TaxTMI 
TaxTMI 
2008 (12) TMI 399
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....mmons supported by an affidavit. A copy of the proposed compromise or arrangement shall be annexed to the affidavit as an exhibit thereto. Save as provided in rule 68 hereunder, the summons shall be moved ex parte. The summons shall be in Form No. 33, and the affidavit in support thereof in Form No. 34. 68. Service on company.-Where the company is not the applicant, a copy of the summons and of the affidavit shall be served on the company, or, where the company is being wound up, on its liquidator, not less than 14 days before the date fixed for the hearing of the summons. 69. Directions at hearing of summons.-Upon the hearing of the summons or any adjourned hearing thereof, the Judge shall, unless he thinks fit for any reason to dismiss the summons, give such directions as he may think necessary in respect of the following matters :- (1)determining the class or classes of creditors and/or of members whose meeting or meetings have to be held for considering the proposed compromise or arrangement; (2)fixing the time and place of such meeting or meetings; (3)appointing a chairman or chairmen for the meeting or meetings to be held, as the case may be; (4)fixing the quorum and th....
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....have been duly complied with. In default thereof, the summons shall be posted before the Judge for such orders as he may think fit to make. ****** 79. Petition for confirming compromise or arrangement.-Where the proposed compromise or arrangement is agreed to, with or without modification, as provided by sub-section (2) of section 391, the company, (or its Liquidator, as the case may be), shall, within 7 days of the filing of the report by the Chairman, present a petition to the Court for confirmation of the compromise or arrangement. The petition shall be in Form No. 40. Where a compromise or arrangement is proposed for the purposes of or in connection with a scheme for the reconstruction of any company or companies, or for the amalgamation of any two or more companies, the petition shall pray for appropriate orders and directions under section 394. Where the company fails to present the petition for confirmation of the compromise or arrangement as aforesaid, it shall be open to any creditor or contributory as the case may be, with the leave of the Court, to present the petition and the company shall be liable for the costs thereof. Where no petition for confirmation of the c....
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....NO. 34 [See Rule 67] [Heading as in Form No. 1] Company Application No. ..............of 19....... ...........Applicant(s). Affidavit in Support of Summons I,.......of etc., solemnly affirm and say as follows :- 1. I am the managing director/secretary/director/.... ...../of the said company, (or an auditor of the said company authorised by the directors to make this affidavit/or liquidator of the said company in liquidation). [Where the application is not by the company or its liquidator, but by a member or creditor, the above paragraph should be suitably altered.] 2. The company was incorporated on............19.....The document now produced and shown to me is a printed copy of the memorandum, and articles of association of the said company, and also contains copies of all the special resolutions which have been passed and are now in force. 3. The registered office of the company is situate at...... 4. The capital of the company is Rs. ......divided into.....(here set out the classes of shares issued and the amounts paid up on each share). 5. The objects of the company are set out in the memorandum of association annexed hereto. They are briefly (here set out the main ....
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.... to hold a meeting of shareholders and members to consider the proposed scheme of amalgamation. The applications were filed stating that the applicant had entered into the said Scheme under which it was proposed to amalgamate appellant Nos. 1 to 5 into the 6th appellant-company. This proposed Scheme of Amalgamation was in fact approved by the Board of Directors vide Resolution dated 15th February, 2003 stating that the amalgamation would result in economy of scale. In accordance with Rule 67, Judge's Summons for Directions regarding holding of meetings was moved ex parte. 6. When the Company Application regarding holding of meeting came before the Company Judge on 15-3-2004, a query was raised as to whether it was not necessary to hear the shareholders and creditors before issuing directions for holding meeting of shareholders and creditors. Appellant contended that Rule 67, quoted above, did not contemplate the hearing of any person, including shareholders and creditors, before issuing directions for holding of meetings. 7. By impugned judgment dated 20-8-2007, the Division Bench of the Karnataka High Court on reference answered the above question of law stating that hearing of ....
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....otice of the meeting is required to be given to the creditors and/or members or such other classes enumerated in Rule 73. Similarly, under Rule 74 advertisement of the notice of meeting is also required to be published in such newspapers and in such manner as the Judge may direct. This is to be supported by affidavit of service under Rule 76. The analysis of the above Rules indicates that there is a clear dichotomy between the threshold stage of issuance of directions to convene a meeting and the subsequent stage of a notice of meeting which is contemplated by Rule 73 and for that precise reason Rule 67 states that the summons shall be moved ex parte. 9. Our view is supported by various judgments of this Court and the High Courts. As far as the scheme of sections 391 to 394 of the Companies Act is concerned, we quote hereinbelow Paragraph 28 of the judgment of this Court in the case of Miheer H. Mafatlal v. Mafatlal Industries Ltd. [1971] 1 SCC 5791 :- "28. The relevant provisions of the Companies Act, 1956 are found in Chapter V of Part VI dealing with 'Arbitration, Compromises, Arrangements and Reconstructions'. In the present proceedings we will be concerned with sections 391....
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....otherwise, and the effect on those interests, of the compromise or arrangement, if, and insofar as, it is different from the effect on the like interests of other persons; and (b )in every notice calling the meeting which is given by advertisement, there shall be included either such a statement as aforesaid or a notification of the place at which and the manner in which creditors or members entitled to attend the meeting may obtain copies of such a statement as aforesaid'. The aforesaid provisions of the Act show that compromise or arrangement can be proposed between a company and its creditors or any class of them or between a company and its members or any class of them. Such a compromise would also take in its sweep any scheme of amalgamation/merger of one company with another. When such a scheme is put forward by a company for the sanction of the Court in the first instance the Court has to direct holding of meetings of creditors or class of creditors or members or class of members who are concerned with such a scheme and once the majority in number representing three-fourths in value of creditors or class of creditors or members or class of members, as the case may be, pres....
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....lication is moved for sanctioning such a scheme which might have got the requisite majority support of the creditors or members or any class of them for whom the scheme is mooted by the concerned company, has to act merely as a rubber stamp and must almost automatically put its seal of approval on such a scheme. It is trite to say that once the scheme gets sanctioned by the Court it would bind even the dissenting minority shareholders or creditors. Therefore, the fairness of the scheme qua them also has to be kept in view by the Company Court while putting its seal of approval on the concerned scheme placed for its sanction. It is, of course, true that so far as the Company Court is concerned, as per the statutory provisions of sections 391 and 393 of the Act the question of voidability of the scheme will have to be judged subject to the rider that a scheme sanctioned by majority will remain binding to a dissenting minority of creditors or members, as the case may be, even though they have not consented to such a scheme and to that extent absence of their consent will have no effect on the scheme. It can be postulated that even in case of such a scheme of compromise and arrangement....