The explanatory statement required under Section 173(2) of the Companies Act, 1956, must set out all material facts concerning each item of business, but not detailed particulars. Material facts are those necessary for the shareholders to make an informed decision on the proposed resolution.

( 1 ) THIS is an application in an appeal against an order made by S. P. Mitra. J. , dated 2nd February, 1965. The facts are briefly as follows: Raymon Engineering Works Ltd. , the respondent company (hereinafter referred to as the 'company') is a private limited company incorporated in 1954 under the Indian Companies Act, 1913 with an authorised capital of Rupees 1,00,00,000/- divided into 8,00,000 ordinary shares of Rs. 10/- each and 20,000 redeemable preference shares of Rs. 100/- each. The appellant is a share-holder of the respondent company in respect of 125 equity shares By a resolution adopted at the company's annual general meeting held on 23rd September 1968 the capital was increased to Rs. 3,00,00,000/ -. One of the reasons for this increase, as stated in the Explanatory Statement was that the company had undertaken a new project for the manufacture of spiral welded pipes in collaboration with an American/german group for which a manufacturing licence had been obtained and it was proposed to effect substantial expansion of the company's existing undertakings, for which negotiations were under way for a technical-cum-financial participation in the equity capital of the company with the same group. At the annual general meeting held on 23rd September, 1964 this increase was effected as follows: By an unanimous resolution the share capital of the company was reduced from Rs. 1,00,00,000/- to Rs. 84,83,000/-by the cancellation of 15170 unissued redeemable preference shares of Rs. 100/- each By a further resolution, also unanimously passed at the said meeting, the authorised share capital of the company was raised from Rs. 84 83,000/-to Rs. 3,00,00,000/- by creating 2151700 equity shares of Rs. 10/- each. The respondent company's authorised capital was thus divided into 29,51,700 equity shares of Rs. 10/- each and 4,830 redeemable preference shares of Rs. 100/-each. The company increased the number of equity shares to 29,61,700 and it was made clear in the explanatory statement that equity share capital would be issued to foreign collaborators and/or share-holders with a view to substantially expanding its business by undertaking a new project for the manufacture of spiral welded pipes in collaboration with American German groups. The respondent company thereafter issued a notice for an extraordinary general meeting of the shareholders to be held on the 30th September, 1964 According to the said notice, the company proposed to pass two special resolutions and one ordinary resolution. The first special resolution proposed to be passed was as follows:

"resolved that subject to the sanction of the Controller of Capital Issues and approval of the Government of India to the foreign Financial participation in the Equity Capital, and Cooley Loan Arrangements and subject to repayment of outstanding loan to Industrial Finance Corporation of India, Equity Shares of nominal value of Rs. 10 each be issued to the following parties as set out against their names:" (1) M/s. Garvey Grains Inc. Wichita, Kansas, U. S. A. 4,75,000 Equity Shares of Rs. 10/- each for cash. 29,700 Equity Shares of Rs. 10/- each for consideration other than cash. (2) M/s. Phoenix-Rhein- rohar Dusseldorf, West Germany. 59,400 Equity Shares of Rs. 10/- each for cash. (3) M/s. Handels Union AG. Dusseldorf, West Germany 59,400 Equity Shares of Rs. 10/- each for cash. without offering these shares to the existing shareholders, as provided in Section 81 (1) of the Companies Act, 1956. "

( 2 ) IT is this special resolution which is the subject matter of this application The extraordinary general meeting has subsequently been held on the 30th January 1964 and this special resolution was passed by a majority of votes, the only dissenting party being the appellant who voted against it. It is, however, material to note here that notice was given of another special resolution by which it was proposed to alter and amend Article 1 and Article 89 (B) of the Articl