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Companies Act (VII of 1913)‑

‑‑ Ss. 10 & 12‑Amendment in Memorandum of Association‑Applica tion for confirmation‑Objects in Memorandum permitting Company inter alia to enter into partnership or arrangement in nature of partnership or union of interest with any person or persons, firm or Company, to become engaged or interested in carrying on conduct of any business or enterprise from which Company would or might derive benefit directly or indirectly‑Company already allowed to change its name and sanction to establish jute mills also allowed by Central Government‑Alteration in Memorandum sought to be confirmed reading : "to set up a jute Mill and to carry on business of jute milling and other business connected or affiliated there with" Held, covered by S. 12(1)(a) and (b) and confirmed.

Re : Chittagong Chamber of Commerce P L D 1964 Dacca 666 and

Re Anglo American Telegraph Co.‑Ltd. 105 L T 947 ref.

Asif Sajjad Jan for Applicant.

GUL MUHAMMAD KHAN, J.‑The petitioner is a Private Limited Company, registered under the Companies Act, 1913. In order to enlarge its sphere of work a special resolution was passed, in the meeting of shareholders held on 26th April, 1980 to amend its Memorandum of Association. It was resolved that the following clause may be added to the objects already given;-

"To set up a jute mill and to carry on the business of jute milling and any other business which may be connected or affiliated with the business of jute milling."

2. An application was then made under section 10 read with section 12 of the Companies Act to this Court for confirmation. It is stated in the petition that the Company has only three shareholders and no debenture -holder or a creditor to be affected by the amendment. Public notices have issued in the Pakistan Times and Nawai‑Waqt but no one has appeared to resist this application.

3. The Assistant Registrar, who appeared in obedience to a notice issued by this Court raised an objection to say that as the object sought to be included is neither connected nor ancillary to the objects already given, it cannot be added. He particularly relied on section 12(1) of the Act.

4. The learned counsel for the petitioner has placed on record a certificate of change of. name from Sunshine Estate Limited to Sunshine Jute Mills Limited. He further states that a sanction for the establishment of the jute mills has already been obtained from the Central Government and that it will create lot of complications if the present prayer is not allowed. The learned counsel relied on clauses (6), (8), (12) and (18) of the Memorandum of Association.

5. He also cited Chittagong Chamber of Commerce (1), in support. Reliance is also placed on Re : Anglo American Telegraph Co. Ltd. (2), where it was held that the Court has the jurisdiction to sanction any alteration of Company's objects, even though consisting of entirely new object clause, in modern form, in substitution for an old restricted one, upon its being satisfied that it is required to place the Company on equality, as regards the efficient carrying on of its business, with more recently formed companies.

6. The Dacca judgment referred to above is directly of no assistance as there the amendment sought was covered by section 12(C). Same is the situation in the case of Anglo American Telegraph Co. Ltd., referred to above. The alteration sought for in that case was to have power to lease an undertaking. The observation of the Court was that "The evidence showed that the proposed alterations were necessary for the more economical and efficient working of the Company's business and would be beneficial to the general body of share‑holders and that no one would be prejudiced thereby".

(1) P L D 1964 Dacca

666 (2) 105 L T 947

7. I have gone through all the objects of the Company as contained in its memorandum of association but none of those specifically permits the addition asked for. There are, however, two objects in clauses (211 and (22) of the Memorandum of Association which permit the petitioner‑Company to enter into partnership or arrangement in the nature of partnership, co‑opera tion or union of interest with any person or persons, firm or company to become engaged

or interested in carrying on or conduct of any business or enterprise from which the Company would or might derive benefit directly or indirectly. This appears to be a blank cheque and when applied to the situation in hand it would permit the petitioner‑Company to enter into a partnership or make another arrangement of the nature referred to above to carry on this object.

8. Clause (22) also permits the Company in amalgamate with any person or company whether by sale or purchase (for fully or partly paid‑up shares or otherwise) of the undertaking. The petitioner thus could take on the jute milling industry in the manner provided by the above two clauses. The short question thus arising for determination is whether in view of the above the case of the petitioner‑Company falls under any provisions of section 12(1).

9. Out of the two judgments referred to by the learned counsel one of the principles laid down in the Dacca judgment is ;--

"In considering the question of confirmation of a Special Resolution effecting alteration of a Memorandum of Association, the Court is concerned with the interest of the holders of debentures of Company or creditors or persons or class of persons having interests in the Company. The position will be clear by reference to section 14 of the Act. That section provides that the Court shall in exercising its discretion under sections 12 and 13 have regard for rights and interests of the members of the Company or of any class of them as well as to the rights and interests of creditors."

A similar principle given in the English judgment as reproduced at the end of paragraph 6 above is that alteration must be for the benefit of the general body of shareholders.

10. The position obtaining in the case in hand is that it is a Private Limited Company with only three shareholders. It is stated that there is neither a creditor nor a debenture‑holder. This finds support from the fact that no objector has appeared to contest the prayer or plea of the petitioner. The Company has already been allowed to change its name to Sunshine Jute Mills Limited. A sanction for establishment of jute mills has also been obtained from the Central Government in the name of petitioner Company. The above object can be achieved by it by a little mechanism as provided in clauses (21) and (22) referred to above. The case as stated above can thus be covered by section 12(1)(a) and (b) of the Companies Act.

I, therefore, allow the application and confirm the alteration as contained in the special resolution as reproduced in para. one above. There will be no order as to costs.

s. Q. Application allowed.

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