Banking company memorandum amendment could stand as deletion of core banking powers removed the essential character of banking.

Deletion of the core banking clauses from a company's memorandum was held sufficient to show that it would not remain a banking company in substance, because mere power to lend money did not preserve the essential character of banking. Confirmation of the alteration was also not refused on the ground of alleged non-implementation of the related scheme of arrangement, since the material showed notice, support from concerned constituents and no continuing basis to treat the company as a banking concern under the existing memorandum. A later requirement of a Reserve Bank certificate was not applied retrospectively to defeat a pending appeal in the absence of clear legislative intent. The refusal of confirmation was set aside and the alteration was allowed.

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Issues: (i) whether the proposed alteration of the memorandum would leave the company carrying on banking business in substance, (ii) whether the court should refuse confirmation because of the alleged non-implementation of the scheme of arrangement and the surrounding commercial circumstances, and (iii) whether the newly inserted requirement of a Reserve Bank certificate applied to the pending appeal.

Issue (i): whether the proposed alteration of the memorandum would leave the company carrying on banking business in substance.

Analysis: The essential feature of banking was held to be the receipt of deposits from the public, repayable in the manner contemplated by the banking statute, together with the ordinary incidents of banking such as honouring cheques and dealing with deposits as a banking relationship. The proposed amendments removed the principal clauses authorising the banking activity and, on the altered memorandum, the company would no longer have the core powers that make a concern a banking company. Mere power to lend money, without the essential deposit-taking character of banking, was held insufficient to convert the company into a banking company. The objection that the company would continue banking in disguise was therefore rejected.

Conclusion: The proposed alterations did not leave the company as a banking company in substance and this objection failed.

Issue (ii): whether the court should refuse confirmation because of the alleged non-implementation of the scheme of arrangement and the surrounding commercial circumstances.

Analysis: The discretion under the companies statute was required to be exercised with regard to the interests of creditors, shareholders and the public, but the material facts showed unanimous support from the concerned constituents, proper notice and publicity, and an earlier order that had already removed the principal banking clauses from the memorandum. In these circumstances, the company was no longer in a position to function as a banking company under the then-existing memorandum, and the objection based on non-implementation of the scheme did not justify refusal of confirmation. Any grievance arising from the scheme could be pursued in appropriate proceedings under the scheme itself.

Conclusion: The refusal to confirm the alteration could not be sustained on this ground.

Issue (iii): whether the newly inserted requirement of a Reserve Bank certificate applied to the pending appeal.

Analysis: The additional certificate requirement introduced by the amending provision was treated as affecting the right to maintain the application, but not as a retrospective bar unless such intention was clearly expressed. As the application had already been decided before the amendment came into force, and the appeal was only a continuation of that proceeding, the amendment was not construed to defeat the pending matter in the absence of clear retrospective language.

Conclusion: The amendment did not bar the pending appeal and the objection based on the certificate requirement failed.

Final Conclusion: The order refusing confirmation was set aside and the alteration sought by the company was allowed, with costs awarded to the company.

Ratio Decidendi: Where the core characteristics of banking are deleted from the memorandum, the company is not left carrying on banking merely because it retains a general power to lend, and a later procedural bar will not retrospectively defeat a pending application absent clear legislative intent.

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