1981 (11) TMI 141 - HC - Companies Law

Summary

Issues:
1. Permission and directions to convene meetings for scheme of amalgamation
2. Application to recall order sanctioning meetings
3. Report of meetings and lack of quorum
4. Approval of amalgamation by secured creditors
5. Jurisdiction of the court and intervention of transferor company
6. Bona fides of the application and agreement breach

Analysis:
1. The judgment dealt with Company Application No. 1763/81 seeking permission and directions for convening meetings for the scheme of amalgamation between Suri and Nayar Limited and M/s. Spraymetal P. Ltd. The court granted the prayer and appointed a chairman for the meetings, fixing the venue, date, time, and quorum for the meetings as required by law.

2. An application, Company Application No. 1801/81, was filed by M/s. Spraymetal P. Ltd. seeking to recall the order sanctioning the meetings. The argument presented was that certain information was misleading, and the purpose of the meetings was not genuine. However, the court did not postpone or cancel the meetings, allowing them to proceed to verify the concerns raised by the applicant.

3. The report of the meetings revealed that the unsecured creditors' meeting did not meet the required quorum, and the secured creditors unanimously voted against the amalgamation. Consequently, three out of four meetings were abortive due to the lack of quorum, and the amalgamation was not approved by the secured creditors.

4. Since the scheme was not approved by the secured creditors, the court determined it lacked jurisdiction to proceed further. The court noted that had all meetings resulted in approval, a petition under section 391(3) of the Companies Act could have been awaited.

5. The judgment addressed the jurisdictional issue regarding the intervention of M/s. Spraymetal P. Ltd., the transferor company situated outside the court's jurisdiction. The court held that M/s. Spraymetal P. Ltd. had no standing to intervene in the application, and any breach of agreement should be addressed in the appropriate forum.

6. Lastly, the court examined the bona fides of the application and the alleged breach of agreement between the parties. It concluded that there was no fraudulent intention in the statements made under section 393(1) of the Companies Act and that M/s. Spraymetal P. Ltd. had no authority to compel the amalgamation.

In conclusion, the court recorded the chairman's report, closed Company Application No. 1763/81, and deemed Company Application No. 1801/81 infructuous, with the applicant having no standing.