INDUSTRIAL CABLES INDIA LTD Vs. REGISTRAR OF COMPANIES

JUDGEMENT

(1.) THE only question which calls for decision in this application for confirmation of the special resolution of the petitioning-company dated April 30, 1971, adding two new items to the objects clause of its memorandum of association is whether the new businesses sought to be authorised under the amended objects clause can or cannot be " conveniently and advantageously combined with the business of the company under existing circumstances" within the meaning of that expression as used (subject to minor modification) in Clause (d) of Sub-clause (1) of Section 17 of the Companies Act, 1956, hereinafter called " the Act ".

(2.) THE Industrial Cables (India) Ltd. , Rajpura, Punjab, hereinafter called " the company ", was registered as a public limited company on March 20, 1956, with registered office at Rajpura (Punjab) with an authorised capital of Rs. 1,20,00,000. Capital worth Rs. 63,10,000, was issued and capital worth Rs. 63,03,725 was subscribed. The financial year observed by the company is from the 1st of November of each year to the 31st of October in the next year. Its latest audited balance-sheet for the year ending October 31, 1970, indicates that, besides the paid-up share capital of Rs. 63,03,725, it has resources and surpluses amounting to Rs. 33,93,368 (paise rounded off to the nearest rupee ). The assets of the company as disclosed in the above-mentioned balance-sheet being worth Rs. 3,29,68,866 and its liabilities being Rs. 2,32,71,773, the excess of its assets over liabilities comes to Rs. 96,97,092. This is the book value of the company's assets worked out on pre-devaluation basis. The market value of its assets must, therefore, be substantially more. The above-mentioned figures reveal that the financial position of the company is very good and not only has the company sufficient working capital but is also in a position to muster necessary financial resources to branch out in the new lines of the proposed activities if its special resolution is confirmed.

(3.) THE objects for which the company was formed are set out in Clause (3) of its memorandum of association and have been reproduced verbatim in paragraph 4 of this application. The scheme of the objects is that entries (i) to (vii) therein deal with mechanical, electrical and engineering works, entries (viii), (xi) and (xii) relate to business of merchants and carriers, entry (ix) deals with textiles and entry (x) with mining businesses. (A printed copy of the memorandum and articles of association of the company is annexure " A " to the petition ). Entry (xiii), which deals with zamindari, agriculture, land and finance, development of land and buildings and earning of rental income, is directly relevant for the purpose of deciding this petition and is, therefore, quoted below :