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Delhi High Court in its recent judgment has ruled that ICSI Regulation/Rules prohibiting associate members in contesting Regional Council Election not illegal. Right to vote/contest not fundamental but purely statutory right. As per section 9(2), the legislative intent is that the Council shall be composed of only the Fellow Members.

Case Law Details:
W.P.(C) 7262/2014
Prince Kumar & Ors (Appellants) vs. The Institute of Company Secretaries of India & ANR (Respondents)
Date of Judgment: 03-02-2015
Coram: Hon’ble The Chief Justice Hon'ble Mr. Justice Rajiv Sahai Endlaw

Prayer made:
To quash Regulation 114 of the Company Secretaries Regulations, 1982 read with Rule 7 of the Company Secretaries (Election to the Council) Rules, 2006 declaring the same as arbitrary, illegal and discriminatory.
A direction to provide an opportunity to the Associate Members of the Institute to stand for election on par with the Fellow Members of the Institute.

Facts of the Case:
The Company Secretaries Regulations, 1982 (consisting of Regulations 111 to 141) deals with Regional Councils of Institute of Company Secretaries of India (ICSI). Before amendment to the Company Secretaries Regulations, 1982 in 2010, Regulation 116 in Chapter XII provided that every Associate or Fellow shall be entitled to vote in and stand for election to the Regional Council of ICSI. However by amendment dated 26-07-2010, the Regulation 116 was omitted.

Post amendment, Regulation 114(1) which deals with the conduct of the elections to the Regional Councils, provides that the same shall be held by the Council and the Company Secretaries (Election to the Council) Rules, 2006 shall apply to elections to the Regional Councils mutatis mutandis.

The amended Regulations/Rules are as under:

114. Conduct of Elections:-

(1) Except to the extent provided in this Chapter, the elections to the Regional Councils shall be held by the Council and the Company Secretaries (Election to the Council) Rules, 2006 shall apply to elections to the regional Councils mutatis mutandis.

(2) Notwithstanding anything .... .... .....”

“Rule 7. Members eligible to stand for election

Subject to other provisions of these Rules, a Member who is a fellow on the first day of April of the financial year in which an election is to take place and whose name continues to be borne on the Register on the last date of scrutiny of nominations under sub-rule (2) of Rule 4, shall be eligible to stand for election to the Council from the regional constituency in which he is eligible to vote.

The Council of ICSI issued a Notification dated 09.09.2014 fixing the schedule for conduct of elections to the Council and Regional Councils in the year 2014. As per the said Notification, only the Fellow Members of the Institute were eligible to stand for election to the Regional Councils.

Aggrieved by the same, the petitioner challenged the action of the respondents in barring the “Associate Members” from contesting to the election of the Regional Councils and claimed such notification as arbitrary, illegal and violative of Article 14 of the Constitution of India.

Important Excerpts from High Court Judgment:

Having heard the learned counsel for both the parties and having given our thoughtful consideration to the issues raised, we find it difficult to grant any of the reliefs sought in the petition for the following reasons:

(i) The right to contest the election to the Regional Councils, being a statutory right created by the Companies Secretaries Act, 1980 and the Rules and Regulations made thereunder, it is subject to qualifications and disqualifications prescribed therein. The law in this regard is well settled and has been reiterated in N.P. Ponnuswami v. Returning Officer, Namakkal Constituency & Ors., AIR 1952 SC 64, Jagan Nath v. Jaswant Singh & Ors. AIR 1954 SC 210, Jyoti Basu v. Debi Ghosal & Ors., (1982 ) 1 SCC 691 and Javed v. State of Haryana& Ors., (2003) 8 SCC 369, as under:

“A right to elect, fundamental though it is to democracy, is, anomalously enough, neither a fundamental right nor a common law right. It is pure and simple, a statutory right. So is the right to be elected. So is the right to dispute an election. Outside of statute, there is no right to elect, no right to be elected and no right to dispute an election. Statutory creations they are, and therefore, subject to statutory limitation.”

The learned Senior Counsel for the respondent No.1 in this regard has also drawn our attention to the judgment of the Division Bench of this Court in Ashish Maddha vs. Institute of Company Secretaries of India AIR 2011 Delhi 126. We may also refer to Supreme Court Bar Association Vs. B.D. Kaushik (2011) 13 SCC 774 wherein it was reiterated that the right to vote is not an absolute right and the right to vote or to contest elections is neither a fundamental right nor a common law right, but it is a purely statutory right governed by the statute, rules or regulations. It was further held by the Supreme Court in the said decision that the right to contest an election and to vote can always be restricted or abridged, if statute, rules or regulations prescribe so. Following the said principle, the challenge to the amendment of the rules of the Supreme Court Bar Association prohibiting non-active members and associate members i.e. members who were not regularly practicing in the Supreme Court from contesting the election to the office of the office bearers of the association or from voting therein, was negatived. A Division Bench of this Court also followed the said view in Apparel Export Promotion Council Vs. All India Garment Exporters Common Cause Guild 186 (2012) DLT 783.

In the light of the above-noticed settled principle of law, the petitioners can neither claim an absolute right to stand for election to the Regional Councils nor contend that their right to contest the election is defeated by stipulating that the Fellow Members alone are eligible to stand for election to the Regional Councils.

(ii) Admittedly, Associate Members and Fellow Members belong to two different classes. Even according to the petitioners, the Fellow Members stand on a higher footing than the Associate Members. As stipulated in Section 5(3) of the Act, an Associate Member who has been in continuous practice as a Company Secretary for at least five years or an Associate Member who possesses such qualifications or practical experience as the council may prescribe with a view to ensuring that he has experience equivalent to the experience normally acquired as a result of continuous practice for a period of five years as Company Secretary are only entitled to be entered in the Register as Fellow Members. Thus, it is clear that the Fellow Members and Associate Members constitute two different classes. The concept of equality and equal protection under Article 14 of the Constitution of India is that persons who are in fact equals cannot be treated as unequals except where the classification is reasonable classification. In other words, the principle is that there should be no discrimination between one person and another if as regards the subject matter of the legislation their position is the same. Having regard to the admitted fact that the Fellow Members belong to a different class and that even according to the petitioners the Fellow Members are more experienced and knowledgeable, the impugned provisions in making only the Fellow Members eligible to stand for election to Regional Councils cannot be held to be discriminatory and violative of Article 14 of the Constitution of India.

(iii) Section 9(2) of the Act provides for election of 15 persons from amongst the Fellows chosen from the Regional Constituencies. Thus, the legislative intendment is clear that the Council shall be composed of only the Fellow Members. However, Regulation 116 of the Regulations (as it stood prior to Amendment dated 26.07.2010) while dealing with the Regional Councils provided that both Associate Members and Fellow Members are entitled to stand for election to the Regional Councils. The same being contrary to the intendment of the Act, the Regulation 116 was rightly omitted by amendment dated 26.07.2010. The omission of Chapters VIII & IX and the substitution of Regulation 114(1) are only corresponding amendments that have been made to remove the inconsistency between the Act and the Regulations. May be that petitioners are made ineligible to contest the election as a result of the impugned amendment, however, while testing the vires of such statutory provision, the Court cannot proceed on a consideration of what is reasonable from the point of view of the person or persons on whom the restrictions are imposed.

(iv) There is always a presumption in favour of the Constitutionality of an enactment and the burden is upon the person who attacks it to show that there has been a clear transgression of the Constitutional principles. In the case on hand, the petitioners failed to discharge the said burden and no case could be made out to show that Regulation 114(1) is violative of Article 14 or Article 19 of the Constitution of India.

(v) In fact, all the provisions of the Act and the Regulations have consistently drawn a distinction between the Fellow Members and Associate Members. The fact that they belong to two different classes is not disputed even by the petitioners. It is also clear from Section 9(1) of the Act that only those Associate Members who have been in continuous practice in India for at least five years and who have been the Associate for a continuous period of not less than five years and who possesses such qualifications or practical experience as the Council may prescribe with a view to ensuring that he has experience equivalent to the experience normally acquired as a result of continuous practice for a period of five years as a Company Secretary are entitled to be enrolled as Fellow Members. That being so, the elimination of the Associate Members from contesting and getting elected to the Regional Councils cannot be held to be arbitrary, unreasonable or discriminatory on any ground whatsoever.

(vi) It may also be added that the Institute of Company Secretaries is a body corporate with persons holding a diploma in company secretaryship awarded by the Government of India or having other qualifications as prescribed in Section 4 of the Act as members thereof. The law is well settled that no citizen has a fundamental right under Article 19(1)(c) to become a member of a cooperative society. His right is governed by the provisions of the statute. So, the right to become or to continue being a member of the society is a statutory right. On fulfilment of the qualifications prescribed to become a member and for being a member of the society and on admission, he becomes a member. His being a member of the society is subject to the operation of the Act, rules and bye-laws applicable from time to time. A member of the society has no independent right qua the society and it is the society that is entitled to represent as the corporate aggregate. No individual member is entitled to assail the constitutionality of the provisions of the Act, rules and the bye-laws as he has his right under the Act, rules and bye-laws and is subject to its operation. The stream cannot right higher than the source (vide State of U.P. &Another Vs. C.O.D. Chheoki Employees Cooperative Society Ltd. and Others (1997) 3 SCC 681). Reiterating the said legal position, it was further held in Supreme Court Bar Association’s case (supra):

“52. In matters of internal management of an association, the Courts normally do not interfere, leaving it open to the association and its members to frame a particular bye-law, rule or regulation which may provide for eligibility and or qualification for the membership and/or providing for limitations/restrictions on the exercise of any right by and as a member of the said association. It is well-settled legal proposition that once a person becomes a member of the association, such a person loses his individuality qua the association and he has no individual rights except those given to him by the rules and regulations and/or bye-laws of the association.”

For the aforesaid reasons, there is no merit in any of the contentions of the petitioners. The writ petition is, therefore, devoid of any merit and the same is accordingly dismissed. There shall be no order as to costs

ICSI Regulations prohibiting Associate members to contest Regional Council Election not illegal. Right to vote/contest not fundamental but purely statutory right | 03-02-2015 |