The Delhi High Court has issued notices to the Central government, HP India Sales Private Limited and others on a petition challenging the constitutional power of certain provisions of the Companies Act, 2013 and the Court Fees Act. A division bench of Chief Justice DN Patel and Justice Prateek Jalan, after hearing arguments on the petition filed by one Manoj Grover on September 28, issued notices to the respondents. The petitioner was represented by advocate Tishampati Sen.The plea challenged the constitutional power of Sections 177(9) and 177(10) of the Companies Act, 2013, and Sections 4 and 19 of the Court Fees Act. The writ petition challenged Sections 177(9) and 177(10) of the Companies Act, 2013 which provides that listed companies and only those classes of companies as are prescribed, are required to create a vigil mechanism for directors and employees to report genuine concerns.The vigil mechanism, it is submitted, is for the purposes of allowing whistle-blowers within the company to have an avenue to bring to light illicit, illegal and corrupt practices that might be undertaken by employees of the company, the plea said.
The petitioner submitted that there seems to be no reasonable basis for the said protection in law being provided only to employees of listed companies and to deny the same to employees of all other companies, even if such employees are speaking out against unethical practices. Section 177 (10) provides unguided powers to the company management to set up such a vigil mechanism without prescribing any threshold principles for the same. As such, the efficacy of such a vigil mechanism is entirely at the mercy of the management and is often rendered redundant, the plea said.The plea also challenged the constitutional power of Section 4 to be read with Section 19 of the Court Fees Act, 1870, as amended and applicable for Delhi on the ground that the same is arbitrary as by excluding the court's discretion to, in an appropriate case, exempt a matter from Court Fees, the basic right of access to justice is stymied.