1998 (4) TMI 480 - HC - Companies Law

Summary

Issues:
1. Validity of the scheme for amalgamation of three companies.
2. Objections raised by the objector regarding the approval of the scheme.

Issue 1: Validity of the scheme for amalgamation of three companies

The petition filed by the transferee-company sought sanction for the scheme of amalgamation involving three companies. The objector raised three objections to the scheme. The first objection was regarding the validity of the objector's resignation as a director of the petitioner-company. The petitioner claimed that the objector resigned in March 1995, and this resignation was accepted at a Board of Directors meeting. The objector denied submitting any resignation letter and alleged forgery. However, documents submitted by the petitioner, including resignation letters and a report by Chartered Accountants, supported the claim of the resignation. The absence of a counter-affidavit further strengthened the petitioner's position. The court found the resignation valid and rejected the objection.

Issue 2: Objections raised by the objector regarding the approval of the scheme

The second objection raised by the objector was related to not receiving notice of the meeting where the scheme was approved by the General Body of the company. The court had previously addressed this objection in a separate order, confirming that the objector had sufficient notice of the meeting. Therefore, this objection was also rejected. The final objection pertained to the absence of a specific clause in the Memorandum of Association of the petitioner-company allowing for amalgamation with another company. The objector cited legal precedents to argue that without a specific power in the Memorandum, the company cannot enter into an amalgamation arrangement. However, the court referred to relevant sections of the Companies Act, 1956, and previous judgments to establish that statutory power exists for companies to amalgamate, even without a specific clause in the Memorandum. The court found no merit in this objection and rejected it as well.

In conclusion, the High Court of Bombay upheld the validity of the scheme for amalgamation of three companies, dismissing all objections raised by the objector regarding the approval process and the legal authority for the amalgamation. The court's detailed analysis of the objections and relevant legal principles supported the decision to sanction the scheme, emphasizing the statutory powers available under the Companies Act for such arrangements.