JAGAT NARAYAN, J. - (1.) THIS is an application by the Mharaja Shree Umaid Mills Ltd. Pali under sec. 17 of the Companies Act for confirmation of the alteration of the memorandum or association of the Company affected by the Special Resolution passed on 28th September, 1959 at a general meeting of its share-holders. The main object of the amendment is to enable the Company to make contributions towards the funds of political parties.
(2.) THE application has been opposed by the Registrar of Companies on the ground that under sec. 17 (1) (a), the object of the Company cannot be enlarged. A similar alteration was permitted by the Calcutta High Court in In Re, Indian Iron & Steel Co. ,ltd. , (1), on the ground that the amendment falls under sec. 17 (1) (a ). It was observed that a healthy relation-ship between the Government and administration on the one hand and the industry on the other leads to business efficiency in the modern age. A condition was however imposed that the company shall show in their balance-sheet and profit and loss account every single contribution directly or indirectly made to any particular political party by name, the amount and date of contribution and shall show the same under the head of miscellaneous expenditure' in part 1 of sch. VI of the Companies Act, 1955, read with cl. 3 (x) (i) of part 11 of Sch. VI of the Companies Act, 1955 setting out the form of balance-sheet and the requirements as to profit and loss account. A question arose before that High Court as to whether the court had power to enforce the conditions imposed by it. As it was felt that there was no such power under the Companies Act, another condition was imposed that the amendment shall be effective and operative only for a period of 6 years and the sanction by the court will lapse and stand revoked on the expiry of the said period of 6 years unless further extended. Provision was made for extending the period upon the Company satisfying the Court that it has faithfully carried out the directions of the Court. THE Registrar of Companies has pointed out that any breach of the conditions imposed by this Court can be punished under Sec. 628 of the Companies Act which runs as follows: - "if in any return, report certificate, balancesheet, prospectus, statement or other document reqired by or for the purposes of any of the provisions of this Act, any person makes a statement. (a) Which is false in any material particular, knowing it to be false; or (b) Which omits any material fact knowing it to be material: he shall, save as otherwise expressly provided in this Act, be punishable with imprisonment for a term which may extend to two years, and shall also be liable to fine. " It appears to me that if a condition is imposed requiring the Company to show the contributions in the blance-sheet and profit and loss account and it is not complied with, the Company and its officers would be liable to punishment under sec. 628 of the Companies Act. A similar alteration was confirmed in Jayant Lal Versus Tata Iron & Steel Co. , (2) and at the time of confirmation, two conditions were imposed. One was that all contributions made by the Company to any political party should be clearly shown in the profit and loss account and balance-sheet of every year of the company; the other was that a complete statement of such contributions should be published every year in two leading news-papers of India. It was argued on behalf of the petitioner that if a new company is started to-day, it can provide for making contributions to funds of political parties in its memorandum and the Companies Act does not give any power to the court to compel it to disclose in its balance-sheet or profit and loss account contributions made to different political parties by name. It was pointed out that the Company finds it necessary to make contributions to the funds of more than one political party and public disclosure of the amounts of these contributions is harmful to its interests. The decision of the Madras High Court in In re Naissar S. P. C. & Wg. Mills was referred to in which no such condition was imposed, although both the Calcutta and the Bombay Cases were cited before the learned Judge who decided that case. The question as to whether any condition should be imposed was not considered in that case. But in my opinion, it is not necessary in the present case to impose any condition of the nature imposed by the Calcutta and Bombay High Courts for the reason that it would operate discriminately in as much as a new company would be at liberty to make contributions to funds of political parties without disclosing such information in the balance-sheet and profit and loss account. As was pointed out in the Bombay case such contributions are lawful and it is primarily for the. share-holders to decide what is in the interests of the Company. Under sec. 234, it is always open to the Registrar to call for such information as he may consider necessary. I accordingly confirm the special resolution without imposing any condition. .;