Decided on December 04,1973

Samantaraj Films P Ltd Appellant
STATE Respondents


PATRA, J. - (1.) THIS is an application under Section 17 of the Companies Act, 1956 (hereinafter referred to as 'the Act'.), by Samantaraj Films, Private Ltd. (hereinafter referred to as ' the company '), registered on the 28th January, 1969, under the Act as a company limited by shares, for confirming the alterations of its memorandum of association. The registered office of the company is situated at Rajabagicha, Cuttack. The share capital of the company is Rs. 10,00,000 (Rupees ten lakhs) divided into one thousand equity shares of Rs. 1,000 each of which 480 shares have been issued and fully paid up. The objects for which the company was formed are set out in clause 3 of the memorandum of association (annexure ' A'). Shortly after its incorporation, the company commenced business and has since been and is still carrying on business. It is stated that the company is in good financial position, its assets being Rs. 5,77,779 and liabilities at the time of making this application being only Rs. 59,906, with an excess of assets of Rs. 5,17,873 over the liabilities. By a special resolution of the company duly passed in accordance with Section 189 of the Act at a general meeting thereof held on the 10th December, 1971, after due notice as provided under the Act, it was resolved that the following new sub -clause being sub -clause 26 be inserted in the memorandum of association of the company : ' 3 -B (26) To give any donations or grant for any religious, educational, charitable or any other social purposes or for the benefit of humanity or section thereof.' - -
(2.) THE special resolution was filed with the Registrar of Companies in accordance with Section 192 of the Act. The Registrar pointed out that to be effective the necessary amendment of the memorandum of association should be made in accordance with Section 17 of the Act. It is, therefore, prayed that the alterations in the memorandum of association sought to be effected by the special resolution set out above be confirmed. Notice of this petition was duly published in the Orissa Gazette, in the Samaj and the Hindustan Standard dated June 23, 1972, May 18, 1972, and 1st June, 1972, respectively. There has been no opposition to the petition. Notice of this petition was also served on the Registrar of Companies, Orissa, who has intimated in his letter No. STA/517/72 -623 dated June 21, 1972, that he does not oppose the petition.
(3.) THE circumstances and conditions under which the court will confirm any proposed alteration in the memorandum of association of a company are dealt with elaborately by me in Straw Products Ltd. v. Registrar of Companies, [1969] 39 Comp. Cas. 974 (Orissa) and it is unnecessary to re -state the principles here. If the alteration to be made in the memorandum of association is within the ambit of the company's power under Section 17(1) of the Act and does not prejudice any of the interests which the court is required to safeguard by Section 17(3), the court has no power under Section 17(2) to refuse to confirm the alteration. It is true that any alteration in the memorandum of association should be to achieve one or more of the purposes in Clauses (a) to (g) of Sub -section (1) of Section 17 of the Act. Whether the alterations now sought to be made would achieve one or other of the purposes referred to above is essentially a business proposition and when the shareholders of the company are of opinion that by effecting the alteration proposed any of the objectives above mentioned would be achieved that opinion is entitled to a great weight. It is noteworthy that in the present case in spite of due publication of the application nobody has come forward to oppose the alteration. There is inherently nothing wrong in giving donation or grants from out of the profits of the company for any religious, educational, charitable or any other social purpose or for the benefit of humanity. When donation to political parties from out of the funds of the company is considered unobjectionable as has been held in In re Indian Iron and Steel Co. Ltd., [1957] 27 Comp. Cas. 361 (Cal.) and In re Natesar Spinning and Weaving Mills P. Ltd, [1960] 30 Comp. Cas. 54 (Mad.). I see no reason why the alteration proposed in this case should not be confirmed.;

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