TaxTMI 
TaxTMI 
2010 (5) TMI 384
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....nization of share capital, having been held by Hadoti Vikas Punji Ltd., Kota pursuant to Resolution passed by Board of Directors of the company on 5-9-2008. 2. The company initially filed Co. Appl. No. 12/2007 under section 391 of the Companies Act on 22-1-2007 seeking directions to hold separate meetings of its preference and equity shareholders for consideration of scheme of Arrangement; wherein vide order dated 23-2-2007, this Court directed for holding of separate meeting of shareholders on 28-3-2007 at Company's registered office at Kota under Chairmanship appointed by the court. Pursuant to their separate meetings of preference and equity shareholders held on 28-3-2007 wherein the Scheme of Arrangement was unanimously passed and th....
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....tiated under section 391 of the Act is not maintainable. Further objection is that since the process involves 'reduction in capital', hence, petitioner-company is under obligation to comply with provisions contained in sections 101 to 104 of the Act, which has not been followed; and further objection is that meeting of creditors ought to have been called for consideration of the Scheme of Arrangement as proposed by the company. 5. Counsel for objectors submits that when a specific procedure has been provided under the Companies Act, provisions of sections 391 to 394 cannot be invoked to circumvent procedure provided under the law; and that apart, Articles of Association of the company being a constituent document is binding upon company ....
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....nsidered to be reduction in share capital but involves its re-organization where a part of preference share capital is being converted into equity share capital; inasmuch as where reduction in face value of preference share capital takes place, there may have an interplay in between section 106 (variation in rights and share holders) and section 391 of the Act. 6.2 Counsel further submits that the special rights to a class of shares are altered by machinery of a Scheme of Arrangement and under section 391, the Court may sanction a scheme which involves alteration of class rights. 6.3 Counsel further submits that what has been required to be examined regarding the scheme under section 391 of the Act is to ensure that members or class o....
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....d by counsel for both the parties, and with their assistance, examined the material on record as well as the Scheme of Arrangement taking note of reports having been duly furnished based on unanimous resolution approving the scheme, itself in separate meetings of preference and equity shareholders held pursuant to order of this Court. It is relevant to mention that no objection to the Scheme of Arrangement proposed by present petitioner-company has been filed either by Regional Director, Department of Corporate Affairs, Noida, or by preference and equity shareholders. 8. The scope and ambit of jurisdiction of the company court has been examined by Apex court in Miheer H. Mafatalal's case (supra); and broad contours of such jurisdiction h....
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....cheme and can judiciously X-ray the same. (7) That the company court has also to satisfy itself that members or class of members or creditors or class of creditors, as the case may be, were acting bona fide and in good faith and were not coercing the minority in order to promote any interest adverse to that of the latter comprising of the same class whom they purported to represent. (8) That the scheme as a whole is also found to be just, fair and reasonable from the point of view of prudent men of business taking a commercial decision beneficial to the class represented by them for whom the scheme is meant. (9) Once the aforesaid broad parameters about the requirements of a scheme for getting sanction of the Court are found to hav....
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....s amounts to redemption of preference shares, the company was under obligation to comply with section 80 of the Act; and the provisions relating to reduction in share capital under sections 101 to 105 of the Company Act, in the opinion of this Court is without substance. What has been proposed under the Scheme of Arrangement by petitioner company will not amount to redemption of preference shares and if at all there would have been any objection, it could have been raised only by preference and equity shareholders but indisputably, no objection has been raised by either of them; whereas on the contrary, separate meetings of preference and equity shareholders were convened pursuant to order of this Court, wherein resolutions were unanimously....