1996 (3) TMI 394 - HC - Companies Law

Compromise and arrangement, Amalgamation, Winding up - Power of registrar to strike defunct company off register, Winding-up of foreign companies

Issues Involved:
1. Jurisdiction of the High Court to sanction the scheme of amalgamation.
2. Validity of the scheme of amalgamation given the non-existence of the transferor company on the appointed date.
3. Allegation of fraud and suppression of material facts.
4. Locus standi and bona fides of the applicants.

Detailed Analysis:

1. Jurisdiction of the High Court to Sanction the Scheme of Amalgamation:

The applicants challenged the jurisdiction of the High Court to sanction the scheme of amalgamation involving the Indian assets of a British company. The court held that it had jurisdiction under sections 390, 391, 394, and 394(4)(b) of the Companies Act, 1956. Section 394(4)(b) explicitly includes any body corporate, whether a company within the meaning of the Act or not, as a transferor company. The court rejected the argument that section 584, which deals with the winding up of foreign companies, restricted its jurisdiction in this matter.

2. Validity of the Scheme of Amalgamation Given the Non-Existence of the Transferor Company on the Appointed Date:

The applicants argued that the scheme was invalid because the British company was struck off the register on October 7, 1986, and thus was not in existence when the scheme was sanctioned on January 29, 1988. The court found that the British company was restored to the register on July 20, 1995, and under section 653 of the English Companies Act, 1985, this restoration had retroactive effect, meaning the company was deemed to have been in existence continuously. Additionally, the court noted that the appointed date (January 1, 1982) in the scheme was for the identification of assets and not the effective date of the scheme, which was January 29, 1988.

3. Allegation of Fraud and Suppression of Material Facts:

The applicants contended that the scheme was obtained by fraud, alleging that the petitioners suppressed the fact that the British company was struck off the register. The court found no merit in this claim, stating that the petitioners were not aware of the striking off at the time and discovered it only in July 1990. The onus of proving fraud was on the applicants, which they failed to do.

4. Locus Standi and Bona Fides of the Applicants:

The court addressed the applicants' locus standi and bona fides, noting that applicant No. 1 was a shareholder and applicant No. 2 claimed to be a beneficial owner of certain shares. However, the court found the application lacked merit and was not made bona fide, suggesting it was intended to defeat proceedings under section 630 of the Companies Act, 1956, initiated by the petitioner company for eviction from a flat.

Conclusion:

The application was dismissed on all grounds. The court found it had jurisdiction to sanction the scheme, the scheme was valid despite the initial striking off of the British company, no fraud was proven, and the application lacked bona fides. The impugned order dated January 29, 1988, was upheld, and the court emphasized the need for finality in such matters to avoid public interest suffering. The ad interim order was extended for four weeks to allow for an appeal.

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