1975 (9) TMI 95 - HC - Companies Law

Summary

Issues Involved: Execution of transfer instruments, compliance with the scheme of amalgamation, obligations under clause 9, court's power under section 392(1) of the Companies Act, 1956, and the appointment of persons to execute transfer instruments.

Issue-wise Detailed Analysis:

1. Execution of Transfer Instruments:
The judgment addresses the failure of some members of the transferor-company to execute transfer instruments as required under the scheme of amalgamation. Approximately 233 members did not comply with the request to return signed transfer instruments. To ensure the proper working of the scheme, the court directed Mr. P. P. Mistry and Mr. G. S. Rane to execute the transfer instruments on behalf of these members.

2. Compliance with the Scheme of Amalgamation:
The scheme of amalgamation, sanctioned by the High Courts of Gujarat and Bombay, required members of the transferor-company to either receive shares and debentures or opt for a cash payment. Clause 9(ii) and (iii) of the scheme outlined the process for members opting for cash, including the submission of share certificates and the execution of transfer instruments. The court found that compliance with these clauses was essential for the proper implementation of the scheme.

3. Obligations under Clause 9:
Clause 9(ii) required members opting for cash to submit their share certificates within 30 days. Clause 9(iii) allowed the transferee-company to require these members to transfer their shares to appointed persons. The court noted that the failure of 146 members to comply with clause 9(iii) would frustrate the scheme's objective and that it was necessary to ensure these obligations were fulfilled.

4. Court's Power under Section 392(1) of the Companies Act, 1956:
The court emphasized its wide powers under section 392(1) to supervise the carrying out of the compromise or arrangement and to give necessary directions for its proper working. The court held that it had the authority to intervene and ensure the fulfilment of obligations under the scheme, even after its sanction.

5. Appointment of Persons to Execute Transfer Instruments:
Given the short time before the transferor-company's dissolution and the closing of its transfer books, the court found it impractical to issue directions to the defaulting members to execute the transfer instruments. Instead, the court appointed Mr. P. P. Mistry and Mr. G. S. Rane to execute the instruments on behalf of the defaulting members, ensuring the proper implementation of the scheme.

Conclusion:
The court's judgment ensured the proper working of the amalgamation scheme by addressing the non-compliance of certain members with their obligations under clause 9. By exercising its powers under section 392(1) of the Companies Act, 1956, the court appointed officers to execute the necessary transfer instruments, thereby facilitating the scheme's implementation and preventing any prejudice to the transferee-company.