Judgment

SARKAR, J. :This appeal raised certain questions as to the validity of an order made under S. 36 of the Insurance Act, 1938 sanctioning the transfer of its life insurance business by one insurance company to another. The appellants had challenged that order by a petition filed under Art. 226 of the Constitution in the High Court of Punjab. The High Court having dismissed the petition, they have come to this Court in appeal.

2. There are three appellants, one of whom is a shareholder of the transferor company, another a policy-holder in it and the third, one of its agents who claims to have become entitled under the Insurance Act to receive from it commission on renewal premiums paid on life insurance business introduced by him. They complain that their respective rights have been adversely and illegally affected by the sanction.

3. The transferor company is the India Equitable Insurance Company Ltd. and the transferee company, the Arya Insurance Company Ltd. Under the transfer all the life insurance business including liabilities for policies issued and all the life fund of the transferor company were taken over by the transferee company. It is said and perhaps that is the correct position-that as a result of the transfer all the assets of the transferor company would vest in the transferee company and the transferor company would really become defunct.

4. The first point argued by Mr. Sinha for the appellants is that the transfer offends Ss. 10 and 12 of the Companies Act. The Companies Act with which we are concerned, is the Companies Act of 1913 as it stood in 1954. Section 10 of the Companies Act provides that a company shall not alter the conditions contained in its memorandum except as provided in that Act. Section 12 states that a company may by special resolution alter the provisions of its memorandum with respect to its objects but that the alteration shall not take effect until it is confirmed by court on petition. The contention of the learned Advocate is that the arrangement of transfer really amounts to abandonment of the business of the transferor company and therefore to an alteration of its memorandum without following the procedure laid down in S. 12 and this cannot be done. The obvious answer to this contention is that the transfer does not affect any alteration in the memorandum of the transferor company. Clause 3( 27) of the memorandum of the transferor company gives it the power to sell its undertaking. The transfer in this case is an exercise of this power and hence within the objects of the company. An exercise by a company of a power given by its memorandum cannot amount to an alteration of the memorandum at all.

5. It is then said that that clause only authorised a sale and that a sale is a transfer for a consideration. It is contended that in the present case there was no consideration moving from the transferee company and, therefore, the transfer was not by way of a sale. This, it is contended, was, therefore, a transfer without any power in that regard in the memorandum an hence in substance amounts to unauthorised alteration of it. We were referred to various balance-sheets and other figures in support of this contention. This point as to want of consideration was not taken in the petition and the High Court did not permit it to be raised. We have, therefore, to proceed on the basis that the transfer was a sale. We, wish however to make it clear that we are not deciding what is enough consideration for a sale, nor whether a transfer not authorised by the memorandum would amount to an alteration of the memorandum. What we have said furnishes enough answer to the contention raised.

6. Mr. Sinha then contends that the result of the transfer was a virtual winding up and that it was not one of the corporate objects of a company to wind it up. The contention was that the winding up could be effected only under the provisions of the Companies Act. We were referred to Bisgood v. Henderson s Transvaal