2011 (2) TMI 1540 - HC - Companies Law

Summary

Issues involved: Application for dispensation of meetings of equity shareholders, secured and unsecured creditors to consider and approve the proposed Scheme of Amalgamation.

Equity Shareholders Meeting:
The applicant, a transferee company, sought dispensation of meetings of equity shareholders, secured and unsecured creditors, stating that their rights and interests would not be affected by the proposed Scheme of Amalgamation. The scheme did not offer any compromise to creditors, and there were excess assets over liabilities in the transferor company. Relying on relevant case laws, the court dispensed with the equity shareholders meeting as the scheme did not involve any reorganization of share capital or affect the rights of the shareholders.

Secured and Unsecured Creditors Meeting:
The applicant argued that the proposed scheme did not offer any compromise to creditors, and their liabilities were not reduced or extinguished. With excess assets over liabilities in the transferor company, the interests of secured and unsecured creditors were not affected. Citing case laws, the court dispensed with the meetings of secured and unsecured creditors, as the scheme did not impact their rights. The court emphasized that under Section 394 of the Companies Act, the proposed scheme should not be prejudicial to the members or public interest, and in this case, the scheme did not affect the creditors' interests.

Significant Legal References:
The judgment referred to various case laws such as Mahaamba Investments Ltd., Andhra Bank Housing Finance Ltd., Santhanalakshmi Investments P. Ltd., and Aditya Birla Nuvo Ltd. These cases were instrumental in establishing the principles that guided the decision to dispense with the meetings of equity shareholders and secured/unsecured creditors based on the specific circumstances of the case.

Conclusion:
The court, after considering the submissions and relevant provisions, dispensed with the meetings of equity shareholders, secured, and unsecured creditors. The scheme of Amalgamation was found not to be prejudicial to the interests of the members or public, and the rights of the stakeholders were not affected. Therefore, the application was disposed of without costs.