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TMI Blog1967 (9) TMI 82X X X X Extracts X X X X X X X X Extracts X X X X ..... rted into ordinary shares and this was agreed to by both the ordinary and preference shareholders at meetings held for the purpose on September 9, 1956. The result is the preference shares are to rank pari passu with the ordinary shares. This was, followed up by an agreement dated November 3, 1966, entered into between Beardsell and St. James Nominees Limited, representing the ordinary shareholders, and Whitecroft Industries Holdings Limited, representing the preference shareholders. The statutory requirement under section 106 of the Act having thus been satisfied regarding the variance of the class of shareholders, Beardsell thereafter took such steps as were further required to enable them to amalgamate with Mettur Industries. Beardsell was the managing agent of Mettur Industries since the latter's incorporation in 1936. Originally, Beardsell was predominantly an import-export house. It expanded its trading activities which now include manufacture of various commodities including marketing of textile machinery. Mettur Industries was essentially a textile manufacturing company. But in view of the great strain and stress which the textile industry is undergoing at present, Mett ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 4,260 shares in Mettur will be transferred to the Beardsell shareholders. The balance of 15,740 shares due to the shareholders of Beardsell on the basis of one for one will be allotted to them without any further application. ( e )The said balance of 15,740 shares to be allotted to Beardsell will not participate in the dividend for Mettur's financial year ended on the March 31, 1967." Beardsell came up to this court in Company Application No. 74 of 1967 and requested that separate meetings of the ordinary shareholders of the petitioner companies be convened and held at their respective registered offices. This court directed the holding of such meetings as required by section 391 of the Companies Act and the meetings have since been held. A common request was made by the two petitioner companies for the holding of such meetings. I sanctioned the said meetings dispensing with the holding of a meeting of the preference shareholders, in view of the fact that the preference shareholders have already agreed to give up the concessions they were then holding as such class of shareholders and have also entered into necessary agreements with Beardsell agreeing to be treated as ordinary ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ital of Mettur should be increased before amalgamation in a manner known to law and it is not known whether it has been done. The companies have riled a reply affidavit answering in detail the various objections and ultimately pray for the sanctioning of the amalgamation. I shall now consider the objections of the Central Government seriatim before I deal with the main aspect of the case whether amalgamation should be ordered or not. As regards the first objection that the notice to the Government should have been given even at the time when this court directed the meetings of both the petitioner-companies to be held under section 391, I do not think that such a notice is necessary or contemplated under the scheme of the Act. Section 394A, which appears after section 394, makes it very clear that it is only the scheme that is approved by the body of shareholders- in a manner contemplated under section 391 that should go to the Central Government for their remarks. The role played by the Central Government in such cases is that of an impartial observer who acts in public interest and advises the court that it is or it is not feasible for the two companies to amalgamate. Even amalg ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on that the amalgamation sought for should be held up only on that ground and for that reason. In fact, Beardsell's;-claim is that the association owes them considerable moneys. Whatever may be the truth in the claim and the counter-claim one against the other of Beardsell and the association, it is not necessary that I should hear the association for the purpose of coming to the conclusion that the amalgamation that is sought for by the companies is in their interests or not. I am not therefore convinced that the second objection of the Central Government has any force at all. The third objection is that there should have been a separate application under section 391 of the Act when the preference rights attached to the preference shareholders were varied. I have already referred to Company Application No. 74 of 67 wherein I have dispensed with the meeting of the preference shareholders on the ground that they have themselves agreed to give up their concession, if any, attached to their rights and they were agreeable to rank pari passu with the ordinary shareholders. This is again a matter coming within the doctrine of indoor management and no unnecessary or untoward inroad ca ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t think that there should be unison in the objects of both the transferor and the transferee companies to enable amalgamation to be sanctioned by courts under section 394 of the Companies Act. The last objection is that Mettur have not increased their authorised capital. This objection is without any force because Mettur has by itself increased its share capital which was approved at its annual meeting. Therefore, this objection is factually incorrect and need not be countenanced at this stage. In fact, Mettur has produced a letter dated September 8, 1967, wherein a record has been made of the thirteenth annual general meeting of the company held on Friday the 25th day of August, 1967, to the effect that the nominal capital of the company be increased to 12 lakhs consisting of 1,20,000 shares of Rs. 100 each and a consequential amendment be made in the memorandum of association of the company. This resolution was passed unanimously. As a consequential amendment, another resolution also was passed to the effect that article 4 of the company's articles of association be substituted by stating that the authorised share capital is Rs. 1,20,00,000 divided into 1,20,000 shares of Rs. 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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