1982 (7) TMI 242 - HC - Companies Law

Summary

Issues: Shareholder requisitioned meeting to withdraw petition for scheme sanction under Companies Act Section 391.

The judgment delivered by Justice Sujata V. Manohar of the High Court of Bombay pertained to an application seeking ad interim relief to restrain a requisitioned meeting of a company. The meeting was requisitioned by some shareholders to pass a resolution for the company to re-negotiate with another company and withdraw a petition filed for scheme sanction. The main resolution in question was the withdrawal of Petition No. 84 of 1981, which sought to sanction a scheme of amalgamation between the petitioner-company and another entity. The scheme had already been approved by a majority of shareholders and creditors, as well as by the Central Government under the MRTP Act, making it ripe for hearing before the court.

Justice Manohar analyzed the provisions of Section 391 of the Companies Act, which outline the process for approving schemes of compromise or arrangement. The section requires the approval of a majority representing three-fourths in value of creditors or members for a scheme to come up for court sanction. In this case, the scheme had been duly approved by the members and creditors, and was ready for court sanction. The judge opined that once a scheme is passed with the requisite majority under Section 391(2), shareholders alone cannot compel the company to withdraw from the scheme. Shareholders can present their objections during the court's consideration of the scheme, and exceptional circumstances may warrant a scheme not being sanctioned despite initial approval.

The judge distinguished the present case from precedents related to requisitioned meetings under Section 169(1) of the Companies Act, emphasizing that the board had called the meeting in compliance with the requisition received. The judge also referred to a previous court decision regarding the validity of a requisition when the accompanying explanatory statement lacked material particulars, indicating that such details were not relevant to the current matter. Ultimately, the judge directed the adjournment of the scheduled meeting pending further consideration after the parties filed their affidavits, as the issue required detailed examination beyond the prima facie view expressed in the judgment.