Page 65 - DCOM106_COMPANY_LAW

Company Law

Notes Change of registered office from one state to another state: Section 17 provides for the
shift of the registered office from one State to another and such shift involves alteration of
memorandum. The change of registered office from one locality to another in the same
city or from one city to another in the same State does not involve alteration of
memorandum.
The shift of the registered office from one State to another can be done by a special resolution
which is required to be confirmed by the Central Government. The Central Government, before
confirming the resolution, will satisfy itself that sufficient notice has been given to every creditor
and all other persons whose interests are likely to be affected by the alteration, including the
Registrar of Companies and the Government of the State in which the registered office is situated.
Also, the Central Government will give an opportunity to members and creditors of the company,
the Registrar and other persons interested in the company to be heard. The Central Government
may confirm the resolution on such terms and conditions as it thinks fit.

It was made clear in Zuari Agro Chemicals Ltd. v. F. S. Wadia and Others (1974) 44 Comp. Cas.
465 that the Company Law Board (now Central government) will not substitute its own wisdom
or judgement for the collective wisdom or judgement of the company expressed in special
resolution. But the bonafides of the company’s application for change can be screened.

Task A company is engaged in jute business. The members unanimously pass a resolution
to start business in rubber. The proposed alteration in the objects clause is submitted to the
Company Law Board for its approval. Advise the Board if the same could be approved or
not. [Hint: It should give the approval. The new business is not inconsistent with the
existing business. See s.17(1)]

Loss of Revenues of State, Whether Relevant Consideration

In Orient Paper Mills Ltd. v. State, AIR (1957) Ori. 232, it was observed that a State whose
interests are affected by the change has a locus standi to oppose shift of registered office of a
company. Accordingly, the Orissa High Court declined to confirm change of registered office
from Orissa to West Bengal, inter alia, on the ground that in a Federal constitution every State has
the right to protect its revenue and, therefore, the interest of the State must be taken into account.
But in Minerva Mills Ltd. v. Govt. of Maharashtra (1975) 45 Comp. Cas 1(Bom.), Justice Ray of the
Bombay High Court held that the Company Law Board (now Central government) cannot
refuse confirmation on the ground that the change would cause loss of revenue to a State or
would have adverse effects on the general economics of the State. The question of loss of revenue
to one State would have to be considered in the prospectus of total revenues for the Republic of
India and no parochial considerations should be allowed to turn the scale in regard to change of
registered office from one State to another within India.
Similar view was expressed in Rank Film Distributors of India Ltd. v. Registrar of Companies,
West Bengal [AIR (1969) Cal. 32]., i.e. that State has no statutory right under s. 17 to oppose the
shifting of the registered office from one State to another.
A printed or a typewritten copy of the special resolution both under s. 146 and s. 17 should be
sent to the Registrar within 30 days of its passing.

A certified copy of the Central Government order of the Central Government should be filed
within three months thereof with the Registrar of each State – the old and the new State. If it is
not filed within the prescribed time, then the alteration shall, at the expiry of such period,
become void and inoperative.

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