1959 (7) TMI 27 - HC - Companies Law

Forming incorporated company Mode of, General provisions with respect to memorandum and articles - Effect of memorandum and articles, Certificate of incorporation Conclusiveness of

Issues Involved:
1. Issuance of a writ of scire facias to rescind the certificate issued by the Registrar of Companies.
2. Issuance of a writ of certiorari to quash the authentication of declaration for the printing and publication of "Indian Express" from Vijayawada.
3. Bona fides of the promoters of Andhra Prabha Private Limited, Vijayawada.
4. Legality of the formation and registration of Andhra Prabha Private Limited.
5. Alleged fraudulent intent to circumvent the recommendations of the Wage Committee and defeat the lawful claims of the employees.

Detailed Analysis:

1. Issuance of a Writ of Scire Facias:
The petitioners sought a writ of scire facias to rescind the certificate issued by the Registrar of Companies to Andhra Prabha Private Limited. The court explained that a writ of scire facias is a judicial writ requiring the person against whom it is brought to show cause why the party bringing it should not have advantage of such record. This writ is typically used for rescinding Crown grants, charters, or franchises obtained by misrepresentation or fraud. The court noted that this form of writ is rarely heard of in India and is primarily used in England for rescinding Crown grants and charters.

2. Issuance of a Writ of Certiorari:
The petitioners also sought a writ of certiorari to quash the authentication of the declaration for the printing and publication of "Indian Express" from Vijayawada. The court did not find sufficient grounds to issue such a writ, as the registration of the company and its activities were found to be lawful and not contrary to public policy.

3. Bona Fides of the Promoters of Andhra Prabha Private Limited:
The petitioners questioned the bona fides of the promoters, alleging that the formation of Andhra Prabha Private Limited was a sham intended to defraud the employees. The court found that the creation of the company was for a legitimate purpose and that the employees' interests were not prejudiced. The court noted that the new company agreed to take into service all staff and workers connected with the business purchased, without any interruption of service and with the obligation to pay compensation in the event of retrenchment.

4. Legality of the Formation and Registration of Andhra Prabha Private Limited:
The court examined the provisions of Section 33 of the Indian Companies Act, which outlines the requirements for the registration of a company. The court found that all the requirements of the Act were complied with, and the Registrar had no option but to register the company. The court emphasized that the Registrar's duty is to ensure compliance with the Act's provisions and not to probe into the motives of the promoters.

5. Alleged Fraudulent Intent:
The petitioners alleged that the formation of Andhra Prabha Private Limited was intended to circumvent the recommendations of the Wage Committee and defeat the lawful claims of the employees. The court found no evidence to support this allegation. The court noted that the sale of the business to Andhra Prabha Private Limited was in line with the recommendations of the Press Commission and the demands of the workers for the separation of different units. The court also found that the new company was under an obligation to maintain the same conditions of service for the employees, and there was no intent to defraud them.

Conclusion:
The court dismissed the writ petitions, finding that the formation and registration of Andhra Prabha Private Limited were lawful and not intended to defraud the employees. The court concluded that the petitioners had misconceived their remedy in approaching the court and suggested that they could seek redress through other available legal provisions if necessary. The court awarded costs to the 2nd respondent in W.P. No. 616 of 1959, fixing the advocate's fee at Rs. 250.

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