High Court Overturns Amalgamation Order, Ensures Workmen's Rights

The High Court set aside an order sanctioning a scheme of amalgamation under section 391 of the Companies Act between two companies due to lack of consideration for workmen's interests. The court directed a meeting for workmen to express their preferences through a secret ballot, with an offer that if a majority declined employment with the acquiring company, the scheme would be terminated, and retrenchment benefits offered. The court appointed a chairman to oversee the meeting, with only concerned workmen and nominated assistants allowed to attend, and the companies bearing the meeting costs. Further proceedings were adjourned based on the workmen's preferences.

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Issues:
1. Scheme of amalgamation under section 391 of the Companies Act with modification.
2. Compulsory transfer of workmen objected by the trade union.
3. Order of sanction affecting the workmen's interests.
4. Lack of consideration of workmen's interests in the order under appeal.
5. Offer made by the companies regarding workmen's employment preferences.
6. Decision on the scheme based on workmen's preference through a secret ballot.
7. Directions for conducting a meeting to determine workmen's preferences.
8. Appointment of a chairman for the meeting and reporting requirements.
9. Cost allocation for the meeting.

Analysis:
The judgment involves an appeal concerning the sanctioning of a scheme of amalgamation under section 391 of the Companies Act between two companies, GM and JWIL, with modifications. The trade union representing GM's workmen objected to the scheme due to the provision of compulsory transfer to JWIL. The single judge modified the scheme to remove the compulsory transfer provision, allowing employees to choose between joining JWIL or remaining with GM with full legal entitlements. However, the order did not consider the merits of the scheme concerning the workmen's interests, leading the High Court to set aside the order and remand the matter for fresh consideration.

During the appeal hearing, an offer was made by the companies regarding the workmen's employment preferences. The offer stated that if a certain proportion of workmen declined employment with JWIL, the scheme would be abandoned, and retrenchment benefits would be offered to the remaining workmen. The court accepted this offer and directed a meeting to be held for workmen to express their preferences through a secret ballot, presided over by an officer of the court. The chairman of the meeting would report the workmen's decisions, and if the majority declined employment with JWIL, the scheme would be terminated.

GM was directed to provide written notice to each workman about the meeting, where they could choose between JWIL employment or GM retention. The meeting details were specified, and the chairman was appointed to oversee the secret ballot process. Only concerned workmen and nominated assistants were permitted at the meeting, with the companies bearing the costs. The court adjourned the matter to September 13, 1991, for further proceedings based on the workmen's preferences as determined in the meeting.

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