act, 2013, section by section—from Section-1 to Section-470.

Stay with us as we decode Company Law — Practically and Lawgically.

What is Company Law?

Company Law also known as (Corporate Law) refers to the legal framework that govern the formation, operation, management, governance and winding up of a Company.

It defines:

• How companies are legally created (Company Incorporation),
• How Companies will Run (Through Directors & Shareholders),
• What powers and responsibilities Directors & Shareholders hold? (Role & Responsibilities),
• The rights and duties of Directors and Shareholders (Rights & Duties)
• How corporate decisions are made (Through Board Meetings or Shareholders Meetings),
• And eventually, how companies are monitored, penalized, or dissolved.

In India, Company Law inter alia includes the following:

• Companies Act, 2013 (replaced the Companies Act, 1956),
• Companies Rules framed under the Act,
• Notifications and Circulars issued by the Ministry of Corporate Affairs (MCA)
• SEBI Act, 1992 and SEBI Regulations (For Listed Companies)
• Judicial Pronouncements by NCLT/NCLAT, Courts and SEBI (for Listed Companies)

Scope of Company Law:

From setting up a Company to running it legally and even closing it down, Company Law guides every step along the way, which broadly includes:

1. Incorporation of Companies

• Company Registration Process
• Types of Companies (Private, Public, OPC, Section 8, Producer etc.)
• Memorandum & Articles of Association
• Share Capital of the Company

• Issue of Share Capital
• Allotment of Shares
• Transfer and Transmission
• Buy Back of Shares
• Management & Governance

• Appointment, Powers, and Duties of Directors and KMPs
• Role of Key Managerial Personnel (KMP)
• Conduct of Board Meetings and General Meetings
• Accounts & Audit

• Appointment and Independence of Auditors
• Statutory Audit and Auditors’ responsibilities
• Maintenance of books of accounts
• Compliance & Filing

• Annual returns
• Filing of Financial Statements
• Event-based compliance (e.g., change of directors, charge creation)
• Filing with the Registrar of Companies (ROC)
• Corporate Social Responsibility (CSR)

• Undertaking CSR Activities and CSR Expenditure
• CSR Committee and Policy implementation
• Inspection, Investigation, and Penalties

• MCA’s power to inspect or investigate
• Penalties for non-compliance, fraud, or misconduct
• Winding Up & Liquidation

• Voluntary winding up (Now governed under IBC)
• Tribunal-ordered winding up

History of Company Law in India:

Pre-Independence Era:

The Joint Stock Company Act, 1850

Our various Companies Acts have been modelled on the English Acts. The first Act passed in India in the year 1850, which was based on the Joint Stock Companies Act, 1844 of England.

The Joint Stock Company Act, 1850 was passed for the registration of Joint Stock Companies that too only in Madras, Calcutta & Bombay and only includes unlimited liability company.

The Joint Stock Company Act, 1857

The Joint Stock Company Act, 1857 was passed in India which replaced the earlier Company Act. This Act include the both Limited & Unlimited Liability Company and recognized the concept of Limited Liability but Baking & Insurance Company can only be registered as Unlimited Liability Company at that time.

Later on, this limited liability concept was extended to Banking & Insurance Companies only in the year 1860. 

Joint Stock Company Act, 1860

In the year 1866, the Joint Stock Company Act, 1866 was passed. This Act consolidated and amended the laws relating to incorporation, regulation and winding up the Companies.

The Companies Act, 1913

This Act replaced the Joint Company Act, 1860 and apart from other concepts in the earlier Company Act, this Act also includes the functioning of commercial organizations, institution of private company.

Post Independence Era:

The Companies Act, 1956

The Government of India, after independence, appointed a committee in the year 1950.  This Committee was headed by H.C. Bhabha. 

The object of the Committee is to revise the Companies Act for the development of Indian trade and industry.

The Committee submitted its report to the government in 1952.

Based on the recommendations of the Committee and following the English Companies Act, 1948, the Indian Government enacted the Companies Act, 1956 which existed till the enactment of Companies Act, 2013.

Companies Act, 1956 applies to whole of India except Nagaland, J&K and Goa, Daman & Diu subject to some exceptions

The salient features of the Companies Act, 1956 are-

• Company is a separate legal entity distinct from its members;
• Artificial judicial person;
• Limited liability to shareholders;
• Company can sue and can be sued;
• Shares can be freely transferred;
• Perpetual succession;
• Common Seal.

The Companies Act, 2013

• The Government constituted an Expert Committee on Company Law under the Chairmanship of Dr. JJ Irani, with the task of advising the Government on the proposed revisions to the Companies Act, 1956.
• The Committee submitted its report to the Government in 2005. The report was charting out the road map for a flexible, dynamic and user-friendly new company law. The Report of the Committee aimed to introduce several progressive and forward-looking reforms. A key recommendation was to shift from a Government Approval Regime to a Shareholder Approval and Disclosure Regime.

Broad Recommendations of Committee inter-alia includes:

• Private and Small Companies need to be given flexibilities and freedom of operations and compliance at the low cost.

• Companies with higher public interest should be subject to stricter regime of Corporate Governance.

• Stricter penalties for Companies that conduct fraudulent activities.

• Committee provided for establishment of SFIO (Serious Fraud Investigation Office).

• The committee further recommended that if the investigation reveals that fraudulent activities conducted then the Law should provide lifting of Corporate Veil.

• The Central Government, after due deliberations, decided to repeal the Companies Act, 1956 and enact a new legislation to encourage transparency and high standards of corporate governance and further accelerate the expansion and growth of our economy.

• The Companies Act, 2013 received the assent of the President on August 29, 2013 and was notified in the Gazette of India on August 30, 2013. It empowers the Central Government to bring into force various sections from such date(s) as may be notified in the Official Gazette.

• Footnote References from the Official Gazette
• Presidential Assent Date: August 29, 2013
• Published in the Gazette: Gazette of India, Extraordinary, Part II, Section 1
• Initial Notification Date: September 12, 2013 (Notification No. S.O. 2754(E))
• Full enforcement: Done in phases from 2013 to 2016 through multiple notifications

The Gazette is an official publication by the Government of India that gives legal effect to laws, rules, and decisions. You can find these references on the MCA website or egazette.nic.in.

• Key triggers that led to the Companies Act, 2013 include:

• Satyam scam (2009) that exposed flaws in corporate governance,
• Demand for investor protection mechanisms,
• Need to align Indian corporate law with global norms, especially after India’s growing role in global business and trade.

Company Law is a Civil Law or Criminal Law?

The Companies Act, 2013 extensively contains the provisions relating to functioning of corporates including the consequences of non-compliances, contraventions, etc.

To understand whether the Company Law is Civil Law or Criminal Law, it is essential to understand the meaning of terms civil law and criminal law.

• Civil Law is that branch of law which deals with private disputes or defaults with an objective to resolve or redress and to make good the loss or damages suffered by one party on account of any act or omission by other party.

• Criminal Law is that branch of law which deals with offences with an objective to punish the offender and is reflection of the public policy of a country. Criminal Law deals with the offences that are committed against the society.

The Companies Act, 2013 is mixture of both civil as well as criminal provisions. The civil and criminal provisions under the Act can be identified by observing the language used by Act, for consequences of non-compliances /contravention of its provisions.

The words “liable to penalties” denote civil nature of non-compliances whereas the words “punishable with fine and/or imprisonment and/or both” denote criminal nature of non-compliances.

Overview of the Companies Act, 2013

The Companies Act, 2013 is now the principal legislation for regulating companies in India. It replaced the earlier Companies Act, 1956, and brought with it paradigm shifts in corporate governance, compliance standards, investor protection, and corporate disclosures. The Act contains 470 Sections divided across 29 Chapters, along with 7 Schedules, and has undergone numerous amendments to keep pace with the dynamic nature of business.

The Companies Act, 2013 aims to simplify law, promote ease of doing business, and ensure accountability and transparency in the corporate sector.

The Companies Act, 2013 is more of a rule-based legislation. A significant part of the legislation is in the form of rules made by the Central Government.

Section-2(66) of the new Act defines the term ‘prescribed’ as prescribed in the rules made under this Act.

Salient features of the Companies Act, 2013.

• Introduction of One Person Company (OPC),
• The maximum number of private companies is increased from 50 to 200,
• The minimum paid up share capital requirements for private companies and public companies are dispensed with,
• Emphasis on Corporate Social Responsibility (CSR),
• Stricter norms for Independent Directors,
• Concept of Key Managerial Personnel (KMPs),
• More powers to Shareholders,
• Women empowerment in the Corporate Sector (Women Director for certain Companies),
• Fast Track mergers,
• Cross Border mergers,
• Entrenchment of Articles of Association,
• Class action suit – a new concept is introduced,
• Formation of National Company Law Tribunal and National Company Law Appellate Tribunal replacing the powers of the Company Law Board and the powers of High Courts,
• Formation of Special Courts,
• Enhanced disclosure requirements, and
• Focus on e-governance and digitization.

Authorities under Companies Act, 2013

For effective implementation and enforcement, the Act empowers various statutory authorities and regulatory bodies.

Ministry of Corporate Affairs (MCA) – Central Level Authority

The MCA acts as the primary regulatory authority for companies in India, overseeing their formation, operations, and compliance with the Companies Act. 

MCA mainly responsible for:

• Policy formulation
• Issuing rules, notifications, and circulars
• Overseeing overall compliance and corporate governance

Regional Directors – Regional Level Authority

In India there are currently 7 Regional Directors (RDs). RDs are the senior officers above the ROCs (Registrar of Companies). Regional Directors under the Companies Act, 2013 are constituted under the powers delegated by the Central Government through Section-458.

Section-458 empowers the Central Government to delegate its powers and functions to the Regional Directors or Registrar of Companies. The Central Government has, in turn, delegated various powers to Regional Directors at different locations like:

• Mumbai,
• Kolkata,
• Chennai,
• New Delhi,
• Ahmedabad,
• Hyderabad, and
• Shillong.

Registrar of Companies (ROC) – State Level Authority

Section-396 of the Act empowers the Central Government for the purpose of exercising such powers and discharging such functions under the Act to establish such number of offices of Registrar as the Central Government considers necessary. Currently in India there are 25 ROCs.

Primary role of ROC is to:

• Register companies
  • Maintain the registry of company records
  • Ensure companies file their statutory documents (e.g., financials, annual returns)
  • Initiate inquiry, inspection, or investigation for non-compliance

National Company Law Tribunal (NCLT) – Quasi Judicial Body

The National Company Law Tribunal (NCLT) is a Quasi-Judicial Body in India that adjudicates issue relating to Companies in India. The NCLT established under Section-408 the Companies Act, 2013 w.e.f 01^st June 2016.

Quasi-Judicial Body:

Quasi-judicial bodies are administrative or non-judicial entities that possess the authority to adjudicate disputes, make decisions, and impose penalties in specific areas. Although not part of the traditional judicial system, they exercise powers akin (similar) to courts, thereby providing a more efficient and focused mechanism for dispute resolution.

NCLT consolidates the Corporate Jurisdiction of: –

• Company Law Board
• Board of Industrial and Financial Reconstruction
• Appellate Authority for Industrial and Financial Reconstruction
• Jurisdiction and Powers related to Winding-Up
• Restructuring and other provisions as vested with High Court relating to Company Law

National Company Law Appellate Tribunal (NCLAT) – Appellate Authority

National Company Law Appellate Tribunal (NCLAT) is an appellate authority formed under Section-410 of the Companies Act, 2013 to hear appeals against the orders of: –

• National Company Law Tribunal (NCLT),
• National Financing Reporting Authority (NFRA) and,
• Any direction, decision or order referred to in Section-53A of the Competition Act, 2002 in accordance with the provisions of that Act.

Special Courts constituted under Section-435

Section-435 of the Companies Act, 2013 provides for establishment of the Special Courts. Provisions of Section-435 states that Central Government for speedy trial of offence under the Companies Act, 2013 except under Section-452, by notification establish or designate as many Special Courts as may be necessary.

A Special Court shall consist of—

1. a single judge holding office as Session Judge or Additional Session Judge, in case of offences punishable under this Act with imprisonment of two years or more; and

• a Metropolitan Magistrate or a Judicial Magistrate of the First Class, in the case of other offences,

Who shall be appointed by the Central Government with the concurrence of the Chief Justice of the High Court within whose jurisdiction the judge to be appointed is working.

Serious Fraud Investigation Office (SFIO)

SFIO is a multi-disciplinary organization under Ministry of Corporate Affairs, consisting of experts in the field of accountancy, forensic auditing, law, information technology, investigation, company law, capital market and taxation for detecting and prosecuting or recommending for prosecution white-collar crimes/frauds. 

SFIO has been set up under Section-211 of the Act and has powers equivalent to a civil court.

SFIO investigates cases assigned by the Central Government.

National Financial Reporting Authority (NFRA)

The National Financial Reporting Authority (NFRA) was constituted on 01st October, 2018 by the Government of India under Sub Section (1) of section 132 of the Companies Act, 2013.

• As per Section 132(2) of the Companies Act, 2013, the duties of the NFRA are to: Recommend accounting and auditing policies and standards to be adopted by companies for approval by the Central Government;

• Monitor and enforce compliance with accounting standards and auditing standards;

• Oversee the quality of service of the professions associated with ensuring compliance with such standards and suggest measures for improvement in the quality of service;

• Perform such other functions and duties as may be necessary or incidental to the aforesaid functions and duties.

Applicability of the Companies Act, 2013 – A Foundational Overview

Introduction – Section-1 of the Companies Act, 2013:

The Companies Act, 2013 is one of the most significant legislations governing the corporate landscape in India. Though Section-1 may appear brief and straightforward at first glance, it plays a foundational role in defining the scope, jurisdiction, and effective date of the Act.

Every legislation is like a well-constructed building, it begins with a blueprint, followed by a strong foundation, and then rises through logically arranged components.

Section-1 of any Act serves as that blueprint. It tells us:

• What the law is called (short title),
• Where it applies (extent),
• When it applies (commencement), and
• To whom it applies (application).

Understanding these aspects ensures that legal professionals, students, businesses, and even the judiciary are clear about the boundaries and reach of the law.

Section-1 isn’t merely a formality, it determines the jurisdictional and operational framework of the entire Companies Act. Any ambiguity here could ripple across corporate legal practice in India.

Role of Section-1 in Statutory Interpretation:

Section-1 lays down the short title, extent, commencement, and application of the Companies Act, 2013. It may look technical, but in legal interpretation, this section is crucial because:

• It sets the territorial reach of the Act (whole of India),
• It explains who is covered under the Act (companies incorporated under it, banking, insurance, electricity companies etc.),
• It empowers the government to commence different parts of the Act on different dates.

Courts often refer to Section 1 when a question arises about whether the Act or a specific provision applies to a particular person or situation. It acts as the first gatekeeper to interpreting the legislative intent behind the law. Without clarity in Section-1, the entire legal text could suffer from interpretive confusion.

Bare Act Text & Interpretation of Section-1 of the Companies Act, 2013:

• Bare Act Text of Section-1

Exact Wording of the Provision

Let’s begin by looking at how Section-1 is officially written in the Companies Act, 2013:

Section 1: Short Title, Extent, Commencement and Application

1. This Act may be called the Companies Act, 2013.
2. It extends to the whole of India.
3. This section shall come into force at once and the remaining provisions of this Act shall come into force on such date as the Central Government may, by notification in the Official Gazette, appoint and different dates may be appointed for different provisions of this Act and any reference in any provision to the commencement of this Act shall be construed as a reference to the coming into force of that provision.

• The provisions of this Act shall apply to—

1. companies incorporated under this Act or under any previous company law;
2. insurance companies, except in so far as the said provisions are inconsistent with the provisions of the Insurance Act, 1938 or the Insurance Regulatory and Development Authority Act, 1999;
3. banking companies, except in so far as the said provisions are inconsistent with the provisions of the Banking Regulation Act, 1949;
4. companies engaged in the generation or supply of electricity, except in so far as the said provisions are inconsistent with the provisions of the Electricity Act, 2003;
5. 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; and
6. such body corporate, incorporated by any Act for the time being in force, as the Central Government may, by notification, specify in this behalf, subject to such exceptions, modifications or adaptation, as may be specified in the notification.

Plain English Explanation

Let’s now break the law into simple words that you can understand – whether you’re a student, businessperson, retired professional, or just curious about the law.

1. “This Act may be called the Companies Act, 2013.”

This just tells us the official name of the law.

It’s like giving a book its title, so people know what to call it.

This Act is to be known and referred to as “The Companies Act, 2013”.

• “It extends to the whole of India.”

This means the law applies everywhere in India, including:

• All states
• All union territories
• Even places like Jammu & Kashmir and Ladakh (after Article 370 was removed).

No part of India is left out. This is a nationwide law.

• “This Section shall come into force on such date as the Central Government may…….”

In simple words:

The law didn’t start working immediately after it was passed.

The Central Government decides when the law will start working by publishing a notification in the Official Gazette.

Also, different parts (called “provisions”) of the law may start on different dates.

Example:

It’s like a mall opening in parts – first the food court, then shops, then the theatre.
Here, different sections of the law came into effect in phases from 2013 to 2016.

• “The provisions of this Act shall apply to…”

This part tells us who must follow the Act. Here’s the breakdown:

(a) Companies incorporated under this Act or older company laws

(b) Insurance companies (unless their own law says something different)

(c) Banks (unless there’s a clash with banking rules)

(d) Electricity companies (subject to electricity laws)

(e) Special companies created by other laws (like LIC or ONGC)

(f) Other big corporate bodies that the Government can include by notification

In short: Most companies in India must follow this law — unless another special law says otherwise.

Significance of “Short Title, Extent, Commencement & Application

These four phrases are standard in almost every Indian law. They may seem boring, but they are very important to help us understand the basics of the Act. Let’s explore what each term means and why it matters.

1. Short Title

What it means:

The official name of the Act — “Companies Act, 2013”.

Why it matters:

This makes it easy to identify and refer to the law in court, offices, books, and everyday business documents.

• Extent

What it means:

Where the law applies — in this case, all over India.

Why it matters:

Some laws apply only in certain regions or states, but this one is pan-India.

That means no matter where a company is registered — Delhi, Chennai, or Shillong — this Act governs it.

• Commencement

What it means:

The starting date of the Act (or part of the Act), announced by the Central Government through an official notification.

Why it matters:

If a section is not “commenced,” it doesn’t apply yet. This helps companies prepare before a law becomes active and avoid confusion about when to follow a rule.

• Application

What it means:

Whom the law applies to — which companies and business bodies.

Why it matters:

Every company needs to know whether this Act governs them. Section 1(4) makes that crystal clear, which helps avoid legal disputes later.

Final Thoughts: Why Section-1 Matters

Although Section 1 looks small, it sets the tone for the whole Companies Act.
It is like the first page of a rulebook — explaining:

• What it’s called
• Where it applies
• When it starts
• Who should follow it

If you understand this section, you’ve taken your first solid step into Indian Company Law.

Does Section 1 of the Companies Act, 2013 apply to North Eastern States including Sikkim?

Yes, it does.

When Section 1(2) says, “It extends to the whole of India,” that includes all North Eastern states such as:

• Assam
• Arunachal Pradesh
• Manipur
• Meghalaya
• Mizoram
• Nagaland
• Tripura
• Sikkim

What about Sikkim’s special status?

Historically, Sikkim had a special status under Article 371F of the Constitution, which allowed it to follow its own laws in many areas, including Company Law. But over time, most Indian laws — including the Companies Act — have been extended to Sikkim either fully or with modifications.

The Companies Act, 2013 now applies to Sikkim just like it does to the rest of India, although certain local company registrations in Sikkim may still be governed by older state-specific practices, unless directed otherwise by the MCA (Ministry of Corporate Affairs).

Footnote (for blog readers or students):

If you’re doing business or working in legal compliance in Sikkim, it’s always good to check if there are any local circulars, government notifications, or transition guidelines for companies that were previously registered under Sikkim’s own company law regime.

Are Foreign Companies covered under the ambit of Section-1(4) and whether Companies Act, 2013 applies to Foreign Companies?

To understand this, let’s critically examine Section 1(4) and its scope, and determine whether Companies Act, 2013 applies to the Foreign Companies?

Section 1(4): Scope of Application:

Section 1(4) of the Companies Act, 2013 enumerates the categories of entities to which the Act is applicable.

It states that the provisions of the Act shall apply to the following:

1. Companies incorporated under this Act or any previous company law,
2. Insurance companies, to the extent not inconsistent with the Insurance Act, 1938 or IRDA Act, 1999,
3. Banking companies, to the extent not inconsistent with the Banking Regulation Act, 1949,
4. Companies engaged in electricity generation/supply, except where inconsistent with the Electricity Act, 2003,
5. Companies governed by any special Act, to the extent not inconsistent with such Act,
6. Such body corporates, incorporated by any act for the time being in force, as may be notified by the Central Government.

Notably, there is no express mention of “foreign companies” in this Section.

Does This Mean the Companies Act Does Not Apply to Foreign Companies?

Absolutely Not.

While foreign companies are not covered under Section-1(4), the Companies Act, 2013 does apply to them—but under a separate framework. The applicability to foreign companies is governed by Chapter XXII, Section-379 of the Act.

The Companies Act, 2013 contains a dedicated chapter “Chapter XXII” dealing with companies incorporated outside India. Thus, Chapter XXII (Sections 379 to 393) specifically deals with “Companies Incorporated Outside India” and lays down how and to what extent the Act is applicable to them.

Statutory Provisions under Companies Act, 2013 – Governing Foreign Companies:

Section 379: Application of Act to Foreign Companies:

• “Sections 380 to 386 (both inclusive) and sections 392 and 393 shall apply to all foreign companies.

• Where not less than fifty per cent. of the paid-up share capital, whether equity or preference or partly equity and partly preference, of a foreign company is held by one or more citizens of India or by one or more companies or bodies corporate incorporated in India, or by one or more citizens of India and one or more companies or bodies corporate incorporated in India, whether singly or in the aggregate, such company shall comply with the provisions of this Chapter and such other provisions of this Act as may be prescribed with regard to the business carried on by it in India as if it were a company incorporated in India.

-Inserted by Companies (Amendment) Act, 2017.

Section 2(42): Definition of Foreign Company

“A foreign company means any company or body corporate incorporated outside India which—

1. has a place of business in India whether by itself or through an agent, physically or through electronic mode; and

• conducts any business activity in India in any other manner.”

Conclusion:

While Section-1(4) of the Companies Act, 2013 does not explicitly include foreign companies within its ambit, it does not mean that the Act is inapplicable to them. The applicability of the Act to foreign companies is governed independently under Chapter XXII, specifically Section-379, and is further supported by the definition provided under Section 2(42).

Territorial Jurisdiction and Applicability of the Act:

Application to Whole of India

Section-1(2) of the Companies Act, 2013 clearly says:

“It extends to the whole of India.”

This means that the Act applies uniformly across every part of India—from metro cities to remote villages. Whether a company is registered in Delhi, Mumbai, Assam, or Sikkim, the law treats them the same under this Act.

Why this matters:

Before independence, Company Laws were fragmented—different provinces followed different rules. But after 1956 (and now in the 2013 version), there is one single law for all companies across India, which brings clarity, consistency, and fairness.

Applicability in Union Territories and J&K (After Article 370)

Before August 5, 2019, Jammu & Kashmir had special status under Article 370. This meant that many Central laws, including parts of Company Law, did not automatically apply unless the J&K State Legislature approved them.

But after abrogation of Article 370:

• Jammu & Kashmir and Ladakh became Union Territories.
• All central laws, including the Companies Act, 2013, became applicable automatically to them.

Today, the Companies Act applies fully to:

• All 28 States
• All 8 Union Territories (including Delhi, Puducherry, Ladakh, Andaman & Nicobar, etc.)

Conclusion: The law is now truly pan-India, with no exceptions for geography.

Companies Act & Special Economic Zones (SEZs):

Do SEZs Follow the Companies Act?

Yes, Companies in Special Economic Zones (SEZs) must follow the Companies Act, 2013, like any other company in India.

SEZs are governed by the Special Economic Zones Act, 2005, which provides special tax and business benefits. However:

• SEZ companies are not exempt from the Companies Act.
• They must still comply with company formation, board meetings, audit, filing,

and governance rules as per the Act.

Only the tax structure and export-related benefits may differ. The legal structure of companies — incorporation, directors, shareholders — stays under the Companies Act.

Example:
If a company is set up in Noida SEZ or Kandla SEZ, and it’s a Private Limited Company, it must register with MCA and follow the same rules as any other company.

Section-1(4) – Specific Companies Covered:

Section 1(4) of the Act clearly lists which types of entities the law applies to:

Let’s simplify it.

Companies Incorporated under the Companies Act, 2013

All companies formed under this Act — whether:

• Private Limited (Pvt Ltd)
• Public Limited (Ltd)
• One Person Company (OPC)
• Section 8 (Non-profits) — are directly governed by the Companies Act, 2013.

Even companies formed under the old Companies Act, 1956 are now considered covered under this Act.

Applicability to Special Industries:

Some industries are already governed by sector-specific laws, such as:

•  Insurance companies → under Insurance Act, 1938 & IRDAI Act, 1999
•  Banking companies → under Banking Regulation Act, 1949
•  Electricity companies → under Electricity Act, 2003
•  Statutory corporations (e.g., ONGC, LIC, etc.)

The Companies Act, 2013 applies to them too, except when there’s a conflict with their special laws.

This means:

• If the company law and the banking law say the same thing, follow it.
• But if they say different things, the special law overrides the Companies Act for that part only.

Think of it like this: The special law is the “subject teacher” and the Companies Act is the “class teacher.” The subject teacher’s rules take priority only for that subject.

Landmark Judgments Explaining Extent and Application:

Let’s look at some key case laws where courts clarified the extent and reach of the Companies Act.

Tata Consultancy Services v. State of Andhra Pradesh (2005):

Issue: Whether software is goods and whether IT companies come under Company Law.

Held: IT companies are companies under the Act, and their business operations, even in tech and digital services, are governed by Company Law provisions like any other business.

LIC v. Escorts Ltd. (1986):

Issue: Can a public sector undertaking like LIC, governed by a special Act, be treated as a company?

Held: When LIC acts in the same capacity as a shareholder (like any company would), it must follow the Companies Act like others — unless its special law says something specific otherwise.

UCO Bank v. Dipak Debbarma (2016):

Issue: What happens when there’s a conflict between Companies Act and banking laws?

Held: If there’s a contradiction, Banking Regulation Act will prevail, but only in that area of conflict.

Union of India v. R. Gandhi (2010):

Issue: Constitutionality of National Company Law Tribunal (NCLT)

Held: Parliament has power to create company law tribunals under the Companies Act, which further confirms the pan-India jurisdiction and power of the Act.

Conclusion: Territorial Reach = Maximum Coverage

The Companies Act, 2013:

• Covers every region of India,
• Applies to almost all companies, with a few exceptions,
• Works alongside sectoral laws where necessary,
• Has been upheld and explained by courts time and again.

Commencement Clause – What Does It Mean in Practice?

The Commencement Clause in a law might sound technical, but it plays a very practical and important role. Think of it as the law’s “start button.” Just because a law is written or passed doesn’t mean it starts working right away. Section-1(3) of the Companies Act, 2013 explains this “start” point for the law.

Let’s explore what this clause really means, how it has worked in practice, and how courts have interpreted it.

What is a Commencement Clause in Law?

Difference Between “Enacted” and “Enforced”

Let’s understand this with a simple analogy:

Imagine a new building is constructed.

The builder says, “The building is ready on January 1st.”

But the government says, “People can start living in it from March 1st.”

This is the difference between enactment and enforcement:

• “Enacted” means the law is passed by Parliament and signed by the President.
• “Enforced” means the law is made active — and people must now follow it.

In the case of the Companies Act, 2013:

• It was enacted on August 29, 2013, when the President signed it.
• But different parts of it were enforced on different dates — as decided by the government.

Role of Notifications under Section-1(3)

Section-1(3) of the Act says:

“It shall come into force on such date as the Central Government may, by notification in the Official Gazette, appoint, and different dates may be appointed for different provisions…”

In simple terms:

The Central Government has full control over when to start which part of the law.
It does this by publishing notifications in the Official Gazette.

What is a notification?

A public announcement issued by the Ministry of Corporate Affairs (MCA) to declare that a certain section or rule of the Companies Act has now started (i.e., is enforceable).

This allows the government to bring the law into force step by step instead of activating the entire Act at once.

Judicial Interpretation of Commencement:

Courts have also played an important role in explaining what “commencement” means, especially when there’s confusion about whether a law applies to past actions (retrospective) or only future ones (prospective).

Case Law 1: K. Krishna v. State of Madras (1951)

Issue: Can a law apply to something that happened before it came into force?

Held:

• A law normally applies only to future acts (prospective).
• Unless it clearly says it applies to past events, it cannot punish or change something that has already happened.

Case Law 2: Keshavan Madhava Menon v. State of Bombay (1951)

Issue: A person committed an act when there was no law against it. Later, a law came and made it punishable. Can he be punished?

Held:

• No. You cannot apply new laws to old actions.
• The Constitution of India protects against retrospective criminal laws.

Why important?

This is exactly why the commencement date matters — a person or company is bound by the law only after it comes into force, not before.

Case Law 3: Sundaram Finance Ltd. v. NEPC India Ltd. (2002)

Issue: Whether a company could be punished under a provision that wasn’t yet in force.

Held: The law cannot be enforced unless and until the specific provision is officially notified.

Conclusion: Why Commencement Clause Matters

The Commencement Clause under Section-1(3) is not a formality — it:

• Gives time to prepare for the law,
• Protects people from being punished for past acts,
• Allows the government to roll out laws in a practical, controlled way.

Whether you’re a Law student, a Startup Founder, or a Compliance Officer, knowing when a section starts to apply is key. Because in law, timing is everything.

Legal Implications of Section-1 in Practice:

Although Section-1 of the Companies Act, 2013 seems short and introductory, it holds deep legal power. It sets the tone for how the rest of the Act should be read, understood, and applied, both in courts and in daily corporate practice. Let’s break down its real-world impact.

Role of Section-1 in Corporate Practice:

In Compliance Work:

Chartered Accountants, Company Secretaries, and Legal Officers check:

• Which sections have commenced (as per Gazette notifications)?
• Which apply to their type of company (bank, insurer, Section 8 NGO, etc.)?

Without understanding Section-1, there’s a risk of applying the wrong law or missing a compliance date.

In Legal Drafting:

Lawyers refer to the short title and extent clause while drafting:

• Agreements
• Board resolutions
• Notices and filings

Interface with Other Acts:

Section 1(4) clearly says:

The Companies Act applies to banking, insurance, electricity, and other companies unless their own special law says something else.

This creates an interface between the Companies Act and other sectoral laws, such as:

• SEBI Act, 1992 (for listed companies)
• RBI Act, 1934 and Banking Regulation Act, 1949 (for banks)
• IRDAI Act, 1999 (for insurers)
• Electricity Act, 2003

 When laws conflict:

General rule:

The sectoral (special) law takes priority only in the area where there’s a conflict.

Example:
A bank must follow Banking Regulation Act for its lending business, but still must follow Companies Act for its:

• Annual filings
• Corporate governance
• Board meetings

This is known as the principle of harmonious construction — where laws are read together without overlapping, unless a clear contradiction exists.

What Happens if a Section Is Not Notified?

Legal Status of Unnotified Provisions

If a section of the Companies Act is not yet notified by the government, then:

• It is not in force
• It cannot be enforced by any authority
• It is treated as non-existent in law, for the time being

That’s why notifications under Section-1(3) are so important. They officially “switch on” a section.

Tip: You can search section-wise status on MCA’s website → Notifications → Enforcement of Provisions

Precedents from Case Law:

Let’s look at real judgments that explain this idea:

Sundaram Finance Ltd. v. NEPC India Ltd., (2002)

Issue: Can you apply a provision that hasn’t been notified yet?

Held: No. Unnotified provisions have no legal effect. Courts cannot apply them unless the government officially brings them into force.

Keshavan Madhava Menon v. State of Bombay, (1951)

Issue: Can someone be punished for an act done before the law was enforced?

Held: No. A law applies only from its commencement date, unless it explicitly says it is retrospective.

Reliance Natural Resources Ltd. v. Reliance Industries Ltd., (2010)

Held: Courts must carefully read the commencement clause to ensure that a provision is in effect before enforcing any obligations under it.

Section-1 may look like a formality — but in real practice, it’s anything but.

It tells you:

• If the law applies to your company
• When it started applying
• Whether another law overrides it
• And if a provision is active or still in waiting

Whether you are a legal professional, a student, or a startup founder, never skip reading Section 1 — because it tells you whether the rest of the law even applies to your case.

Conclusion: Why Section 1 Still Matters in 2025 and Beyond

At first glance, Section-1 of the Companies Act, 2013 may appear simple, even insignificant. It’s short. It doesn’t talk about directors, audits, or penalties. But dig a little deeper, and you’ll see that this section quietly sets the stage for the entire Act.

Even though Section 1 is just a few lines, it performs four major functions:

1. It gives the official name of the law (short title),
2. Defines where the law applies (extent),
3. Explains when it comes into force (commencement), and
4. Clarifies who must follow it (application).

Summary Takeaways for Students, Lawyers & Professionals

Here’s what you should always remember about Section-1:

For students:

Understand it as the legal gateway to any Act. Mastering it makes it easier to understand other sections and Acts too.

For legal professionals:

Always refer to Section 1 when drafting opinions, interpreting applicability, or advising clients on enforcement dates.

For CS/CA/Compliance teams:

• Check notification status before applying any section.
• Understand exemptions or overlaps with SEBI, RBI, IRDAI, or other regulators.

Final Conclusion

In the legal world, the smallest sections often carry the biggest responsibilities. Section 1 is not just a formality. It is a compass — pointing everyone in the right direction before they begin their journey through the Companies Act.

Reference:

1.        https://ca2013.com/short-title-extent-commencement-and-application

2. https://www.mca.gov.in/content/mca/global/en/acts-rules/ebooks/acts.html?act=NTk2MQ==#Short_Title_Extent_Commencement_and_Application

Read more and stay with us as we decode Company Law — Practically and Lawgically.

Part-2 Introduction, Types and Characteristics of the Companies . Section-2

This article is written by Mahboob Gaddi and Farman Ahmad | Founders, Lawgical Search