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of <h1>Transfer of Assets in Amalgamation: Not a Transfer by Assignment but by Operation of Law.</h1> The Court held that the transfer of assets under a scheme of amalgamation was not considered a transfer by assignment but by operation of law. As a ... Amalgamation Issues Involved:1. Whether the execution proceedings were maintainable without serving notice under Order 21, Rule 16 of the Civil Procedure Code.2. Whether the transfer of assets under a scheme of amalgamation is considered a transfer by assignment or by operation of law.Issue-wise Detailed Analysis:1. Maintainability of Execution Proceedings without Notice under Order 21, Rule 16 of the Civil Procedure Code:The judgment debtors argued that the execution proceedings were not maintainable because no notice under Order 21, Rule 16 of the Civil Procedure Code had been served. The respondent company contended that no such notice was necessary as there had been no 'transfer by assignment' but rather a transfer by operation of law.The Court held that the case was not one of transfer by assignment but of transfer by operation of law, and therefore, the respondent was not required to serve any notice under Order 21, Rule 16. The Court emphasized that the proviso to Order 21, Rule 16, which requires notice in cases of transfer by assignment, did not apply here. The exceptions to the proviso do not eliminate the need for notice but allow the execution to proceed pending the hearing of objections. The Court found that neither of the exceptions applied in this case as no copy of the High Court's order was filed with the application, and a verification by the Bank of Calcutta could not be treated as an 'affidavit by the transferor.'2. Nature of Transfer under a Scheme of Amalgamation:The appellants contended that the transfer of assets under the scheme of amalgamation was by assignment, and thus notice under Order 21, Rule 16 was necessary. They argued that the transfer was effected by the scheme of composition and not by the Court's order. The respondent, however, argued that the transfer was by operation of law.The Court analyzed Section 153A of the Indian Companies Act, which deals with the sanctioning of a scheme of amalgamation. The Court noted that the section provides for the transfer of assets by virtue of the Court's order, and not by assignment. The transfer is accomplished by the statutory provision that the property shall be transferred and vested in the transferee company by the force of the Court's order. The Court concluded that the transfer in this case was not by assignment but by operation of law.The Court further clarified that the phrase 'by operation of law' includes transfers effected by the law or the law courts, and not just events like death, devolution, or succession. The Court held that the transfer in this case, being by virtue of an order of the Court and by the force of Section 153A(2) of the Indian Companies Act, was a transfer by operation of law.Conclusion:The Court concluded that the transfer of assets under the scheme of amalgamation was not by assignment, and therefore, the appellants were not entitled to a notice under Order 21, Rule 16 of the Civil Procedure Code. The appeals were dismissed with costs.
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