2013 (10) TMI 1589 - HC - Companies Law

Summary

Issues:
1. Clarification sought regarding proposed amalgamation not violating previous court order.
2. Modification request for exclusion of proposed amalgamation from status quo order.
3. Applicability of Rule 9 of the Company (Court) Rules, 1959 for issuing clarification.
4. Interpretation of "status quo" in terms of shareholding and its implications on proposed amalgamation.

Detailed Analysis:
1. The applicant sought clarification on the proposed amalgamation with Asian Hotels (East) Ltd. to ensure compliance with the court order dated 24th October 2011. The order directed parties to maintain shareholding status quo in Asian Hotels (North) Ltd. and Asian Hotels (West) Ltd. The applicant approached the court to confirm that the amalgamation would not breach the said order or, alternatively, to modify the order to exclude the proposed amalgamation from the status quo directive.

2. The respondent argued against the maintainability of the application under Rule 9 of the Company (Court) Rules, 1959, stating that no pending lis in court warrants such a request. The respondent emphasized that any transfer of shares due to amalgamation would disturb the status quo by shifting shareholding from the applicant to the transferee-company, potentially infringing on the court's directive. The respondent also highlighted a clause in the CLB petition restraining the applicant from dealing with equity shares until the petition's disposal.

3. The court deliberated on the applicability of Rule 9 for issuing clarifications and the interpretation of "status quo" concerning shareholding. While acknowledging the potential abuse of court processes, the court found merit in the respondent's argument that maintaining status quo encompasses both the parties holding shares and the shareholding structure. The court rejected the applicant's contention that only the number of shares, not the entity holding them, mattered. Concerns were raised about potential circumvention of the status quo order and the lack of transparency regarding the amalgamation scheme.

4. The court considered the respondent's statement that the previous court order did not impede the amalgamation scheme if legally valid. However, the court refused to grant the requested clarification, citing the importance of upholding the status quo directive in its entirety. The application was rejected, and no costs were awarded, emphasizing the significance of maintaining shareholding status quo as per the court's order.