2014 (7) TMI 1357 - HC - Companies Law

Sanction of scheme of amalgamation - convention of meeting of the equity and preference shareholders as also the secured and unsecured creditor - HELD THAT - Where the equity and preference shareholders as also the unsecured creditor have given the consent to the scheme and there is no secured creditor, the issue of convening of the meeting would not arise. The prayer made in the application is granted. The convening of the meeting of the equity and preference shareholders as also the secured and unsecured creditor is dispensed. Application allowed.

Summary

Issues Involved:
Approval of scheme of amalgamation; Consent of equity shareholders, preference shareholders, and unsecured creditor; Convening of meeting; Disposal of application.

Analysis:
The judgment by the High Court of Karnataka pertains to the approval of a scheme of amalgamation involving a transferor company. The applicant company, incorporated in Maharashtra and later shifted to Karnataka, is part of the amalgamation scheme considered and approved by the Board of Directors. The scheme required approval from equity shareholders, preference shareholders, and unsecured creditor of the applicant company. The Chartered Accountant's certificate confirmed the consent of the two equity shareholders, one preference shareholder, and the unsecured creditor. Notably, there were no secured creditors involved in the scheme.

The Court observed that since all necessary stakeholders - equity shareholders, preference shareholders, and unsecured creditor - had provided their consent to the scheme, and there were no secured creditors to consider, the issue of convening a meeting was deemed unnecessary. Consequently, the Court granted the prayer made in the application, dispensing with the need to convene a meeting of the stakeholders. The judgment concluded by disposing of the application and directing the filing of the petition within two weeks.

This judgment underscores the importance of obtaining consent from relevant stakeholders in schemes of amalgamation and highlights the significance of fulfilling all necessary requirements as per the Companies Act. The Court's decision to dispense with the meeting reflects a practical approach based on the specific circumstances of the case, where all concerned parties had already provided their approval, and no secured creditors were involved in the transaction.