TaxTMI 
TaxTMI 
2026 (9) TMI 961
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....ing Infotrain Limited ('appellant Company/Company' for short) is listed on the Bombay Stock Exchange ('BSE' for short). It is an IT and network training institution. Its shareholders approved insertion of new object clause in the memorandum of association ('MoA' for short) to invest, acquire, hold, sell, trade and deal in any type of virtual digital assets ('VDAs' for short). On November 4, 2024, the Registrar of Companies ('RoC' for short) certified the amendment to the MoA. Appellant made an application to the BSE for an 'in-principle approval' for issue and allotment of equity shares on preferential basis and on May 9, 2025, BSE granted the 'in-principle approval'. Appellant Company circulated offer letter to the proposed pre-identified investors. On May 23, 2025, appellant Company received the issue proceeds and invested in virtual digital assets on the 'Coin DCX Exchange' platform. On June 10, 2025, the Company filed an application and sought listing of the shares issued in the preferential issue. On September 23, 2025, BSE returned the listing application and it is under challenge in this appeal. 3. We have heard Mr. Ravi Kadam, learned Senior Advocate for the appellant an....
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....the impugned communication. 10. We have carefully considered the rival contentions and perused the record. 11. Undisputed facts of the case are, the MoA was amended twice. The first amendment was approved by the shareholders in the AGM (Annual General Meeting) on September 20, 2024 and the RoC approved the same on November 4, 2024. That amendment reads as follows: "To invest, acquire, hold, sell, trade and deal in any type of virtual and/or digital assets, including but not limited to fungible tokens, non-fungible tokens and other blockchain-based assets. To facilitate such activities, The Company can open, maintain and operate accounts with permissible exchanges or trade desks, for the purpose of investing, trading, holding, and managing digital assets in compliance with applicable laws and regulations as deemed necessary or desirable for the business." 12. The second amendment was approved by the shareholders on May 1, 2025. On July 7, 2025, the RoC approved the amendment of objects clause to insert clause 5(III)A and issued a certificate. The second amendment reads as follows: "5. To engage in the business of holding, acquiring, buying, selling, tradin....
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....se arrangements for, collaborate with foreign agencies/institutions for educational schools or colleges or Institutes by whatever name called in the field of education in electronics. 3. To carry on the business in India and abroad of academic development and education, as well as training for professional and skills development of personnel engaged or to be deployed in various trades and vocations including but not limited to organized or unorganized retail sector and automobile servicing and repairs etc. through own- run, franchisee operated or in collaboration with other institutions, and to promote universities, institutions, colleges, schools, vocational training centers for providing such training and spreading awareness of literacy and human development through computers and other media and promote research and development in all branches of human interest and award doctorate, degrees, diplomas or such other titles in vogue in the academic or professional fields. 4. To establish, operate, provide, undertake, develop, manage, promote, own, organize, conduct, or wind up, facilities management and services in relation to fully or partly furnished, staffed and ....
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....n amendment to the ancillary objects and it cannot be operated independently. 20. Both Mr. Kadam and Mr. Rustomjee have relied upon (Dr. A. Lakshmanaswami Mudaliar Dr. A. Lakshmanaswami Mudaliar and Others v. LIC and Another, 1962 SCC OnLine SC 9). In that case, United India Life Assurance Company had donated Rs.2 Lakhs from shareholders account to a charitable Trust. That donation was challenged by the LIC after the Company was merged into it under the LIC Act, 1956. The Apex Court held that the donation was ultra vires because there was no clause in the memorandum authorising such contribution. Mr. Kadam argued that in the instant case clause III (B) authorised the Company to invest, acquire and deal in virtual and digital assets and sought to distinguish the said authority. We may usefully note that in Dr. A. Lakshmanaswami Mudaliar, it is recorded thus: "There is however no ambiguity in the relevant terms of the memorandum of association. Clause III of the memorandum deals with the objects and powers of the company in language which is reasonably plain. The articles may explain the memorandum, but cannot extend its scope. Sub-clause (v) merely authorises the company....
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....ation in this case is whether the first amendment permitted investment and dealing in VDAs. It was argued by Mr. Rustomjee that relying upon Dr. A. Lakshmanaswami Mudaliar (Dr. A. Lakshmanaswami Mudaliar and Others v. LIC and Another, 1962 SCC OnLine SC 9), the Apex Court in Terrascope Ventures Limited (SEBI v. Terrascope Ventures Limited, (2026) SCC OnLine SC 403, 2026 INSC 245) has held that an ultra vires act cannot be ratified. We note that in Terrascope Ventures Limited, it is held as follows: "62. Following the judgment Birkbeck Permanent Benefit Building Society, In re [(1912) 2 Ch. D. 183 (CA).] this court in Dr. A. Lakshmanaswami Mudaliar v. Life Insurance Corporation of India [(1963) 33 Comp Cas 420 (SC); 1962 SCC OnLine SC 9.] observed that where a company does an act which is ultra vires, no legal relationship or effect ensues therefrom. Such an act is absolutely void and cannot be ratified even if all the shareholders agree." 24. It was urged by Mr. Kadam that in Companies Act, 2013, there is no classification such as 'main objects' and 'ancillary objects'. Adverting to Section 4 of the Companies Act, 2013, he submitted that Section 4 mandates that memorand....