2008 (7) TMI 582 - HC - Companies Law

Amalgamation - Held that - Scheme of amalgamation has to be done under the supervision of this Court. Section 391 of the Act specifically providing for convening a meeting of shareholders and creditors of companies for considering the scheme of amalgamation in the presence of an independent chairman, to be nominated by the Court. It has been stated that entire paid-up share capital of transferor-company (Jaykaycem Limited) is owned by the transferee-company J.K. Cement Limited) and the fact that the board of directors have already approved the proposed scheme of amalgamation, no meeting of shareholders of the transferor-company is required to be convened. In this view of the matter, the meeting of the shareholders of the transferor-company is dispensed with for the time being, subject to any objection by anyone in future. Taking into consideration the submissions made by Shri R.P. Agrawal, advocate, it is directed hereby that a meeting of (1) Equity Shareholders of J.K. Cement Ltd. (transferee-company), (2) of the creditors of transferee-company and (3) the creditors of Jaykaycem Limited (transferor-company) be held at Merchants Chamber of U.P., 14/76, Civil Lines, Kanpur. All these meetings shall be held on 6-9-2008 (Saturday). The meeting of the creditors of Jaykaycem Limited shall take place at 11-00 A.M. and of the J.K. Cement creditors shall take place at 12-00 noon. The meeting of J.K. Cement shareholders shall take place at 1-00 P.M.

Issues:
1. Application under section 391(1) read with section 393 of the Companies Act filed by two companies for reliefs related to amalgamation.
2. Dispensing with the meeting of shareholders of the transferor-company.
3. Appointment of chairmen for meetings of equity shareholders and creditors.
4. Fixing quorum and procedures for the meetings.
5. Publication of meeting notices in newspapers.
6. Payment and arrangements for chairmen.
7. Sending notices and scheme of amalgamation to shareholders and creditors.
8. Discretion of the Court regarding shareholder approval.
9. Quorum and proxy voting rules for meetings.
10. Reporting of meeting results to the Court.

Analysis:
1. The joint application under section 391(1) read with section 393 of the Companies Act was filed by two companies seeking various reliefs related to amalgamation. The scheme of amalgamation had to be done under the supervision of the Court, as per the provisions of the Companies Act. The entire paid-up share capital of the transferor-company was owned by the transferee-company, and the board of directors had already approved the proposed scheme, leading to the dispensation of the meeting of shareholders of the transferor-company unless objected to in the future.

2. Considering the submissions made by the advocate, a meeting of equity shareholders of the transferee-company, creditors of both companies, and creditors of the transferor-company was directed to be held. Chairmen and alternate chairmen were appointed for each meeting. The notices of the meetings were to be published in newspapers, and arrangements for payment and travel of chairmen were specified.

3. The notices for the meetings had to be sent to shareholders and creditors at least 21 days before the meeting date, along with the scheme of amalgamation and necessary statements. The Court retained discretion to ensure shareholder approval of the arrangement. Quorum requirements were to be as per the Articles of Association, applicable to creditors' meetings as well. Proxy voting was permitted under specified conditions, and chairmen were to report the meeting results to the Court by a certain date.

This detailed analysis outlines the key aspects of the judgment, including the legal provisions invoked, the specific reliefs sought, the procedural requirements for conducting meetings, and the responsibilities of the parties involved in the amalgamation process.

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