The majority of the shareholders of Kasi Textiles Private Ltd., passed a special resolution to alter its Articles of Association and gave the directors a power to require any shareholder who is doing competing business w

The alteration of Articles of Association is valid. A change in Articles made bona-fide for the benefit of the Company as a whole is justified. In this case, the directors were empowered to change the Articles of Association to ask a shareholder to transfer his shares in case he was found to be carrying on a business in competition with that of the Company. It is possible for a person to take advantage in a competing business, of facts known to him or which he may know because of his shareholding in the Company. Such a member must be eliminated from the group of membership in the interests of the Company as a Company and therefore an alteration of Articles to this effect is valid. The facts of the given problem are similar to the facts of a decided English case of Sidebottom Vs Kershaw in which Court held that alteration was valid in as much as it was made bona fide and in the interest of the Company as a whole. Hence, in the given case, Mr. Swaroop will not succeed.