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Orient Paper Mills Ltd. and anr. Vs. the State - Court Judgment

LegalCrystal Citation
SubjectCompany
CourtOrissa High Court
Decided On
Case NumberCompany Act Case Nos. 6 and 7 of 1955
Judge
Reported inAIR1957Ori232; 23(1957)CLT221
ActsCompanies Act, 1956 - Sections 17; Indian Companies Act, 1913 - Sections 12, 12(3) and 14
AppellantOrient Paper Mills Ltd. and anr.
RespondentThe State
Appellant AdvocateA.C. Mitra and ;P.C. Chatterji, Advs.
Respondent AdvocateAdv. General
DispositionApplication dismissed
Cases ReferredIn Allen v. Gold Reefs of West Africa Ltd.
Excerpt:
- motor vehicles act, 1988 [c.a. no. 59/1988]section 173(1) proviso; [d. biswas, amitava roy & i.a.ansari, jj] appeal without statutory deposit but within limitation/or extended period of limitation maintainability - held, if the provision of a statute speaks of entertainment of appeal, it denotes that the appeal cannot be admitted to consideration unless other requirements are complied with. the provision of sub-section (1) of section 173 permits filing of an appeal against an award within 90 days with a rider in the first proviso that such appeal filed cannot be entertained unless the statutory deposit is made. the period of limitation is applicable only to the filing of the appeal and not to the deposit to be made. it, therefore, appears that an appeal filed under section 173 cannot.....p.v.b. rao, j. 1. these two cases are heard analogously as they involve similar questions of facts and common questions of law and are disposed of by this single judgment. 2. company act case no. 6 of 1955 is an application by the orient paper mills ltd., a limited liability company having its registered office at brajrajnagar in the district of sambalpur in the state of orissa, under section 12 of the indian companies act, 1913 for confirming a special resolution of the company passed at an extra-ordinary general meeting on 26-8-1955. 3. company act case no. 7 of 1955 is an application by the hindusthan cellulose and papermills ltd., a limited liability company having itsregistered office at brajrajnagar in the district ofsambalpur in the state of orissa, under section 12 ofthe indian.....
Judgment:

P.V.B. Rao, J.

1. These two cases are heard analogously as they involve similar questions of facts and common questions of law and are disposed of by this single Judgment.

2. Company Act Case No. 6 of 1955 is an application by the Orient Paper Mills Ltd., a limited liability Company having its registered office at Brajrajnagar in the district of Sambalpur in the State of Orissa, under Section 12 of the Indian Companies Act, 1913 for confirming a special resolution of the Company passed at an extra-ordinary general meeting on 26-8-1955.

3. Company Act Case No. 7 of 1955 is an application by the Hindusthan Cellulose and PaperMills Ltd., a limited liability Company having itsregistered office at Brajrajnagar in the district ofSambalpur in the State of Orissa, under Section 12 ofthe Indian Companies Act, 1913 for confirminga special resolution duly passed at an extra-ordinary general meeting of the Company heldon 26-8-1955.

4. Both the special resolutions were to the effect that the registered office of the company be changed from the State of Orissa to the State of West Bengal.

5. Both the Companies were Incorporated on 25-7-1936, under the Indian Companies Act,1913 as Companies limited by shares. Clause (2)of the Memorandum of Association of the Companies provides that the registered offices of the Companies would be situated in the State of Orissa. It is at present situated at Brajrajnagar in the district of Sambalpur. Hindusthan Cellulose and Paper Mills Ltd., is a subsidiary Company to that of Orient Paper Mills Ltd.

6. The objects of the Orient Paper Mills Ltd., are to carry on the business of manufacturer of pulo, paper, boards and other articles and the business of buyers, sellers, dealers, exporters of any goods or merchandise whatsoever and to transact all manufacturing or treating and preparing processes and mercantile business and to purchase and vend raw materials and manufacturing articles.

7. The objects of the Hindusthan Cellulose and Paper, Mills Ltd., inter alia are to carry on the business of manufacturers of and dealers in papers of all kinds and articles made from paper or pulp (mechanical or wood) and materials used in manufacture or treatment of paper including card boards, card board boxes, straw boards, leather boards, mill boards, paste boards, pulp boards.

8. The nominal capital of the Orient Paper Mills Ltd., is Rs. 4,00,00,000/- (Rupees four crores) divided into 20,00,000/- ordinary shares of Rs. 10/-each and 2,00,000/- preference shares of Rs. 1007-each, out of which 14,68,250/- ordinary shares and 1,29,889/- preference shares have been fully paid up.

9. The nominal capital of the Hindusthan Cellulose and Paper Mills Ltd., is Rs. 10,00,00,000/-divided into 60,00,000/- ordinary shares of Rs. 10/-each and 4,00,000/- preference shares of Rs. 100/-each out of which issued and paid up capital amounts to Rs. 10,00,000/-.

10. By special resolutions of the Companies duly passed at extra-ordinary general meetings of the Companies on 26-8-1955, it was resolved as follows:

'Resolved that the registered office of the Company be transferred from the State of Orissa to the State of West Bengal and that the words 'West Bengal' be substituted for the word 'Orissa' in clause No. 2 of the Memorandum of Association of the Company.'

11. The office of the managing agents of the Orient Paper Mills Ltd., and the Central Departments of various companies under their managing agency being situated at Calcutta in the State of West Bengal and necessary staff for such work being kept there, the petitioner in Company Act Case No. 6 of 1955 alleges that the management finds it more convenient and economical to have the registered office of the Company in the State of West Bengal. In the case of the other Company, as it is a subsidiary Company of the Orient Paper Mills Ltd., it is alleged that it is convaniant to transfer the registered office of that Company also to Calcutta.

12. For the above-said reasons, a special resolution of the share-holders of each Company was passed unanimously to effect the said alteration of the location of the registered office in the Memorandum of Association of the Company.

13. The Orient Paper Mills Ltd., has an outstanding debenture loan to the extent of Rs. 1,00,00,000/-. The Company has only general creditors in the ordinary course of dealings who are paid from time to time in the usual course of business. It is alleged that the transfer, of the registered office of the Company will not affect the rights and interests of the creditors in any way and that the Company has ample working capitaland its assets are more than sufficient to pay all its debts and to make good the whole of lis paid up capital and that no one will be prejudiced by the change of the registered office of the Company from the State of Orissa to the State of West Bengal.

14. The Hindusthan Cellulose and Paper-Mills Ltd., has no debenture creditors. It is alleged that it has only general creditors in the ordinary course of dealings who are paid from time to time in the usual course of business and the transfer of the registered office of the Company will not affect the right or interest of the creditors in any way and that it has ample working capital and its assets are more than sufficient to pay all its debts and to make good the whole of its paid up capital. Due publication of the applications was made in the Eastern Times and the Matrubhumi.

15. The learned Advocate General appeared and filed an objection in both the matters on behalf of the State of Orissa.

16. The objections of the State are to the effect that the alteration made bv the special resolutions which are to be confirmed with regard to the registered offices of the Companies affects the interests of the State Government as well as the people of the State; that the interests of the labour employed in the factory would suffer if the registered office is at Calcutta; that issues relating to payment of bonus and the administration of the Employees' Provident Fund Act and Scheme cannot be properly administered as the worker-members will not be in a position to check and see their account, which will be in the registered office: that if the registered office is transferred to Calcutta, vacancies in the office cannot be filled up by appointing the citizens of the State; that many difficulties would arise in case of labour disputes if the registered office is at Calcutta and the Government would not be in a position to deal with the situation that may arise; that the alteration sought to be confirmed would greatly affect the revenue of the State of Orissa with reference to various taxes, namely, income-tax, sales-tax. etc. that the proposed alteration is not bona fide and made in good faith; that the alteration is aimed at evading the operation of the impending legislation regarding sales-tax and the provisions of the New Companies Act; and that the alteration resolved upon is not for the benefit of the Company. The State also alleges that the change of the registered offices would entail serious practical difficulties in working out the provisions of the Orissa River Pollution Prevention. Act, 1953 and of the Factorias Act, 1948; and that immediate action contemplated by those Acts cannot be taken if the registered office is to be at Calcutta.

17. An objection was also received from one Shri Lalit Kumar Pati, Pleader, Sambalpur alleging that the proposed shifting will work as a handicap to the people who want to approach the registered office directly either for appointment, of ventilating their grievances; that it will put the employees of the Company at a great disadvantage in seeking redress of their grievances regarding wages, bonus, leave and other legitimate facilities and amenities; and that the proposed alteration of the registered offices is a move for depriving the children of the soil of Orissa of their rightful claims for services and employment etc., and is an injustice to the people of Orissa.

18. Publication of the notice of these applications was ordered to be made on 18-11-55. The learned Advocate General appeared for the StateON 16-3-56. Publication of the notice of these applications was made in two issues on 24-11-55. On 6-4-56, I ordered notice of this application to be taken to the Registrar of the Joint Stock Companies. Orissa. The Registrar of the Joint Stock Companies was served on 10-4-56. But he did notchoose to appear and place before the Court any material to enable it to come to a decision whetherto confirm the special resolution or not.

19. On 13-7-136, these petitions were heardin part and I directed the petitioners to produce before me certified copies of the applications made by the petitioners in 1947 to change the registered offices from Calcutta to Orissa as also the orders of the High Court of Calcutta on those applications and a statement showing the income-tax paid by the Companies to the Central Government each year. The learned Advocate General also was asked by me to produce if there is any material with the Government as to the reasons why the Companies changed the registered offices from Calcutta to Orissa in 1947. The learned Advocate General did not place any material regarding the same before me, but the petitioners filed the copies of the applications and the ordersof the Calcutta High Court with regard to theconfirmation of the resolutions to change the registered offices from Calcutta to Orissa in 1947 as also extracts showing the income-tax paid by the Companies. The final hearing of the objections was closed on 27-7-56.

20. The learned counsel for the petitioners Mr. A.C. Mitra contends that the proposed alt-ration of the registered offices was unanimously resolved upon by special resolutions of the Companies duly passed at an extra-ordinary general meeting held on 26-8-1955; that the offices of the managing agents of the Companies are always situated at Calcutta in the State of West Bengal, in consequence of which it is mere convenient and economical to have the registered offices of the Companies at Calcutta and that the matter having been unanimously approved by the shareholders should be confirmed by this Court. -He also contends that about 7,09,000 ordinary shares of the nominal value of Rs. 70,90,000/- are held by share-holders in West Bengal whereas in Orissa there are only about 6000 share-holders holding shares of the nominal value of Rs. 60,000/- and that the shares of about 7,53,000 shares of the nominal value of Rs. 75,32,500/- are held in other States. His contention is that as the majorityof the share-holders are in West Bengal, and as by a unanimous special resolution it was agreed to transfer the registered offices to West Bengal, the Court should confirm the same. He also vehemently urges that the State of Orissa has absolutely no locus standi to object to the confirmation of the special resolution as it is a matter solely concerning the share-holders and the only persons who can object are either the creditors or debenture-holders. In support of this contention he relies upon Section 14 of the Indian Companies Act, 1913, to the effect:

'The Court shall, in exercising its discretion under Sections 12 and 13, have regard to the rights and interests of the members of the company or of any class of them, as well as to the rights and interests of the creditors,''

and contends that the power vested in the Court under Clause (2) of Section 12 is subject to the above clause in Section 14. Consequently, his contention is that the Court should not take into account anyobjections raised by the State. I cannot accept this contention. Clause (2) of Section 12 is definitely to the effect that the alteration shall not takeeffect until and except in so far as it is confirmed by the Court on petition, and Clause (3) states:

'Before confirming the alteration, the Court must be satisfied (a) that sufficient notice has been given to every holder of debentures of the Company, and to any persons or class of persons whose interests will, in the opinion of the Court, be affected by the alteration.'

This Sub-section (a) of Clause 3 requires notice to any persons or class of persons whose interests will, in the opinion of the Court, be affected by the alteration. The expressions 'any persons' or 'class of persons' in this clause are very general and are applicable not only to the creditors or debenture-holders of a Company but also to every person whose interests may be affected. Section 14 only requires that before exercising its discretion under Sections 12 and 13, the Court shall have regard to the rights and interests of the members of the company or of any class of them as well as to the rights and interests of the creditors. This provision, in my opinion, does not in any way fetter the power of the Court to take into consideration the objections of any person or class of persons if their interests are affected by the alteration. Section 14 only requires that the Court shall have regard to the rights and interests also of the members. This is only an additional factor to be taken into consideration. This does not mean that the rights and interests of the members of the Company or of any class of them is the paramount guide in exercising the discration to confirm or not to confirm the special resolution changing the registered office of the company, The expression 'shall have regard to' has been Interpreted by the Judicial Committee of the Privy Council in the case of Ryots of Garabandho v. Zamindar of Farlakimedi AIR 1943 PC 164 (A). In construing Sub-Section (2) of Section 168 of the Madras Estates Land Act :

'In settling rents under this section, the Collector shall presume, unless the contrary is proved that the existing rent or rate of rent is fair and equitable and shall have regard to the provisions of this Act for determining rates of rent payable by a ryot,'

the Judicial Committee held that the expression 'shall have regard' has no more definite or technical meaning than that of ordinary usage, and only requires that these provisions must be taken Into consideration and not that the settlement or rent should be in accordance with those provisions. Consequently, I am of opinion that Section 14 requires only that the interests of the creditors shall be taken into consideration and not that the Interests of the share-holders should be given effect to and is the only paramount consideration. On the other hand, in my opinion, Clauses 2 and 3 of Section 12 are more imperative than Section 14 of the Indian Companies Act of 1913.

21. Under the English Company Law, the registered office of the company is unalterable when once It is fixed in the Memorandum of Association and the Company is registered. In para 274 of Halsbury's Laws of England, Third Edition, Volume 6, at page 130, it is stated:

'Every company must have a registered' office as from the day on which it begins to carry on business of the fourteenth day after its incorporation, whichever is the earlier.

The position of the office, namely, whether it is in England or Scotland, must be stated in she Memorandum of Association. This fixes thecountry In which the company is to be registered;and, as in this respect the provisions of the memorandum are unalterable, the situation of theoffice cannot be changed from England to Scotland or vice versa.

X X X X X The situation of the registered office fixes the domicil of the company, and is important as regards the Court which has the jurisdiction to wind up the company.'

Though under Section 12 of the Indian Companies Act, of 1913 the memorandum of association may be altered with regard to its registered office by a special resolution to be confirmed by a Court, yet it is clear from the unalterable nature of a registered office in England that the registered office of a Company in India should not be altered and the alteration should not be confirmed as and when the Company passes a special resolution. A Company is a corporation in law and a company is different entity in law from that of its share-holders. The interests of the company may also be different from the interests of the share-holders in certain respects. It cannot be predicated that the interests of the share-holders are identical with the interests of the Company.

22. Mr. Mitra, the learned counsel for the petitioners also contends that the objections based upon the loss of income-tax or sales-tax is not at all relevant for purposes of this enquiry. He concedes that the Company pays a large amount of income-tax to the Central Government as also sales-tax, but contends that this should not be taken into consideration in coming to a conclusion whether the special resolution of the Company should be confirmed or not.

He also contends that the difficulties of the employees and the labour, in case the registered office is changed to Calcutta, are only imaginary and in these days of rapid communications, it is quite immaterial whether the registered office is at Brajrajnagar or at Calcutta, In these days the labour strikes are very frequent and if the State, in the interests of law and order, wants to interfere, there will be certainly some difficulty if responsible officers of the Company are not on the spot to put an end to or to reconcile the difference between the labour and the capital.

23. At the time of the incorporation of the Companies. the registered offices were at Calcutta, but in 1947 the companies filed applications before the High Court of Calcutta to confirm the special resolutions passed by the share-holders at a general meeting of the companies held on 9th May. 1947, to alter the registered offices of the companies to the province of Orissa and these were confirmed by the Calcutta High Court.

The learned counsel for the petitioners pointed out to me that confirmations of these special resolutions altering the registered offices of the companies from. West Bengal to Orissa were ordered in chambers and that confirmation is only a formality. It may be that in that particular case the order was made in chambers according to the rules and practice prevailing in the Calcutta High Court, but that fact does not m any way lead me to come to the conclusion that I should not take into consideration any of the objections before confirming the resolutions.

24. I asked the learned Advocate-General to place before me any material which is in possession of the State of Orissa to show why the petitioners changed their registered offices of the companies from West Bengal to Orissa, in 1947, but the learned Advocate-General did not placebefore me any such material. In the petitionsfiled by the petitioners in the Calcutta High Court, it was clearly stated that the Mills of the Companies are situate in Orissa and that the Companies had to manage a large staff at that place and the management, consequently, finds it more convenient to have the registered offices of the Companies in Orissa.

If it was more convenient to have the registered offices of the Companies in Orissa on account of their mills being situate in Orissa and a large staff was maintained at that place, in 1947, I cannot understand how now it could be more convenient to have the registered offices at Calcutta in West Bengal when the mills still continue to be in Orissa and the companies maintain a large staff at that place. The reason for the company changing its registered office from West Bengal to Orissa in 1947 might be, though there is absolutely no specific evidence to that effect, as suggested by the learned Advocate General, to obtain certain permits and concessions for bamboos which are so very necessary for a paper mill, the main objects of the companies being to carry on the business of manufacturer of pulp, paper, boards, etc. The learned Advocate-General, on this ground, urges that the alteration of the Memorandum of Articles of the Association by transferring the registered offices from Orissa to West Bengal is not bona fide and done in good faith.

25. In Halsbury's Laws of England, Third Edition. Vol. 6, at page 272, it is observed :

'Any alteration must be made bona fide for the benefit of the Company as a whole,'

meaning thereby the corporations as a general body. In Allen v. Gold Reefs of West Africa Ltd., (1900) 1 Ch. 656 (B), Lindley M.R. observed as follows :

'The power thus conferred on companies to alter the regulations contained in their articles is limited only by the provisions contained in the statute and the conditions contained in the company's memorandum of association. Wide, however, as the language of Section 50 (of the Companies Act, 1862) is the power conferred by it must, like all other powers, be exercised subject to those general principles of law and equity which are applicable to all powers conferred on majorities and enabling them to bind minorities. It must be exercised, not only in the manner required by law, but also bona fide for the benefit of the company as a whole, and it must not be exceeded.'

Lord Wrenbury in his book on the Companies Act, 9th Edition, page 25, says:

'Possibly the limitation on the power of altering the articles may turn out to be that the alteration must not be such as to sacrifice the interests of the minority to those of a majority without any reasonable prospect of advantage to the company as a whole.''

Consequently, in my opinion, the Court can confirm, the special resolution altering the registered office only if it is satisfied that the said special resolution was first bona fide and next was in the interests of the Company.

26. As has been already stated, the petitioners by special resolutions and after confirmation by the Calcutta High Court got the registered offices of the companies changed from West Bengal to Orissa specifically alleging therein that the said change would be more convenient as the companies have to maintain a large staff at that place. At that time, the present managing agentswere also the managing agents of the companies and their office was at Calcutta.

In the present applications, for changing again the registered offices of the companies from Orissa to West Bengal, the reasons assigned in the affidavit are that the office of the managing agents of the companies and the Central ' Departments of various companies under their managing agency are situated at Calcutta in the State of West Bengal and necessary staff for such work is kept there and the management consequently finds it more convenient and economical to have the registered offices of the companies in the State of West Bengal.

When a change of the registered offices was effected in 1947 from West Bengal to Orissa on the ground that it would be more convenient to carry on the business of the companies if the registered offices are changed to Orissa, I cannot understand how a retransfer of the registered offices of the companies to West Bengal again on the same ground without stating any other additional reasons would be a bona fide one. There la some force therefore in the suggestion of the learned Advocate-General that the said special resolutions passed on 26th August 1955 for transfer of the registered offices of the Companies to Calcutta are not passed in good faith and are not bona fide.

27. The proposed alteration of the registered offices from Orissa to Calcutta may not also be for the benefit of the companies. The mills being mills for manufacture of paper etc., require a large quantity of bamboos which are available in Orissa. The alteration of the registered offices of the companies to Calcutta may, in course of time, lead the State of Orissa to restrict the supply of bamboos from its forests to the mills concerned, in which case the business of the mills may ultimately collapse.

28. The next contention of the learned Advocate-General is that the State of Orissa would be deprived of a large portion of the revenue if the registered offices of the companies are transferred to West Bengal. He contends that the State granted certain concessions to the companies as also certain licenses on the understanding that the registered offices of the companies would be in Orissa. But no attempt was made by the learned Advocate-General to substantiate this contention by producing any material evidence. Nevertheless, the change of the registered offices of the companies in 1947 from West Bengal to Orissa must have been made for the purpose of getting the licenses or concessions mentioned by the learned Advocate-General. The State of Orissa would certainly be a loser as far as its revenue is concerned if the registered offices of the companies are now transferred to Calcutta by confirming the special resolutions. The petitioners in accordance with my order filed into Court an extract of the income-tax paid by the Orient Paper Mills Ltd., from the years 1938 to 1956 as also of the Hindusthan Cellulose and Paper Mills Ltd.

From that it can be seen that the total income-tax paid on income by the Orient Paper Mills Ltd., is Rs. 31,09,393/- for the year 1955-56, and Rs. 33,59,487/- for the year 1954-55. The Hindusthan Cellulose and Paper Mills Ltd., paid a total tax on income in the year 1955-56 of Rs. 66,428/- and in 1954-55 Of Rs. 65,872/-. It may also be noted that for the year 1954-55 this company paid an income-tax of Rs. 2,89,969/- and in 1952-53 a tax of Rs. 3,78,324/-. No doubt, the income-tax is a central revenue, but a large portion of the income-tax realised by the Central Government is paid to the respective States in proportion to the tax realised from the State concerned.

If the income tax on these companies is levied at the place where the registered offices of the companies are situate and if the registered offices of the companies, according to the special solutions, are to be changed to West Bengal, that income-tax paid by the Companies would be credited to the State of West Bengal and the said tax would not be taken into account by the Union Government as the tax received from the State of Orissa. though the Paper Mills of the Company are situate in Orissa. The State of Orissa will thus lose a considerable portion of the contribution of the Central Government from out of the income-tax realised, to the Slate. The interest of the State therefore is affected if the special resolutions are to be confirmed.

29. Next, the learned Advocate-General contends that a considerable amount of sales-tax would be realised if the registered offices of the companies are situate in Orissa. Though the learned Advocate-General had not furnished any figures as to what is the amount of sales tax collected by the State from these two petitioners each yet there is no denying the fact that sales-tax collected would be of a considerable amount. Generally, the contracts for purchase or sale are entered into with the companies at the registered offices and if the registered offices are to be situated at Calcutta, the liability to sales-tax may arise at Calcutta when the State of West Bengal only will be competent to collect the sales-tax. Again, according to the contention of the learned Advocate-General, the sales tax is sought to be made a central subject and legislation is contemplated for the levy of sales-tax on inter-State sales. In that case also if the sales-tax is collected by the Union Government, a contribution may be made by the Union Government to the respective States on the quota of sales-tax collected from each State and in that respect also the State would be a loser. In Halsbury's Laws of England, Third Edition. Vol. 6, at page 113, it is stated :

'The residence of a company is of great importance in revenue law. ... .The locality of the shares of a company is that of the register of shares'

and if the registered office is changed to West Bengal the State of Orissa would suffer a substantial reduction of income from income-tax and sales-tax.

30. The next objection of the learned Advocate-General is with regard to serious practical difficulties in working out the provisions of the Orissa River Pollution Prevention Act, 1953 and of the Factories Act, 1948, as also the Industrial Disputes Act, if the registered offices of the companies are transferred to Calcutta. In these days when the labour disputes may be frequent, all these Acts may be better administered expeditiously if occasion arises, only if the registered offices of the companies are situate in Orissa, especially when the factories of the companies are situate here.

31. There is also the counter affidavit of one Shri Lalit Kumar Pati In which he raises that the proposed shifting will work as a handicap to such people of Orissa who want to approach the registered office directly either for appointment or ventilating their grievances, if any; that it will also put the employees in general of the company at a great disadvantage in seeking redress of their grievances regarding wages, bonus leave and other legitimate facilities and amenities: that it will minimise the Importance of the State of Orissa; and that the proposed alteration la a move for depriving the children of the soilof Orissa of their rightful claims for services andemployment etc., which, though they may appear trivial have some force which can be taken intoconsideration by a Court before confirming the special resolution of the compenies for change or the registered office to West Bengal.

32. Orissa is still an undeveloped State though it contains vast natural resources and has not yet developed as West Bengal, Bombay and Madras, as far as industrial progress is concerned. Many companies are formed for purpose of starting factories in Orissa and they are obtaining all facilities and permits for the said purpose from the State of Orissa. The objections of Shri Pati are very humble objections. They show that; the persons on whose behalf he made the objections are satisfied only if facilities are given to the people of Orissa for being employed as clerks or labourers in the registered offices of the companies or in the factories of the companies and for a peaceful continuance of those appointments. The change of the registered offices of the companies may affect even those humble aspirations of the people.

33. The Indian Constitution is of a faderal type. Each unit of the federation has exclusive fields of State activity and is entitled to develop its State in its own way. The interests of the State are to be taken into account and are of considerable importance in confirming special resolu-tions of the companies if they have adverse effect on the interests of the State concerned.

34. To summarise, my findings are as follows.

(1) That the State of Orissa or any otherperson is competent to raise objections underSection 12 of the Indian Companies Act of 1913, toa change of the registered office and confirmationof the special resolution to that effect;

(2) That the Court can consider these objections in confirming or not the special resolutions of the companies and can, if the objections are justified refuse to confirm the special resolutions.

(3) That the proposed alteration creates many practical difficulties in the administration of thevarious Acts concerning industrial disputes and factories and labour;

(4) That the proposed alteration affects the revenue of the State of Orissa to a considerable extent; and

(5) That the proposed change of the registered offices of the companies is not bona fide and is not resolved upon in good faith and is not for the benefit of the companies. As observed above, in my opinion, the special resolutions of the two companies passed on 26th August, 1955, are not bona fide and would create many practical difficulties.

35. In the result, therefore, I would refuse to confirm the special resolutions and dismiss the applications with costs. A consolidated hearing fee for both the applications is fixed at Rs. 250/-.


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