Company Law Board
In Re: Automobile Products Of India ... vs Unknown on 28 January, 2005
Equivalent citations: [2005]127COMPCAS941(CLB), [2005]64SCL553(CLB)
ORDER
S. Balasubramanian, Chairman
1. This petition has been filed under Section 17 of the Companies Act, 1956 for altering the situation Clause II of the Memorandum of Association of the Company, consequent to passing of a special resolution pursuant to the provisions of Section 192A of the Companies Act, 1956 through postal ballot for shifting the registered office of the petitioner company from the State of Maharashtra to the State of Tamil Nadu.
2. This Company was incorporated in 1949 and had three manufacturing units at Bhandup - Mumbai, Aurangabad and Chennai for manufacturing of automobile components. According to the Company, due to entry of MNCs, automobile recession and excess of labour with the Company and obsolete technology, the Company suffered huge losses from 1987 to 1991 resulting in the net worth of the company becoming negative and as such had to be referred to BIFR. In terms of the scheme of rehabilitation sanctioned by BIFR, Bhandup unit was closed in the year 2000 by completing settlement of all employees and all secured creditors. The unit at Aurangabad was also closed after an agreement with the Employees Union and settlement of the dues of all employees. The only functioning unit is at Chennai which is also running with lean staff strength. Accordingly, with a view to optimise the administrative cost and other expenses and also to carry on the business of the Company more efficiently and economically, the board of directors of the Company decided to shift the registered office of the Company from Maharashtra to Tamil Nadu. The shareholders' approval was obtained by postal ballot for the said proposal and the special resolution for shifting the registered office was approved by the shareholders with 99.99% votes in favour. Accordingly, this petition has been filed seeking for confirmation of the Special Resolution passed by postal ballot.
3. Some of the ex-employees/executives/supervisory staff have filed objection to the shifting of the registered office from the State of Maharashtra on the ground that they have filed cases before the Labour Court complaining that the Company has not paid their full dues and the matter is subjudice and as such shifting of the registered office which would be prejudicial to their interest, should not be permitted.
In the reply to this objection the Company has filed an affidavit stating that the employees had obtained a stay from the Thane Labour Court restraining the Company from shifting the registered office from Mumbai -Maharashtra and this stay has been squashed by the High Court and as such there is no impediment in permitting the Company from shifting its registered office. In the same affidavit the Company has also undertaken that it would abide by the directions given by the Labour Court in regard to the various claims made by the employees in the proceedings before that Court.
4. When the matter was heard the objectors ex-employees/executives/ supervisory staff present in person prayed that till the Labour Court decides their cases, the Company should not be permitted to shift its registered office. Shri R. Sridharan, Practicing Company Secretary, appearing for the Company submitted that since the Company has already undertaken by an affidavit to comply with the directions of the Labour Court in the cases filed by the ex-employees/executives/supervisory staff, they can have no objection in shifting of the registered office of the Company. He explained the rationale for shifting the registered office as indicated in the petition itself. Accordingly, he sought for confirmation of the Special Resolution passed by postal ballot for shifting the registered office of the Company from the State of Maharashtra to the State of Tamil Nadu.
5. I have considered the matter and also the report submitted by Registrar of Companies, Maharashtra vide his letter No. ROC/11-7777/TA/KC/829 dated 12.1.2005. The admitted position is that the Company has no business in the State of Maharashtra after closure of Aurangabad unit and Bhandup unit. The only unit functioning is in Chennai. In the registered office at Mumbai there is only one employee and the entire affairs of the Company are being managed only from Chennai. The special resolution to shift the registered office has been approved by 99.99% votes. Therefore, by 99.99% affirmative votes the shareholders have confirmed that it would be in the interest of the Company that the registered office is shifted to Tamil Nadu. In these circumstances, the objections of the ex-employees/executives/supervisory staff have to be considered. Their main apprehension appears to be that the shifting of the registered office may prejudice their cases in the Labour Court. Now that, by an affidavit the Company has undertaken to comply with the directions of the Labour Court, the apprehension of the employees no longer survives. Accordingly, the alteration in the Memorandum of Association of the petitioner company as approved by Special Resolution by the shareholders of the Company through postal ballot is hereby confirmed as set forth in the schedule hereto and forming part of this Order, subject to the condition that the Company shall ensure compliance with the directions of the Labour Court in cases filed by the ex-employees/executives/supervisory staff.
SCHEDULE RESOLVED THAT pursuant to the provisions of Section 17 of the Companies Act, 1956, Clause II of the Memorandum of Association be altered by the substitution of the words "State of Tamil Nadu" in place of the words "State of Maharashtra".
Further resolved that Clause II of the Memorandum of Association shall be read as under:
"The Registered Office of the Company shall be situated in the State of Tamil Nadu."
Let a copy of this Order be sent to all objectors.