2005 (5) TMI 668 - HC - Companies Law

Summary

Issues:
1. Convening separate meetings of unsecured and secured creditors for considering a proposed scheme of arrangement.
2. Notice requirements for the meetings.
3. Appointment of Chairman for the meetings and his powers.
4. Quorum for the meetings and provisions for voting by proxy.
5. Determination of the value of votes of each creditor.
6. Reporting the meeting results to the Court.
7. Dispensation of the Equity Shareholders' meeting.
8. Requirement of separate proceedings for the Transferee Company in a proposed Scheme of Amalgamation.

Detailed Analysis:
1. The judgment involves the convening of separate meetings of unsecured and secured creditors to consider a proposed scheme of arrangement. The meetings are scheduled to be held in Bangalore, with specific dates, times, and locations provided for each category of creditors. The purpose is to approve the scheme of amalgamation between the applicant Company and the transferee Company, with detailed instructions on how the meetings should be conducted.

2. The judgment outlines the notice requirements for the meetings, emphasizing that notices must be sent to all creditors at least 21 days before the meetings. The notices should include details of the meetings, the scheme of arrangement, the Explanatory Statement under Section 393 of the Companies Act, 1956, and the prescribed Form of Proxy. Additionally, the judgment specifies the publication of notices in various newspapers for wider dissemination.

3. Regarding the appointment of a Chairman for the meetings, the judgment designates specific individuals for the role and grants them powers under the Articles of Association of the applicant Company and the Companies (Court) Rules, 1959. The Chairman is authorized to conduct the meetings, including amending the scheme or resolution proposed and ascertaining decisions through a poll.

4. The judgment sets the quorum for the meetings, requiring 2 secured creditors and 5 unsecured creditors to be present in person. It also allows voting by proxy, provided that the proxy is in the prescribed form and duly signed, to be filed with the applicant Company before the meetings.

5. It addresses the determination of the value of votes of each creditor, stating that the value shall be as per the entries in the Company's books of accounts. In case of disputes, the Chairman of the meetings has the authority to determine the value or number for meeting purposes, with the decision being final.

6. The judgment mandates the Chairman to report the meeting results to the Court within 14 days of the meetings' conclusion, with the report verified by affidavit.

7. The judgment dispenses with the need for a meeting of Equity Shareholders as their written consents are on record, as required under Section 391(2) of the Companies Act, 1956.

8. Finally, the judgment addresses the requirement of separate proceedings for the Transferee Company in the proposed Scheme of Amalgamation. It cites legal precedents and submissions to conclude that separate proceedings for the Transferee Company are not necessary, thereby granting the prayer to dispense with such proceedings.

In conclusion, the judgment comprehensively covers various procedural aspects related to convening meetings, notice requirements, appointment of Chairman, voting procedures, reporting obligations, and the dispensation of certain meetings based on legal considerations and precedents.