2005 (5) TMI 340 - HC - Companies Law

Summary

Issues:
1. Application under section 391(1) of the Companies Act, 1956 for dispensing with formalities of meetings of equity shareholders and creditors.
2. Consent of equity shareholders for amalgamation.
3. Consent of secured creditors for amalgamation.
4. Consent of unsecured creditors for amalgamation.
5. Procedure for convening and holding meetings of secured and sundry creditors.
6. Appointment of Chairman for the meetings.
7. Voting by proxy at the meetings.
8. Determination of value of creditors for the meetings.
9. Reporting the result of the meetings to the Court.

Analysis:
1. The application was filed under section 391(1) of the Companies Act, 1956, seeking dispensation of the formalities of convening and holding meetings of equity shareholders and creditors of the Transferee Company for amalgamation. Majority consent of equity shareholders was obtained, justifying the dispensation of their meeting.

2. Despite the consent of equity shareholders, the court noted the lack of consent from secured creditors for the amalgamation. The court highlighted that even when secured creditors provide consent, the court may still require a meeting to be held. Thus, the prayer to dispense with the meeting of secured creditors was denied.

3. Unsecured creditors, including directors of the company, gave their consent for amalgamation. Considering their relationship with the company and their consent, the court approved the dispensation of the meeting of unsecured creditors.

4. The judgment outlined the procedure for convening and holding separate meetings of secured and sundry creditors. Notices were to be sent to secured creditors via registered post AD, while an advertisement in local newspapers was required for sundry creditors. The appointment of a Chairman for the meetings was also specified.

5. The court permitted voting by proxy at the meetings, subject to the submission of duly signed proxy forms. The value of each creditor was to be determined according to the company's books, with the Chairman having the authority to resolve any disputes regarding the entries.

6. The judgment mandated the Chairman to report the meeting results to the Court within seven days, with verification by affidavit. The detailed directions provided in the judgment ensured a structured and legally compliant process for the amalgamation proceedings.