2013 (7) TMI 48 - HC - Companies Law

Scheme of amalgamation recalled - Held that - In the instant case, the scheme has not been put into effect. It is not the case of the State Trading Corporation of India that any time after the order dated 1st July 2011, the applicants have taken the requisite steps so as to give effect to and implement the scheme. Once there is nothing in the scheme or in the sections empowering the Court to grant or approve it not to recall an order, then, by exercise of inherent powers of this Court and in the facts peculiar to this case, the recall can be permitted. In facts peculiar to this case the applicants have approached this Court and pointed out that it is not possible to seek sanction or approval for the transfer of mining and prospecting licence and that the shareholders of both companies having decided not to give effect to or implement the scheme, but to continue the existence of both transferor companies, that the request as made can be granted. At the same time, it must be clarified that neither the sanction or approval in terms of the earlier order nor the recall by this order shall in any manner adversely affect or prejudice the claim of the State Trading Corporation of India nor shall if affect its right to seek winding up of the 1st transferor company or to take such proceedings against it as are permissible in law. Thus the order sanctioning the scheme is recalled and set aside.

Summary

Issues:
1. Application seeking to recall an order sanctioning a scheme of amalgamation.
2. Interpretation of Companies Court Rules, 1959 and inherent powers of the Court.
3. Opposing arguments based on section 392 of the Companies Act, 1956.
4. Comparison with a previous judgment regarding recall of winding up order.
5. Analysis of the scheme's provisions and the Court's power to supervise its implementation.
6. Consideration of objections raised by the State Trading Corporation of India.
7. Decision on recalling the order sanctioning the scheme and its implications.
8. Request for stay of the order by the State Trading Corporation of India.

Detailed Analysis:

1. The company application sought to recall an order sanctioning a scheme of amalgamation involving mining companies. The applicant expressed concerns about the transfer of mining licenses and the potential impact on shareholders and creditors if the licenses could not be transferred to the transferee company.

2. The petitioner relied on Rule 9 of the Companies Court Rules, 1959, arguing that the Court's inherent powers could be used to recall the order in the interest of justice. It was contended that the scheme could not be implemented due to non-compliance with relevant clauses, justifying the application for recall.

3. The State Trading Corporation of India objected to the application, citing section 392 of the Companies Act, 1956. They argued that recalling the scheme required winding up the company under specific provisions of the Act, especially if fraud was suspected.

4. A comparison was drawn with a previous judgment involving the recall of a winding-up order, highlighting the differences in legal context and procedural rules.

5. The analysis focused on the scheme's provisions, emphasizing the Court's power to supervise its implementation and make necessary modifications for proper functioning. The importance of complying with statutory requirements and obtaining approvals from governmental authorities was underscored.

6. The objections raised by the State Trading Corporation of India centered on the inability to transfer mining licenses and the potential consequences of proceeding with the scheme. The lack of implementation of the scheme post-order sanction was highlighted as a key factor.

7. The Court, after considering the arguments and peculiar facts of the case, decided to recall the order sanctioning the scheme. It clarified that the recall would not prejudice the rights of the objector and maintained the independent existence of the transferor companies.

8. The State Trading Corporation of India's request for a stay on the order was refused, with the Court emphasizing that the matter primarily concerned the applicant and the Court, and the clarifications provided regarding the objector's claims.

This detailed analysis covers the various legal issues, arguments presented, and the final decision reached by the Court in the judgment.