PAL PEUGEOT LTD Vs. STATE

JUDGEMENT

(1.) THE petitioner company has presented this petition under Section 17 of the Companies Act, 1956 (hereinafter called "the Act"), for confirmation of alteration of clause II of the memorandum of association of the company for shifting the registered office of the company from the NCT of Delhi to the State of Maharashtra as approved by the special resolution passed in accordance with Section 189 of the Companies Act, 1956, at the annual general meeting held on January 22, 1996.

(2.) After going through the pleadings and considering certain objections received from some of the creditors, at the hearing held on January 20, 1997, directions were issued to the company for passing a fresh resolution seeking the consent of the new shareholders who have come in after the public issue, the allotment in respect of which had intervened in between the special resolution passed and the date of filing of the petition, since the resolution supporting the petition was passed by two shareholders whereas after public issue more than one lakh shareholders have become members of the company. There was also a direction to clear the objections from two of the creditors of the company which remained uncleared.

(3.) THE arguments of counsel that the new shareholders do not constitute a class under Section 17(6) is not relevant, as any resolution in the general meeting should always be passed by notice to all shareholders which in the present case includes the new shareholders as well. It is wrong to construe the direction that a separate class meeting of only the new shareholders was contemplated as such a meeting cannot be valid in law. It is also wrong to presume that the court has only to see whether statutory formalities have been complied with. If that be so, there is no room for discretion available to the Company Law Board to impose such terms and conditions as it may think fit. This discretion to impose conditions as the court may deem fit has been not only upheld but also made use of by a Division Bench of the Bombay High Court in Jayantilal Ranchhoddas Koticha v. Tata Iron and Steel Co. Ltd. [1957] 27 Comp Cas 604 (Bom). As such the impugned direction is very much in exercise of this discretionary power available under Section 17(5) of the Act.