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Issues Involved:
1. Maintainability of appeals by the Central Government and SEBI. 2. Power of the company court to grant reorganization scheme u/s 391 read with sections 100 to 104 versus the procedure prescribed by section 77A. 3. Whether the scheme sanctioned is contrary to law, unconscionable, unfair, and against the interest of shareholders. Summary: Regarding Issue (i): The court examined whether the appeals filed by SEBI and the Central Government were maintainable. It was determined that the Companies Act does not provide for any notice to SEBI in proceedings u/s 391 or 394, nor does SEBI have a statutory right to appeal. However, the Central Government, which receives notice u/s 394A, has a statutory duty to protect the interests of the investing public and can maintain an appeal u/s 391(7). The court concluded that SEBI's appeal was not maintainable, but the Central Government's appeal was. Regarding Issue (ii): The court analyzed whether the company court has the power to sanction a scheme of arrangement u/s 391 read with sections 100 to 104, or if section 77A is the exclusive method for buy-back of shares. It was held that section 77A is a facilitating provision that allows companies to buy-back shares without court intervention, but it does not supplant the court's jurisdiction under sections 100 to 104 and section 391. The court's powers under these sections remain unaffected, and the conditions for buy-back under section 77A cannot be applied to schemes under sections 100 to 104 and section 391. Regarding Issue (iii): The scheme was challenged on the grounds that it treated the silence of shareholders as an offer, violating various laws and regulations. The court found it inequitable to entertain this objection at the appellate stage, especially since the scheme had been substantially implemented and the Central Government had not raised any objections before the company judge. The court accepted the company's offer to allow shareholders who had not received or encashed cheques to retain their shares. Other objections, such as non-disclosure of material facts and alleged violations of SEBI guidelines, were found to be without merit. The court concluded that there was no substantial ground to set aside the scheme. Conclusion: The appeals and notice of motions were dismissed, with no order as to costs.
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