DALMIA CEMENT BHARAT LIMITED Vs. STATE

JUDGEMENT

(1.) THIS petition by Dalmia Cement (Bharat) Limited is under section 17 of the Companies Act, 1956, for confirmation of the special resolution of the company dated June 28, 1963, to add certain objects to the existing objects of the company. In substances the additional objects proposed are to enable the company to do export business in all varieties of goods and commodities. The Registrar of Companies who has filed an affidavit seems to be of the opinion that, having regard to the existing objects of the company, the proposed objects may not fall within the purview of section 17(1). He points out that the petitioner has not specifically set out the facts and circumstances relating to the existing circumstances and as to how the additional objects can conveniently and advantageously be combined with the existing business of the company Section 17(1)(a) and (d) has employed language of wide amplitude and it is difficult to confine its scope by a statement that it will be applicable to this or that situation. Whether a company can carry on its business more economically or more efficiently is a matter for the judgment of the directors. They alone are best fitted by reason of their experience in the particular business to decide whether the business can be carried on more economic ally or more efficiently by adding fresh objects. The court of course on given facts may apply its mind and see whether the directors may reasonably and fairly form that opinion. I consider that the court can do no more about it. Clause (d) of sub -section (1) of section 17 reads

(2.) HERE again, my observations with reference to clause (a) apply with equal force. Whether the ingredients of clause (d) are satisfied will no doubt be a matter for this court to judge. But whether the business can conveniently or advantageously be combined with the business of the company will depend a great deal upon the opinion of the directors. If the directors consider that under the existing circumstances, it will be convenient and advantageous to combine the new objects with the existing objects, and if it appears that that conclusion may be fairly arrived at, this court will not go behind it and hold an enquiry as to whether the opinion of the directors is well -founded or is justified. In the very nature of things, such an enquiry will not be possible for the CLB to undertakeThere is also the further aspect. In my opinion, section 17(1) should not be narrowly interpreted. As a matter of fact, courts have approached the section in a liberal way. It is not necessary to cite authority for it. The whole object of the section is enabling