Alteration to memorandum allowing alcohol manufacture upheld if conveniently and advantageously combined and conditioned on project commencement.

An alteration to the memorandum to add manufacture of industrial and power alcohol was treated as permissible where the proposed activity can be conveniently and advantageously combined with the company's existing manufacture of artificial silk cloth; the company demonstrated active pursuit of an acetate yarn project to create an integrated production chain using alcohol as input, and shareholders unanimously approved the change. The amendment's broad wording was narrowed to exclude brewing and potable liquors, and confirmation was made conditional on commencement of acetate yarn production within two years, failing which modification may be sought.

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Issues: Whether the alteration to the memorandum of association adding power to manufacture industrial and power alcohol is confirmable under section 17 of the Companies Act, 1956.

Analysis: The Court examined whether the proposed new business (manufacture of industrial and power alcohol) can be conveniently and advantageously combined with the company's existing business of manufacturing artificial silk cloth. The Registrar argued the proposal fell outside section 17 because the company was not at present producing yarn and the planned acetate yarn project was prospective. The company demonstrated active pursuit of an acetate yarn project to be implemented within two years, which would create an integrated production chain using alcohol as an input. The Court also relied on authority establishing that an additional business may be different from the existing business provided it is not destructive or inconsistent and may be capable of convenient and advantageous combination. The shareholders had unanimously approved the resolution and no record showed that their approval was unjustified. The Court noted the amendment's wording was unduly wide and accepted the company's agreement to narrow it to industrial and power alcohol only.

Conclusion: The petition is allowed and the suggested alteration to the memorandum of association insofar as it enables the company to manufacture industrial and power alcohol is confirmed, subject to deletion of references to brewing and potable liquors and subject to the company's commencement of acetate yarn production within two years (failing which the Registrar may seek modification of the order).

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