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Interpretation of provisos to section 394(1) of the Companies Act regarding amalgamation of companies without winding up and the necessity of reports from the Company Law Board or official liquidator. Analysis: The appeal was filed against an order sanctioning a scheme of amalgamation of three respondent-companies under sections 391 and 394 of the Companies Act. The appellant contended that a report from the official liquidator was necessary as per the second proviso to section 394, but this contention was rejected based on a previous court decision. The appellant reiterated this objection, arguing that the two provisos of section 394(1) apply to different situations and the second proviso should not depend on the application of the first proviso. The respondent-companies opposed the appeal, stating that they had already acted on the sanctioned scheme, and reversing it would cause hardship. The appellant clarified that they sought a declaration on the interpretation of the provisos rather than unsettling the sanctioned scheme. The court proceeded to interpret the provisos and dismissed the appeal regardless of its interpretation, maintaining the sanctioned scheme. The court analyzed sections 391 and 394 of the Companies Act, which deal with court sanctioning of compromises and arrangements between companies, including for reconstruction or amalgamation. The first proviso to section 394(1) mandates a report from the Company Law Board or Registrar for schemes involving companies being wound up. The second proviso applies to dissolution without winding up, requiring a report from the official liquidator. The court emphasized that the provisos address distinct scenarios, with the first relating to winding up companies in a scheme of amalgamation and the second to dissolution without winding up. The court clarified that both provisos may apply in cases involving both types of companies but emphasized that the second proviso operates independently in cases where no winding-up company is involved, contrary to the respondent-companies' argument. The court concluded that the appeal should succeed based on the interpretation of the provisos but chose to dismiss it due to the appellant's submission seeking a declaration on the provisos' scope. No costs were awarded in this case.
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