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1961 (12) TMI 43 - SUPREME COURTValidity of an order made under section 36 of the Insurance Act, 1938 sanctioning the transfer of its life insurance business by one insurance company to another questioned Held that:- The transfer in this case is an exercise of this power and hence within the objects of the company. An exercise by a company of a power given by its memorandum cannot amount to an alteration of the memorandum at all. In the present case the thing has been done under express statutory power. No question here arises of a corporate power. Further, there is not here a distribution of the assets of the transferor company after its undertaking had been transferred. Hence we have here no winding up really. It was after such approval that the transfer had been sanctioned under section 36 of the Insurance Act and may be, though we do not have this on the record, the transfer was effected by proper documents executed between the companies. An agreement only to transfer the undertaking by the directors clearly does not violate section 86H for it is merely tentative, subject to final approval by the company in general meeting. In the present case, the defect, if any, arose from a statutory provision itself of which the shareholders must be deemed to have had knowledge. It is not possible to take the view that a transfer cannot be sanctioned under section 36 if the result of that is to denude the transferor company of all its assets out of which an agent can be paid his commission. In the present case, he actually heard the policy-holders. Therefore, it does not seem to us that it can be contended with substance that sections 35 and 36 of the Insurance Act are not pari materia with the sections of the Companies Acts to which we have earlier referred. The last point of Mr. Sinha must also fail. Appeal dismissed.
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