1972 (4) TMI 58 - HC - Companies Law

Memorandum of association Special resolution and confirmation by CLB required for alteration of, Extra Ordinary General Meeting, Contents and manner of service of notice and persons on whom it is to be served

Issues Involved:
1. Legality of the extraordinary general meeting and resolution to transfer the registered office.
2. Locus standi of the employees' union to oppose the application.
3. Compliance with statutory requirements under Section 17 of the Companies Act, 1956.
4. Allegations of mala fides and suppression of facts by the petitioner company.
5. Impact of the proposed transfer on employees and pending disputes.

Detailed Analysis:

Legality of the Extraordinary General Meeting and Resolution to Transfer the Registered Office:
The court examined whether the extraordinary general meeting held on May 30, 1970, and the resolution passed therein to transfer the registered office from Calcutta to New Delhi were valid. The meeting was convened at No. 10, Ring Road, New Delhi, and was attended by 21 shareholders in person and 68 by proxy. It was unanimously resolved to alter the memorandum of association by substituting "Bengal" with "The Union Territory of Delhi" and to move the registered office accordingly. The court concluded that the meeting and resolution were valid, as the board was empowered under Article 75 of the company's articles of association to call such meetings, and there was no requirement for the meeting to be held at the registered office.

Locus Standi of the Employees' Union to Oppose the Application:
The court considered whether the employees' union had the standing to intervene in the proceedings. The union was granted leave to intervene by the court of first instance, arguing that employees are persons whose interests could be prejudiced by the proposed transfer under Section 17(4) of the Companies Act. However, the court found that the employees' union did not have locus standi to oppose the application, as the interests of the employees were not directly affected by the alteration of the memorandum to change the registered office.

Compliance with Statutory Requirements under Section 17 of the Companies Act, 1956:
Section 17 of the Companies Act allows a company to alter its memorandum to change the registered office from one state to another, subject to court confirmation. The court must ensure that notice has been given to debenture holders and other interested parties, and that any objections by creditors are addressed. The court noted that no creditors or shareholders opposed the application, and the State of West Bengal did not object after being served notice. The court found that the statutory requirements were met, and the alteration was in compliance with Section 17.

Allegations of Mala Fides and Suppression of Facts by the Petitioner Company:
The employees' union alleged that the company acted in bad faith by suppressing facts about the closure of the registered office and non-payment of salaries. The court recorded a statement from the company's counsel that no employees would be retrenched due to the transfer. The court found no evidence of mala fides, stating that the omission of certain facts in the notice did not mislead the shareholders and would have strengthened the case for the transfer. The court did not find it necessary to express an opinion on whether the bona fides of the company were relevant to the application.

Impact of the Proposed Transfer on Employees and Pending Disputes:
The court addressed concerns about the impact of the transfer on employees and ongoing disputes before the conciliation officer. The court noted that the company's assurance against retrenchment mitigated potential prejudice to employees. The court also clarified that it was not required to decide on the company's right to transfer employees, as such matters fall under the Industrial Disputes Act.

Conclusion:
The appeal was allowed, and the court confirmed the resolution to alter the memorandum and transfer the registered office from Calcutta to New Delhi. The court found that the meeting and resolution were valid, the employees' union lacked locus standi, statutory requirements were met, and there was no evidence of mala fides. Each party was directed to bear its own costs.

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