MOTILAL HIRABHAI SPINNING AND WEAVING CO., LTD. Vs. XYZ

JUDGEMENT

(1.) This is a petition under section 17(1) of the Companies Act, 1956, praying for confirmation of the proposed alteration in the memorandum of association of the company adopted as per the special resolution passed at the general meeting of the company held on 16th June, 1969. The Motilal Hirabhai Spinning, Weaving and Manufacturing Company Ltd. (hereinafter referred to as "the company") was incorporated in 1889, under the Companies Act then in force. From the commencement of the business till 1941, the company carried on the business of manufacturing cotton yarn and cotton cloth and selling the same. In the year 1941, in view of the then prevalent financial circumstances of the company, the members of the company adopted a special resolution at the extraordinary general meeting held on May 15, 1941, to close the business of manufacturing cotton yarn and cotton cloth and also resolved to sell and dispose of the textile machinery of the company and authorised the board of directors to carry out this resolution. Pursuant to this resolution, the textile machinery was sold and since then the company is not doing business of manufacturing of cotton yarn and cotton cloth or any business incidental to the manufacture of cotton yarn and cotton cloth. There is some controversy as to whether the company is doing any business since 1941, and if so, what, to which aspect I would presently advert. It may, however, be stated that from 1941 till the filing of the present petition, the only thing the company appears to be doing is to lease out land in its possession and from the income derived therefrom, dividend at the rate of 10 per cent. is being distributed to its members. The issued and subscribed capital of the company is Rs. 9,90,000 divided into 9,900 shares each of Rs. 100 fully paid. Though the company was primarily formed for manufacturing cotton yarn and cotton cloth which was its main object, its memorandum of association provides for a number of other objects. But it appears that between 1889 and 1941 when the company closed down its mills, the company did not carry on any other activity except that of manufacturing cotton yarn and cotton cloth and selling the same.

(2.) At the annual general meeting of the company held on 16th June, 1969, a special resolution was unanimously adopted proposing certain alterations in the objects clause of the memorandum of association of the company. The proposed alterations are to be found in paragraphs 13-a to 13-d at pages 86 to 90 of the record. In short, it may be stated that by the proposed alteration in the objects clause of the memorandum of association, the company wants to provide as its objects every conceivable activity in the world of commerce and industry entirely unconnected with each other commencing from manufacturing of textiles to photographic materials, pharmaceuticals, setting up of hotels, restaurants cafe tavern preparing refreshments and consumable articles and also to start theatres and other places of public entertainments, to set up cold storage and refrigeration plants. The company also wants to adopt as its objects the business of stationers, printers, lithographers and it as well wants to enter into the filed of transport activity. The minutes of the meeting shows that this resolution was unanimously adopted by 17 members of the company attending the annual general meeting. Thereafter the company filed the present petition praying for an order confirming the proposed alteration.

(3.) On the petition being admitted, the court directed that the petition be advertised in a Gujarati daily, Sandesh, and an English daily, Times of India, and the Gujarat Government Gazette, and accordingly, various advertisements were issued. A notice was also issued to the Registrar of Companies as provided by section 17. In response to the notice, the Registrar of Companies appeared and filed an affidavit at page 153 of the record and contested the petition. One Mohammed Kayamuddin Gulamnabi Uraizee, claiming to be mutwalli of a public trust known as "Abdul Razak Saheb Roza and Masjid", also appeared and filed his affidavit at page 163 of the record and contested the petition. A question has been raised whether Mohamed Kayamuddin Gulamnabi Uraizee can be permitted to contest the petition.