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1 - 4 of 4 (0.30 seconds)Secretary, Madras Gymkhana Club ... vs Management Of The Gymkhana Club on 3 October, 1967
7. The next point urged on behalf of the appellant is that the mortgages and hypotecations claimed by the bank are invalid since they contravene the provisions of section 293(1)(a) of the Companies Act. Section 293(1)(a) provides that the board of directors shall not sell, lease or otherwise dispose of the whole or substantially the whole, of the undertaking of the company without the consent of such public company. It is admitted that no such consent has been taken but what is pleaded on behalf of respondent No. 1 is that consent of the company has been taken under clause (d) of section 293(1) of the Companies Act. That clause provides that the board of directors shall not borrow moneys after the commencement of this Act, where the moneys to be borrowed, together withe the moneys already borrowed by the company, will exceed the aggregate of the paid-up capital of the company and its free reserves without the consent of the company. Section 293(1)(a) of the Companies Act will apply when the whole or substantially the whole of the undertaking of the company is sold, leased or otherwise disposed of. Webster's New Standard Dictionary describes the word "undertaking" as meaning a business or project engaged in. The word "undertaking" has been defined as "any business or any work or project which one engages in or attempts as an enterprise analogous to business or trade" according to the decision in Madras Gymkhana Club Employee's Union v. Management. The business or undertaking of the company must be distinguished from the properties belonging to the company. In this case, it is only the properties belonging to the company that have been dealt with by the board of directors under the deeds of hypothecation and mortgage in favour of the bank. Hence, the learned company judge was right in holding that no part of the undertaking of the company was disposed of in favour of the bank.
The Transfer Of Property Act, 1882
Section 213 in The Companies Act, 1956 [Entire Act]
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