1960 (3) TMI 29 - HC - Companies Law

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

Issues Involved:
1. Maintainability of the application.
2. Locus standi of the State of Orissa to oppose the application.
3. Confirmation of the resolution for change of the registered office.

Detailed Analysis:

1. Maintainability of the Application:
The application by Orissa Chemicals and Distilleries Private Ltd. sought to change its registered office from Jharsuguda, Orissa to Masulipatam, Andhra Pradesh under section 17 of the Companies Act, 1956. The State of Orissa opposed the change. The learned Advocate-General argued that the application was not maintainable due to improper notice to all shareholders, specifically mentioning the absence of a proper legal representative for a deceased shareholder. The court did not express a definitive opinion on maintainability due to its decision on the merits.

2. Locus Standi of the State of Orissa:
The court considered whether the State of Orissa had the locus standi to oppose the application. It was determined that under section 17(3)(a) of the Companies Act, the State of Orissa is a person whose interests will be affected by the alteration. The court referenced a similar case decided by a division bench, affirming the State's locus standi.

3. Confirmation of the Resolution for Change of the Registered Office:
The court examined whether the resolution for changing the registered office should be confirmed. The company argued that the change would facilitate more direct and economic administration since all shareholders and directors were residents of Andhra Pradesh. However, the court found that the company did not provide sufficient particulars to support this claim. The State of Orissa raised several objections, including potential loss of revenue from Income-tax and sales-tax, and practical difficulties in enforcing local laws.

Income-tax and Sales-tax Considerations:
The court found merit in the State's objection regarding potential revenue loss. It cited previous decisions, including Orient Paper Mills Ltd. v. State and Bonai Industrial Co. Ltd. v. State of Orissa, which discussed the impact on state revenue. The court noted that the company's claim of being assessed in Andhra Pradesh lacked sufficient evidence. The court emphasized that the potential loss of revenue was a relevant consideration.

Labour and Industrial Legislation:
The court acknowledged that changing the registered office could create practical difficulties in enforcing labour and industrial laws. This aspect was also discussed in previous decisions, which the court followed.

Location of the Registered Office:
The court stressed the importance of the registered office's location, as outlined in section 146 of the Companies Act. It highlighted the legislative intent and the spirit of the law, emphasizing that the location should not be changed lightly. The court also noted the penal provisions for non-compliance with section 146.

Bona Fides of the Application:
The court questioned the bona fides of the application, pointing out that the special resolution for the change was passed at the Masulipatam office, undermining the company's claim of needing to change the registered office for convenience. The court suggested that there might be an ulterior motive behind the proposed change and found no clear evidence of economic benefit or administrative efficiency.

Conclusion:
The court dismissed the application, concluding that the company's reasons for changing the registered office were not convincing and that the potential impact on the State of Orissa's revenue and the enforcement of local laws were significant considerations. The application was dismissed with costs, and a hearing fee of Rs. 100 was imposed.

← Previous Next →