TaxTMI 
TaxTMI 
1996 (12) TMI 299
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....result of amalgamation will benefit their optimum utilisation of raw materials, high value spares, consumables, high rate of electrical equipment, etc., resulting in saving of considerable amounts and helping expeditious and economical implementation of expansion projects. In the connected Company Application Nos. 173 and 174 of 1996, this Court directed convening of the meetings of the shareholders. The respective chairpersons have filed their reports showing that the shareholders approved the scheme. As per the scheme, the appointed date is 1-4-1996. As per para 8 of the scheme, the transferee company shall allot to the shareholders of the transferor company four equity shares of the face value of Rs. 10 each for five equity shares of the face value of Rs. 10 each held in the latter company. The transferor company holds 2,25,450 equity shares of Rs. 10 each fully paid and 3,60,800 equity shares of Rs. 10 each partly paid, i.e., Rs. 2.50 per share in the transferee company. On the scheme being effective, the said shares shall not be cancelled but shall be transferred to and vested in a trustee to be appointed by the board of directors of the transferee company who shall sell the s....
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....f it. The second objection raised by the official liquidator regarding the lock-in period has to be equally rejected as that condition was stipulated at the time of public issue and is no longer relevant. The third objection raised by the official liquidator is that the consent of the secured creditors has not been obtained. Apart from the fact that the official liquidator is only concerned with certifying under the proviso to section 394 of the Act that the affairs of the transferor company do not appear to have been conducted in any manner prejudicial to the interests of its members or that of public interest, even on the merits, the Companies Act does not require any notice to the creditors of the transferor company. The proposal or amalgamation is widely advertised in newspapers and no creditor either secured or unsecured has filed any objection in this Court. Further, the creditors of the transferor company will not be prejudiced in any way as they will have a financially stronger company as their debtor. 6. Mr. C. Kodandaram relied on Coimbatore Cotton Mills Ltd., In re [1980] 50 Comp. Cas. 623 (Mad.); Telesound India Ltd., In re [1983] 53 Comp. Cas. 926 (Delhi) and Mafatl....
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....half of the landlord and, to an extent, on behalf of Sondhi, has to be answered in the negative. A bare reading of section 391 of the Act leaves little doubt that a compromise or arrangement is either between a company or its creditors, or between a company and its members. An arrangement in the nature of amalgamation is the result of an agreement between the amalgamating company and its members, as well as a corresponding agreement between the transferee company and its members, and there is, therefore, no provision for the participation of persons other than the members of the two companies to vote on an arrangement of amalgama-tion proposed between a company and its members. In the case of Union of India v. Asia Udyog ( P.) Ltd [1974] 44 Comp. Cas. 359 (Delhi), I had an occasion to consider the scheme of the provisions of the Act of 1913, corresponding to sections 391 to 394 of the present Act, in a slightly different context and had pointed out that although the provisions contained in Chapter V of the present Act, inter alia, with regard to compromise or arrangement and reconstruction of companies were a considerable improvement on the corresponding provisions in the previous ....
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....ed to and vested in the transferee company. In fact, by the proposed scheme of amalgamation the properties, movable or immovable, tangible and intangible, of the transferee company are not going to be affected. The creditors of the transferee company are not, in any way, going to be affected by the proposed scheme of amalgamation as the proposed scheme would result in the increase of all movable and immovable assets of the transferee company and it would not in any way result in transferring or vesting any of the properties of MIL to anyone else. As such, by the proposed scheme of amalgamation the class of creditors of the petitioner company is not going to be affected at all. Under section 391, on an application being made to the court, the court passes appropriate orders to call, hold and conduct the meeting. Since in a petition for sanction to the scheme of amalgamation the properties of the transferee company are not to be adversely affected and since they are available to the class of creditors, ordinarily, their meeting is not required to be convened. Shackleton on Law and Practice of Meetings notes that 'where the proposed arrangement is one between one company and its membe....