TaxTMI 
TaxTMI 
2013 (2) TMI 10
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....ed a Special Officer to ascertain the wishes of the shareholders in a joint meeting to be held at the office of the advocate moving the said application or any other place of his choice. The Special Officer submitted a report wherefrom it would appear, the shareholders agreed to the said scheme being propounded. Accordingly, His Lordship disposed of the said application vide order dated September 29, 2011. His Lordship directed the company to file appropriate application for confirmation of the scheme of amalgamation. Accordingly, the appellants being the four companies, filed an application for sanction of the scheme when the learned Judge directed notice to be published in two newspapers and a copy of the petition to be served upon the Regional Director, Department of Corporate Affairs, Eastern Region, Calcutta. Pursuant to the notice, the Central Government appeared. Despite advertisement being published none came forward to object to the said scheme being propounded. In course of time there was change of determination and another learned Judge took up the said application for hearing on January 4, 2012 when His Lordship gave direction for filing affidavits. Central Govern....
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....e two petitioner companies has not been furnished along with their reply. Hence, this office vide letter dated 27- 02-2012 followed by subsequent reminder dated 20-04-2012 has sought details of these information which is yet to be replied by the petitioner companies. The reminder sent has been returned undelivered with certain invisible postal remark. It is, therefore, prayed before the Hon'ble Court to direct the petitioner companies to submit the above information to the office of the deponent so as to enable the Central Government to file report in the form of supplementary affidavit before the Hon'ble Court in this matter. (Copy of letters issued on 27-02-2012 and 20-04-2012 are enclosed herewith - Annexure 'A' &'B'). Before filing of the affidavit, the Central Government asked for several particulars from the appellant companies. One of them answered, the others did not. The Central Government was not satisfied with the answer given. The learned Judge passed orders asking the appellants to respond to the query made by the Central Government. The matter appeared before His Lordship ultimately on July 2, 2012 when the learned counsel appearing for the appellants insiste....
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....dship also directed the Central Government to continue with the investigation. While doing so, His Lordship observed, "this direction should be seen to be a direction under Section 237 of the Companies Act". Hence, this appeal by the appellants. When the appellants moved the appeal before us we stayed operation of the judgment and order to the extent that directed payment of cost to the extent of rupees seven thousand. With regard to the other direction prohibiting them from filing any application for five years we observed as follows: "The order of restraint in filing a further scheme application is also stayed subject to the assurance given by Mr. Mookherjee's client that they would not suppress the orders of this Court in case any subsequent scheme is brought." We did not stay the order directing the Central Government for carrying on investigation, however observed, in case they would investigate such investigation should not be influenced by the observation made by His Lordship in the judgment and order impugned. We finally heard the appeal on January 3, 2013 when upon conclusion of hearing we reserved the judgment. Mr. S.B. Mookherjee, learned senior counsel ap....
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....he Special Officer appointed by Court specifically recorded, the shareholders unanimously approved the scheme. Commenting on the objection raised by the Central Government in two affidavits quoted (Supra), Mr. Mookherjee contended, share issued at a premium was not prohibited in law. It was the wish of the Board of Directors and/or the persons having management and control of the companies and ultimately the wish of the shareholders, the proposed share exchange ratio was duly approved by the shareholders at large that too, unanimously. There being no law prohibiting such issue, the Central Government was not entitled to object to the same. Such objection was not tenable in law. He also demonstrated from the paper book that out of four companies one did not issue any share at a premium value. In any event, the shareholders by their letters appearing at page 201 onwards duly consented to such proposed scheme being sanctioned. He referred to the list of shareholders appearing at page 257 to 260 and contended, each one of them, by separate letter of consent, approved the scheme. He also referred to paragraph 13 of the petition where the appellants categorically contended, no proc....
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....E. M.C. Steel Ltd. & Ors.) x) 1981 Volume-51 Company Cases Page-634 (Ashoka Marketing Ltd. -VS- Union of India) xi)1983 Volume-54 Company Cases Page-370 (Kumaranunni -VSMathrubhumi Printing & Publishing Company Ltd.) xii) All India Reporter 1967 Calcutta Page-406 (Patrakola Tea Company Ltd.) xiii) 2001 Volume-I Company Law Journal Page-121 (Safia Usman -VS- Union of India & Anr.) xiv) All India Reporter 1981 Supreme Court Page-1298 (Needle Industries (India) Ltd. -VS- Needle Industries Newey (India) Holdings Ltd. & Ors. xv) 2004 Volume-121 Company Cases Page-729 (Rohinten Mazda & Anr. -VS- Hypoids (India) Private Ltd.) xvi) 2002 Volume-110 Company Cases Page-710 (Safia Usman - VS- Union of India & Anr.) xvii) 2005 Volume-I Supreme Court Cases Page-212 (Dale & Carrington Investment (Pvt.) Ltd. & Anr. -VS- P.K. Prathapan & Ors.) xviii) 2001 Volume-251 ITR Page-263 ( Commissioner of Income Tax -VS- Steller Investment Ltd.) Per contra, Mr. Bhashkar Prasad Banerjee, learned counsel appearing for the Central Government drew our attention to the affidavits filed by the Central Government and contended, Central Government found the share exchange ratio unusual....
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....cisions in view of the additional observation of His Lordship that such direction should be seen to have been made under Section 237. While making comment, Mr. Mookherjee in his usual fairness admitted inherent power of the Court to direct investigation, even not prayed for formally by any of the parties. However, the pre-requisite of Section 237, according to him, must be complied with meaning thereby, the learned Judge would have to form an opinion that there was prima facie evidence of irregularity, before the learned Judge would make a declaration that affairs should be investigated upon by the Central Government. We fully agree with Mr. Mookherjee on that score. The Section itself is absolutely clear on the issue. We need not take recourse to any precedent. Question would still be germane as to whether the learned Judge did have any such material before His Lordship and if so, whether His Lordship was justified to direct a particular agency to investigate. To take up the second issue first, in our view, the learned Judge was not perhaps correct to name any agency that would be in excess of the power conferred under Section 237. Directorate of Revenue Intelligence is a limb ....
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.... above. The appellants did not challenge the same before the Apex Court. Hence, the said direction attained finality. When the investigation was in process the appellants withdrew their application. Hence, in our view any such continuing process could not be made futile and/or nugatory by withdrawal of the petition. Court felt, an investigation should be made. The Division Bench upheld such direction. Withdrawal and/or dismissal of the application, in our view, should not stand in the way of bringing the said process into logical conclusion. iv) APPLICABILITY OF SECTION 237 Mr. Mookherjee in his usual fairness admitted the Court's power to direct such investigation. Hence, the learned Judge did not commit any illegality in observing that the order should be treated as an order under Section 237. The question would still remain, whether the learned Judge had sufficient evidence to continue such investigation. Mr. Mookherjee put emphasis on the decision of our Court in the case of Patrakola Tea Company Limited (Supra). He relied on paragraph 8 to 10 wherein the learned single Judge discussed the scope and ambit of Section 237. We would however, refer to paragraph 35 of the s....
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....he Court should either allow a scheme of amalgamation or reject the same, if not satisfied. Such question however, may not be germane herein as the appellants did not proceed further. They withdrew the scheme. The learned Judge directed investigation at a stage as when the appellants were proceeding with their scheme. To what extent the learned Judge was within His Lordship's authority, was a question that attained finality in the judgment and order of the Division Bench in the former appeal. Today we are only required to decide whether continuation was permissible or not. In our view, once the investigation was directed that must come to a logical conclusion. The Central Government is free to choose the agency. We already observed to that extent. It is for the Central Government to decide the course of action. In any event, if any action is proposed that must be in accordance with law. We should not presume as to what would be the consequence of such investigation. We fully agree with Mr. Mookherjee. The Company Court should only declare that an investigation should be carried out by the Central Government. The learned Judge did so in the other way by observing, the order shoul....