2014 (7) TMI 1359 - HC - Insolvency and Bankruptcy

Sanction of scheme of amalgamation - no secured creditor - HELD THAT - The certificate issued by the Chartered Accountant as at Annexure-N indicates that there is no secured creditor in respect of the applicant company and the certificate at Annexure P indicates that there is one unsecured creditor and in the same series the consent letter given by the unsecured creditor is also produced. 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 convening of the meeting of the equity and preference shareholders as also the secured and unsecured creditor is dispensed. Application disposed off.

Summary

Issues: Approval of scheme of amalgamation; Consent of equity and preference shareholders; Consent of unsecured creditor; Convening of meeting not required.

Analysis:
The judgment pertains to the approval of a scheme of amalgamation involving the transferor company No. 2. The applicant company, initially incorporated in Maharashtra and later shifted to Karnataka, is part of the amalgamation scheme approved by the Board of Directors. The scheme required consent 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 one unsecured creditor through various communications.

The absence of any secured creditor in relation to the applicant company was also noted. Given the consents obtained from equity and preference shareholders, as well as the unsecured creditor, and the lack of a secured creditor, the court ruled that there was no need to convene a meeting for approval of the scheme. Consequently, the application's prayer for dispensing with the convening of the meeting of shareholders and creditors was granted. The judgment disposed of the application, directing the petition to be filed within two weeks.