2010 (6) TMI 889 - HC - Companies Law

Summary

Issues Involved:
1. Scheme of amalgamation and its approval.
2. Allegations of fraud in the conduct of the meeting.
3. Res judicata and representation of interests.
4. Delay and acquiescence in challenging the scheme.

Issue-wise Detailed Analysis:

1. Scheme of Amalgamation and its Approval:
The applicants challenged the scheme of amalgamation between the respondent companies and respondent No. 1, which was sanctioned by the Court on January 16, 2003. They sought to set aside this order on the grounds of fraud, alleging improper notice of the meeting, unauthorized attendance, and attendance by deceased shareholders.

2. Allegations of Fraud in the Conduct of the Meeting:
The applicants argued that the meeting to approve the scheme was held without proper notice to shareholders, including publication in obscure newspapers. They also contended that unauthorized persons, including two deceased shareholders, attended the meeting, rendering the resolution invalid. The details of the fraud included the improper appointment of a Chairman, inadequate notice to shareholders, and unauthorized proxy holders accepting notices.

3. Res Judicata and Representation of Interests:
The respondents argued that the issues raised had already been decided in earlier proceedings, making them res judicata. The Court examined whether the applicants were represented in the earlier application through their privies, and if their interests were adequately represented. It was found that the living shareholders (supporters) who controlled the applicant companies had participated in the earlier application, effectively representing the interests of those companies.

4. Delay and Acquiescence in Challenging the Scheme:
The Court noted significant delay and acquiescence by the applicants in approaching the Court. The earlier application was filed nearly three years after the scheme's approval, and the current application was filed six and a half years later. The Court found that the applicants had constructive notice of the fraud and had acquiesced in it, making their challenge untimely and uncondonable.

Judgment:
The Court dismissed the application on the ground of delay and acquiescence, holding that the applicants were bound by the findings in the earlier proceedings. The Court found that the meetings were conducted fraudulently, but the applicants' delay in challenging the scheme rendered their application untenable. There was no order as to costs.