TaxTMI 
TaxTMI 
2013 (9) TMI 452
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....ompany, latest auditor's report on accounts of the Company and pendency of any investigation proceeding in relation to the Company. At the time of promulgating the Companies Act, 1956, Section 394A was not incorporated but was subsequently inserted by Act 31 of 1965 with effect from 15th October, 1965. By virtue of Sub-section 1 and 2 of Section 643 of the Companies Act, 1956, the Companies (Court) Rules 1959 was framed by the Supreme Court of India and assumes the Act of parliament. The said rule came into force on and from 1st day of October, 1959. Rule 67 & 68 of the said rules provide for moving the application by way of judges summons ex parte, unless an application is taken out other than the Company. In such event, the copy of the summons and the affidavit in support of the said judges summons 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 hearing of the summons. Rule 69 of the said rules contains the provisions relating to the directions at the hearing of the judges summons which further provides that upon hearing on the day when it is moved ex parte or any adjourned date, the Court ca....
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....ns before calling the meeting of the members or creditors or its classes. It has been further observed that "any order" occurring in Section 394A should be read as "any final order". The interpretation was given by this Court in the above noted case so to avoid the conflict between Section 394A and the rules framed so as to the render provision workable. Although, the aforesaid point was not directly involved in case of Ucal Fuel Systems Ltd., In re [1992] 73 Comp. Cas. 63 (Mad.), the Madras High Court held that it is obligatory on the Court to give notice to the Central Government of every application made to it under Section 391 or 394 as it would enable the Central Government to study the proposal and raised objections thereto, so that, the interest of the investing public at large may be taken into account by the Court before sanctioning the scheme. Neither Bangeswari Cotton Mills Ltd. nor Ucal Fuel Systems Ltd. (supra) laid down that the notice to the Central Government is optional but in unequivocal terms held that notice to the Central Government is imperative and/or obligatory before passing any order under Section 391 or 394 of the said Act. The Allahabad High Court ....
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....s, however, a well known rule of construction that if there is nothing to modify or qualify the language which the statute contains it must be construed in the ordinary and natural meaning of the words". I find nothing either in the enactment or in the rules to indicate that the word 'application' is used in Section 394-A for applications by petitions only. Nor do I find a conflict between Section 394-a (Sic and?) the Companies (Court) Rules." The Allahabad High Court answered the first question in affirmative that the notice is required to be given to the members at the threshold stage of moving the application. The judgment of the Allahabad High Court was considered by the Apex Court in case of Chembra Orchard Produce Ltd. v. Regional Director of Company Affairs [2009] 89 SCL 109 and it is held that the interpretation given in Hind Auto Industries Ltd. (supra),if accepted, would render the scheme of the Companies (Court) Rules, 1959 unworkable. However, the Apex Court did not make any observations relating to the interpretation of Section 394A of the Companies Act which could be readily inferred from above observations: "14. In the impugned judgment....
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....rly, second proviso to the said section provides that no order for the dissolution of any transferor company under clause (iv) of sub-section (1) of Section 394 of the Act shall be made unless the Official Liquidator has, on scrutiny of the books and papers of the company, made a report to the Court that the affairs of the company have not been conducted in a manner prejudicial to the interests of its members or to public interest. Thus, section 394 of the Act casts an obligation on the Court to be satisfied that the scheme of amalgamation or merger is not prejudicial to the interest of its members or to public interest." The Company Court does not act as a Court of an appeal and is equally not expected to put it seal of an approval on the scheme, either the majority of the shareholders have voted in favour of the Scheme or the Company Law Board or the Registrar or the Official Liquidator has not put any adverse report. The two provisos to Section 394 of the Act were added and enforced on the same day, when Section 394A came into force. If the aforesaid provisos can operate after the meeting is convened, the language employed in Section 394A of the Act suggest that the notice to....
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....those societies which became member society of the federal society after 23-8-2000. In this view of the matter, the impugned judgment of the High Court does not suffer from any infirmity. Even if there remained any doubt in the matter of interpreting the proviso, in the Ordinance that has been promulgated on 27-2-2001, called Maharashtra Ordinance 10 of 2001, after the first proviso to sub-section (3), a second proviso had been inserted, which has removed any doubt or controversy inasmuch as it has been indicated therein that the first proviso will not apply to the member society which has invested any part of its fund in the share of the federal society before the commencement of the Maharashtra Cooperative Societies (Amendment) Act, 2000 dated 23-8-2000. The aforesaid Ordinance also has been given a retrospective effect, to be effective from 23-8-2000. The Ordinance having been held to be valid by us as stated above, the so-called prohibition contained in the first proviso to sub-section (3) of Section 27 will not apply to all those societies which have already become members of the federal society prior to 23-8-2000." It is further held by the Supreme Court in case of Greater....
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..... To give an illustration, if a person says "this is a pencil", then he means that it is a pencil; and it is not that when he says that the object is a pencil, he means that it is a horse, donkey or an elephant. In other words, the literal rule of interpretation simply means that we mean what we say and we say what we mean. If we do not follow the literal rule of interpretation, social life will become impossible, and we will not understand each other. If we say that a certain object is a book, then we mean it is a book. If we say it is a book, but we mean it is a horse, table or an elephant, then we will not be able to communicate with each other. Life will become impossible. Hence, the meaning of the literal rule of interpretation is simply that we mean what we say and we say what we mean." From the above principles, it cannot be said that the provisions contained under Section 394A of the Companies Act can only be resorted after convening the meeting or before passing the final order either sanctioning or refusing to sanction the scheme. The said provision can be pressed at any stage on an application being moved under Section 391 or 394 of the Act depending upon the facts of....
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....pensed with. In addition at least 21 (twenty one) clear days before the meeting to be held as aforesaid, notice convening the said meeting at the place and time as aforesaid, together with a copy of the said scheme of amalgamation, a copy of the statement required to be sent under Section 393 of the Companies Act, 1956 and the prescribed Form of Proxy be sent by registered post and/or personal messenger addressed to each of the said equity shareholders of the applicant company at their respective registered or last known addresses. The Advocate-on-Record of the applicant company, abovenamed, do within 15 (fifteen) days from this day file in Court the form of the advertisement, the notice and statement to accompany the notice and the same shall be settled by the Assistant Registrar (Company) of this Court. Mr. Amitava Ghosh, Advocate, failing him Mr. D. N. Sharma, Advocate shall be the Chairman of the meeting of the applicant company no. 1, abovenamed, to be held as aforesaid, at a remuneration of 2000 Gms. Mr. D. N. Sharma, Advocate, failing him Mr. Kuldeep Mallick, Advocate shall be the Chairman of the meeting of the applicant company no. 2, abovenamed, to be held as a....