2004 (2) TMI 711 - HC - Companies Law

Summary

Issues involved:
Dispensation of convening and holding shareholders' meeting, dispensation of convening meetings of creditors, requirement of a separate application by the Transferee Company.

Dispensation of convening and holding shareholders' meeting:
The judgment addresses a Company Application seeking dispensation of convening and holding a meeting of shareholders. The applicant, a Transferor Company wholly owned by a Transferee Company, has obtained consent from shareholders for the proposed Scheme of Amalgamation. As the shareholders have given their approval, the Court allows dispensation from the requirement of holding a meeting of Equity Shareholders and advertising in newspapers. The publication in the Gujarat Government Gazette is also dispensed with. The merits of the proposed Scheme will be considered when the petition is filed. The Court emphasizes the importance of shareholder consent in dispensing with the meeting.

Dispensation of convening meetings of creditors:
The judgment further discusses the necessity of convening meetings of Unsecured Creditors and Secured Creditor of the applicant Company. The Senior Counsel argues that since no compromise is offered to any creditors and no reduction or extinguishment of liabilities is involved, calling for these meetings is unnecessary. Referring to the application and Balance-Sheet, it is demonstrated that both the Transferor and Transferee Companies are profitable. Citing a previous order where the meeting of creditors was dispensed with, it is concluded that the rights of the creditors are not affected, and thus, convening and holding meetings of Unsecured Creditors and Secured Creditor are not required.

Requirement of a separate application by the Transferee Company:
The judgment also clarifies the need for a separate application by the Transferee Company in the context of the present case. The Senior Counsel argues that a separate application by the Transferee Company is unnecessary since the Transferor Company is a wholly owned subsidiary of the Transferee Company. Referring to legal precedents, it is established that a separate application by the Transferee Company is not mandatory in such circumstances. Thus, the Court rules that the convening and holding of meetings of Equity shareholders, Secured and Unsecured Creditors can be dispensed with, and the applicant Company is directed to file the petition within 14 days.

In conclusion, the judgment provides a comprehensive analysis of the issues surrounding the dispensation of shareholders' and creditors' meetings, as well as the requirement of a separate application by the Transferee Company in the context of a proposed Scheme of Amalgamation. The Court's decision is based on the consent of shareholders, the lack of impact on creditors' rights, and the legal framework regarding wholly owned subsidiaries.