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TMI Blog1971 (8) TMI 151X X X X Extracts X X X X X X X X Extracts X X X X ..... pany on March 20, 1956, with registered office at Rajpura (Punjab) with an authorised capital of Rs. 1,20,00,000. Capital worth Rs. 63,10,000, was issued and capital worth Rs. 63,03,725 was subscribed. The financial year observed by the company is from the 1st of November of each year to the 31st of October in the next year. Its latest audited balance-sheet for the year ending October 31, 1970, indicates that, besides the paid-up share capital of Rs. 63,03,725, it has resources and surpluses amounting to Rs. 33,93,368 (paise rounded off to the nearest rupee). The assets of the company as disclosed in the above-mentioned balance-sheet being worth Rs. 3,29,68,866 and its liabilities being Rs. 2,32,71,773, the excess of its assets over liabilities comes to Rs. 96,97,092. This is the book value of the company's assets worked out on pre-devaluation basis. The market value of its assets must, therefore, be substantially more. The above-mentioned figures reveal that the financial position of the company is very good and not only has the company sufficient working capital but is also in a position to muster necessary financial resources to branch out in the new lines of the proposed activi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d to take such action as may be required to comply with the various formalities as provided by the Companies Act, 1956, for the amendment of the memorandum of association". General meeting of the company was held after due notice on April 30, 1971, in pursuance of the above-quoted resolution of the board of directors. At that meeting, the following special resolution was duly passed in accordance with section 189 of the Act: "Resolved as a special resolution that in order to enable the company to carry on its business more economically and efficiently and to attain its main purposes by new and improved means as well as to enable it to carry on fresh business which under the existing circumstances can conveniently and advantageously be combined with the existing business of the company, the provisions of the objects clause of its memorandum of association be and are hereby altered in the manner set out below : (A)After the present sub-clause ( xiii ) and before the present sub-clause ( xiv ) of clause (3) of the company's memorandum of association, the following shall be inserted as sub-clause (xiii-a): ( xiii-a )To carry on the business of hotel, restaurant, cafe, road hou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... etition was also published in the Official Gazette, the English daily " Indian Express" and in the Punjab Daily " Jathedar". The Registrar has filed his affidavit dated July 17, 1971, in paragraph 3 of which he has raised objection to the proposed amendment contained in sub-clause ( xiii-a ) as introduced by the special resolution relating to fitting up and furnishing any property as guest-house or hotel, etc ., and letting out those properties as hoteliers, etc ., in the following words : "With reference to the contents of para. 7 of the said petition, the deponent submits that the additional objects as stated in sub-clause ( xiii-a ) of memorandum of association cannot be conveniently and advantageously combined with the existing business of the company. The company is at present engaged in the manufacture and sale of cables. The new business proposed to be set up by the company, namely, the business of hotel, restaurant, cafe, road house, hotel, holiday camp, caravan site and apartment-house keepers, etc ., is not in any way directly or indirectly connected with the said business. The existing sub-clauses of the objects clause of memorandum of association also do not indi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 500 is shown on the income side to have been received for the year ending October 31, 1969, by sale of land at Hissar. My reference was invited to these facts and figures by Mr. Dang, the learned advocate for the company, to show that the business of dealing with land and property on an extensive scale is one of the existing businesses of the company. It cannot, therefore, be said that the proposed new business is not connected with the existing businesses of the company. Relevant portion of section 17(l)( d ) of the Act states : "17. (1) A company may, by special resolution, alter the provisions of its memorandum .... with respect to the objects of the company so far as may be required to enable it ............. ( d )to carry on some business which under existing circumstances may conveniently or advantageously be combined with the business of the company;..".. Whereas Mr. Dang contends that the new business in question is covered by the above-quoted provision, Mr. D. N. Awasthy, the learned counsel for the Registrar, submits to the contrary. The principles on which a special resolution amending the objects clause of the memorandum of association of a company may or may ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as normally to be determined by the persons engaged in the business of the company and without the court introducing a new bar to the amendment of the objects clause of a company, which restriction is not prescribed by the legislature. Nor is the interest of the public at large relevant in all cases. It does not appear to me to be necessary to refer to the facts and circumstances of cases covered by a chain of authorities, to which my attention was invited in this respect by the counsel for the petitioner. In fairness to Mr. Dang, however, I may notice those judgments : In re Ambala Electric Supply Company Ltd., [1963] 33 Comp Cas. 585 (Punj.) In re Modi Spinning and Weaving Mills Co. Ltd. [1963] 33 Comp. Cas. 901 (All.) , In re Motilal Padampat Sugar Mills Co. (Private) Ltd [1964] 34 Comp. Cas. 86 (All) , In re Dalmia Cement (Bharat) Ltd. [1964] 34 Comp. Cas. 729 (Mad.) , In the matter of Standard General Assurance Co. Ltd. A.I.R. 1965 Cal. 16, Juggilal Kamlapat Jute Mills Co. Ltd. v. Registrar of Companies [1967] 37 Comp. Cas. 20 (All.), In re New Asiatic Insurance Co. Ltd. [1967] 37 Comp. Cas. 331 (Punj.) and Straw Products Ltd. v. Registrar of Companies ..... X X X X Extracts X X X X X X X X Extracts X X X X
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