1936 (9) TMI 14 - HC - Companies Law

Memorandum of association Special resolution and confirmation by CLB required for alteration of

Summary

Issues:
1. Jurisdiction of the court to set aside an order confirming alterations in the memorandum of association.
2. Proper procedure for altering the memorandum of association under the Companies Act.
3. Authority of the court to recall its order and allow for further proceedings.
4. Consideration of the impact of proposed alterations on the Chamber of Commerce's constitution.

Analysis:
1. The judgment concerns an application filed by a Chamber of Commerce under the Companies Act for confirmation of alterations in its memorandum of association. The court initially confirmed the alterations, but subsequently, another application was filed by a member of the Chamber seeking to set aside the confirmation order. The main issue was the jurisdiction of the court to set aside its own order confirming the alterations.

2. The Chamber of Commerce passed a special resolution to alter its memorandum of association to allow for profitable investment of funds and direct settlement of transactions. However, it was revealed that the proper procedure required approval from the Local Government before seeking confirmation from the court. The court acknowledged the error in not considering this requirement initially.

3. Despite arguments against the court's jurisdiction to recall its order, citing various cases, the court held that it had the authority to undo the wrong resulting from the ex parte order confirming the alterations. The court emphasized its duty to rectify errors and decided to recall the order, allowing for further proceedings to obtain approval from the Local Government.

4. The judgment also discussed the potential impact of the proposed alterations on the Chamber's constitution, noting that the alterations could enable the Chamber to engage in banking business and change its role to that of a Pakka Arhatia. The court refrained from expressing a definitive opinion on the merits of the alterations, leaving it for the Local Government to consider when sanctioning the proposed changes.

In conclusion, the court recalled its order confirming the alterations, directing the application to stand over for six months to allow the Chamber to obtain approval from the Local Government. The judgment highlighted the duty of the court to rectify errors and emphasized the importance of following the proper procedure for altering the memorandum of association under the Companies Act.