Section 146
Registered
office of company
[2002] 39 SCL 90 (Bom.)
v.
Swarup Shree Yarn (P.) Ltd.
F.I.
Rebello, J.
Company
Petition No. 558 of 1998
and Company
Application (Lodg.) No. 527 of 1998
Section 146, read with section 434, of the Companies Act, 1956 - Registered office of companies - Whether change of registered office must be duly authorised pursuant to resolution of board of directors - Held, yes - Whether where registered office had been changed in terms of notice addressed by one of directors to Registrar of Companies and Registrar had not carried out change in register maintained by him under sub-section (2) of section 146, it could be said that change had been effected - Held, no - Whether in such a case if notice under section 434 had not been served on registered office as shown but on purported new address, notice served on new registered office could not be said to be notice on company as required by law for purpose of invoking deeming provisions of section 434(1)(a) - Held, yes
The petitioner filed the instant petition for
winding up of the respondent-company on the ground that the respondent-company
had not paid the amount due despite being served with notice and further
contended that the substratum of the company had disappeared. The
respondent-company refuted the claim on ground that nothing was served on them
at their registered office.
It was contended that the registered office
had been changed in terms of the notice addressed by one of the directors to
the Registrar of Companies and in terms of section 146 once such a notice is
sent, it is the Registrar who has to carry out the change in the register maintained
by him. Service of such notice at the changed address is good notice. The
company had filed an affidavit stating that there was no resolution passed to
effect any change in the registered office and as such the communication was
done without compliance with the requirement of law.
Though one of the directors did send a notice,
the Registrar had not carried out the change in the register maintained by him
under sub-section (2) of section 146. Mere sending of the notice is not
sufficient, the Registrar must be satisfied that the change is duly authorized
pursuant to a resolution of the board of directors. It is, therefore, not a
mere mechanical act on the part of the Registrar to effect the change in the
register but he must be satisfied that the legal requirements have been
complied with. The very fact that the change was not effected raises a
presumption that the Registrar having not been satisfied, had not effected the
change. The change had not been effected and, consequently, the registered address
of the company remained as disclosed in the register maintained. Admittedly,
the notice under section 434 had not been served on the registered office as
shown but on the purported new address. That could not be said to be a notice
on the company as required by law for invoking the deeming provision of section
434(1)(a).
As regards the contention that the substratum
of the company had disappeared, there were no sufficient pleadings before the
High Court to come to the conclusion that the petitioner had been able to show
as required by sub-section (1)(c) of section 434 that the substratum of the
company had disappeared.
Therefore, the petition was to be
dismissed.
Punjab Flying Club Ltd., In re AIR 1933 Lahore
301, Darjeeling Bank Ltd., In re AIR 1948 Cal. 335, Bukhtiarpur Bihar Light
Railway Co. Ltd. v. Union of India AIR 1954 Cal. 499 and Tripura Administration
v. Tripura State Bank Ltd. AIR 1959 Tripura 41.
Anand Grover, Miss Ayesha Damania, Basant
Tilokani and V.B. Juris
for the Petitioner. M.K. Ghelani for the Respondent.
1. The
petitioner has prayed for winding up of the company. It is contended that
though a statutory notice under section 434(1)(a) of the Companies Act, 1956
(‘the Act’) was served on the company, the company has failed to pay the amount
claimed and as such it is presumed that the company is unable to pay its debts.
It is secondly contended that the substratum of the company had disappeared and
on that count also by virtue of section 434(1)(c), the company needs to be
wound up. In support of the second contention, the learned counsel has relied
on the judgment of the Lahore High Court in the matter of Punjab Flying Club
Ltd., In re AIR 1933 Lahore 301, Darjeeling Bank Ltd., In re AIR 1948 Cal. 335,
as also in the case of Bukhtiarpur Bihar Light Railway Co. Ltd. v. Union of
India AIR 1954 Cal. 499 and in the case of Tripura Administration v. Tripura
State Bank Ltd. AIR 1959 Tripura 41.
2. A company
can be wound up for any of the causes as set out in section 433 of the Act. One
of the grounds in section 433(e) is that the company is unable to pay its
debts. Section 434(1)(a) provides that the company shall be deemed to be unable
to pay its debts if the company is indebted in a sum exceeding Rs. 500 and such
creditor has served on the company by causing it to be delivered at its
registered office by registered post or otherwise a demand under his hand
requiring the company to pay the sum so due and the company has for three weeks
thereafter neglected to pay the sum or to secure or compound for it to the
reasonable satisfaction of the creditor. What is, therefore, contemplated is a
notice at the registered address of the company. Though these are procedural
requirements, nonetheless the settled position in company law is that as they
pertain to a winding up order, even procedural provisions have to be strictly
construed. The contention of the petitioner, however, is that he has caused to
be served on the registered office of the company the necessary notice. It is
contended that the registered office had been changed in terms of the notice
addressed by one of the directors to the registrar of companies and in terms of
section 146 once such a notice is sent, it is the Registrar who has to carry
out the change in the register maintained by him. Service of such notice at the
changed address is good notice. The company has filed an affidavit stating that
there was no resolution passed to effect any change in the registered office
and as such the communication was done without compliance with the requirement
of law.
3. A company
has its Board of Directors. The board of directors act by resolutions passed,
unless specific power is conferred by the articles and/or the memorandum of
association delegating powers to specific persons. In the instant case, it is
not so. Though one of the directors did send a notice, the Registrar has not
carried out the change in the register maintained by him under sub-section (2)
of section 146. As pointed out earlier, mere sending of the notice is not
sufficient. The Registrar must be satisfied that the change is duly authorized
pursuant to a resolution of the board of directors. It is, therefore, not a
mere mechanical act on the part of the Registrar to effect the change in the
register but he must be satisfied that the legal requirements have been
complied with. The very fact that the change was not effected raises a
presumption that the Registrar having not been satisfied has not effected the
change. At any rate whatever be the reasons the change has not been effected
and, consequently, the registered address of the company remains as disclosed
in the register maintained. Admittedly, the notice has not been served on the
registered office as shown but on the purported new address. This cannot be
said to be a notice on the company as required by law which could invoke the
deeming provision of section 434(1)(a). Consequently, the petition on that
count has been rejected.
4. The next
contention is that the substratum of the company has disappeared. It is pointed
out that, in fact, the company has not been carrying out any operation for the
last several years. It is also pointed out that the company is indebted to
various creditors. Winding up of the company on the ground that the substratum
has disappeared requires specific pleadings as to the assets and liabilities
and other information for the court to arrive at a conclusion that the
substratum has disappeared. In the instant case, even if there are some
averments in para 15 of the petition that the substratum has disappeared, the
verification clause discloses that the pleadings are not based on the knowledge
of the petitioner but based on information and legal advice. As pointed out
earlier, in matters of winding up, pleadings also have to be construed strictly
as the severe consequences follow on an admission of the petition for winding
up. The source of information has also not been disclosed. The case-law cited
by learned counsel merely proceeds on the footing that even if there are assets
left after the debts can be satisfied that by itself can be ground to hold that
the substratum of the company has not disappeared. I need not go into all these
aspects as in my opinion there are no sufficient pleadings before the court to
come to the conclusion that the petitioner has been able to show as required by
sub-section (1)(c) of section 434 that the substratum of the company has
disappeared. The contingent and prospective liabilities of the company have
also not been set out in the petition.
5. It may be
noted that even otherwise on behalf of the company, the defence taken was that
the loan advanced was to be repaid after the company made profits. I need not
go into that issue in the light of what I have set out earlier.
6. There is,
therefore, no merit in this petition on both the counts and the company
petition is, accordingly, dismissed. However, in the circumstances of the case,
there shall be no order as to costs.
The counsel for the petitioner seeks a
direction that the company should be restrained from disposing of this asset.
No interim relief was granted earlier. After having come to the conclusion that
the petition is not maintainable, the question of granting any relief does not
arise as it is always open to the petitioner if so advised to take out
appropriate legal proceedings as mere dismissal of this petition will not stand
in the way of the petitioner.