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1956 Supreme(Ori) 34
HIGH COURT OF ORISSA
P. V. B. Rao, J.
ORIENT PAPER MILLS LTD. - Appellant
Versus
THE STATE - Respondent
Company Act Case 7 Of 1955
Decided On : AUGUST 16, 1956
Important Points
Subject
Company Law - Alteration of Registered Office
Act Referred
Headnote
COMPANY - Alteration of Registered Office - Confirmation of Special Resolution - Objections by State Government - Locus Standi - Interests of State and Persons Affected - Bona Fide and Benefit of Company - Revenue Loss - Practical Difficulties in Administration of Acts - Refusal to Confirm Resolution.
Fact of the Case:
Two companies, Orient Paper Mills Ltd. and Hindusthan Cellulose and Paper Mills Ltd., filed applications under Section 12 of the Indian Companies Act, 1913, for confirmation of special resolutions to change their registered offices from Orissa to West Bengal. The State of Orissa and an individual, Shri Lalit Kumar Pati, filed objections to the proposed change.
Finding of the Court:
1. The State of Orissa and any other person have the locus standi to raise objections under Section 12 of the Indian Companies Act, 1913, to a change of the registered office and confirmation of the special resolution to that effect. 2. The Court can consider these objections in confirming or not the special resolutions of the companies and can, if the objections are justified, refuse to confirm the special resolutions. 3. The proposed alteration creates many practical difficulties in the administration of various Acts concerning industrial disputes, factories, and labor. 4. The proposed alteration affects the revenue of the State of Orissa to a considerable extent. 5. The proposed change of the registered offices of the companies is not bona fide, is not resolved upon in good faith, and is not for the benefit of the companies.
Issues: 1. Whether the State of Orissa and other persons have the locus standi to raise objections to the change of registered office and confirmation of the special resolution. 2. Whether the Court can consider these objections in confirming or not the special resolutions of the companies. 3. Whether the proposed alteration creates practical difficulties in the administration of various Acts concerning industrial disputes, factories, and labor. 4. Whether the proposed alteration affects the revenue of the State of Orissa. 5. Whether the proposed change of the registered offices of the companies is bona fide, resolved upon in good faith, and for the benefit of the companies.
Ratio Decidendi: 1. Section 12 of the Indian Companies Act, 1913, allows any person or class of persons whose interests will be affected by the alteration of the registered office to raise objections. 2. The Court has the discretion to consider these objections and refuse to confirm the special resolutions if the objections are justified. 3. The proposed alteration would create practical difficulties in the administration of various Acts concerning industrial disputes, factories, and labor. 4. The proposed alteration would affect the revenue of the State of Orissa to a considerable extent. 5. The proposed change of the registered offices of the companies is not bona fide, is not resolved upon in good faith, and is not for the benefit of the companies.
Final Decision: The Court refused to confirm the special resolutions and dismissed the applications with costs.
A.C.MITRA, P.C.CHATTERJI
P. V. B. RAO, J.
( 1 ) THESE two cases are heard analogously as they involve similar questions of facts and common questions of law and are disposed of by this single Judgment.
( 2 ) COMPANY Act Case No. 6 of 1955 is an application by the Orient Paper Mills Ltd. , a limited liability Company having its registered office at Brajrajnagar in the district of Sambalpur in the State of Orissa, under Section 12 of the Indian companies Act, 1913 for confirming a special resolution of the Company passed at an extra-ordinary general meeting on 26-8-1955.
( 3 ) COMPANY Act Case No. 7 of 1955 is an application by the Hindusthan Cellulose and Paper Mills Ltd. , a limited liability Company having its registered office at brajrajnagar in the district of Sambalpur in the State of Orissa, under Section 12 of the Indian Companies Act, 1913 for confirming a special resolution duly passed at an extra-ordinary general meeting of the Company held on 26-8-1955.
( 4 ) BOTH the special resolutions were to the effect that the registered office of the company be changed from the State of Orissa to the State of West Bengal.
( 5 ) BOTH the Companies were Incorporated on 25-7-1936, under the Indian companies Act, 1913 as Companies limited by shares. Clause (2) of the memorandum of Association of the Companies provides that the registered offices of the Companies would be situated in the State of Orissa. It is at present situated at Brajrajnagar in the district of Sambalpur. Hindusthan Cellulose and Paper Mills ltd. , is a subsidiary Company to that of Orient Paper Mills Ltd.
( 6 ) THE objects of the Orient Paper Mills Ltd. , are to carry on the business of manufacturer of pulo, paper, boards and other articles and the business of buyers, sellers, dealers, exporters of any goods or merchandise whatsoever and to transact all manufacturing or treating and preparing processes and mercantile business and to purchase and vend raw materials and manufacturing articles.
( 7 ) THE objects of the Hindusthan Cellulose and Paper, Mills Ltd. , inter alia are to carry on the business of manufacturers of and dealers in papers of all kinds and articles made from paper or pulp (mechanical or wood) and materials used in manufacture or treatment of paper including card boards, card board boxes, straw boards, leather boards, mill boards, paste boards, pulp boards.
( 8 ) THE nominal capital of the Orient Paper Mills Ltd. , is Rs. 4,00,00,000/- (Rupees four crores) divided into 20,00,000/- ordinary shares of Rs. 10/-each and 2,00,000/- preference shares of Rs. 1007-each, out of which 14,68,250/-ordinary shares and 1,29,889/- preference shares have been fully paid up.
( 9 ) THE nominal capital of the Hindusthan Cellulose and Paper Mills Ltd. , is Rs. 10,00,00,000/-divided into 60,00,000/- ordinary shares of Rs. 10/-each and 4,00,000/- preference shares of Rs. 100/-each out of which issued and paid up capital amounts to Rs. 10,00,000/ -.
( 10 ) BY special resolutions of the Companies duly passed at extra-ordinary general meetings of the Companies on 26-8-1955, it was resolved as follows:
"resolved that the registered office of the Company be transferred from the State of Orissa to the State of West Bengal and that the words 'west bengal' be substituted for the word 'orissa' in clause No. 2 of the memorandum of Association of the Company. "
( 11 ) THE office of the managing agents of the Orient Paper Mills Ltd. , and the central Departments of various companies under their managing agency being situated at Calcutta in the State of West Bengal and necessary staff for such work being kept there, the petitioner in Company Act Case No. 6 of 1955 alleges that the management finds it more convenient and economical to have the registered office of the Company in the State of West Bengal. In the case of the other company, as it is a subsidiary Company of the Orient Paper Mills Ltd. , it is alleged that it is convaniant to transfer the registered office of that Company also to calc
