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TMI Blog1972 (4) TMI 77X X X X Extracts X X X X X X X X Extracts X X X X ..... ansferor-company") of which one shareholder is the Union Company (Motors) Private Ltd. (hereinafter referred to as "the transferee-company"). The authorised capital of the transferor-company is Rs. 5 lakhs consisting of 5,000 equity shares of Rs. 100 each. The subscribed capital is Rs. 2,62,000 consisting of 2,620 equity shares of Rs. 100 each. Out of this, the transferee-company owns 1,000 shares. The transferor-company has been doing business as repairers, engineers, fitters, founders and painters of motor vehicles. The transferee-company has been carrying on business of distribution of cars and automobile spare parts. Both the companies are having their registered office at No. 29, Mount Road, Madras-2. Both the companies have similar ob ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y the board of directors of both the companies at a meeting held on November 19, 1971. In Company Application No. 399 of 1971, this court directed the transferor-company to convene a meeting of the shareholders of the company for the purpose of considering and, if thought fit, approving with or without modification, the above said scheme of amalgamation and arrangement. Thiru K. V. Srinivasan was appointed to act as the chairman at the meeting and to report the result thereof. After due notice of the said proposed meeting, the same was held on December 30, 1971, in which all the shareholders of the transferor-company took part. In the said meeting, the shareholders approved the scheme of arrangement and amalgamation as aforesaid. It is un ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f Canon Tea Co. Ltd. [1966] 2 Comp L J 278 (Cal.) in support of his contention that the transferee-company should also hold the statutory meeting and join as a petitioner in these proceedings. In that case, the Calcutta High Court points out that each of the amalgamating companies must comply with the requirement of section 391(1) of the Act by obtaining direction, inter alia , for holding a meeting of the shareholders of the company, for section 394(1)(a) throws them back to sub-section (1) of section 391. It is also pointed out that if one of the two amalgamating companies is not before court, any arrangement sanctioned and directions given under various sub-clauses of clause ( b ) of section 394(1) of the Act may be set at naught by th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is not to be upheld. I am clearly of the view that, even as far as the transferee-company is concerned, the scheme of amalgamation is an arrangement as contemplated under section 391(1)( b ) of the Act. It is undoubtedly an arrangement bet-been the transferee-company and its members, because the transferee-company is taking not only the assets and liabilities of the transferor-company but also inducting more shareholders and thereby changing, at least to a certain extent, the voting rights of the shareholders of the transferee-company. It is only for the sake of convenience the Union Company (Motors) Private Ltd. is referred to as the transferee-company, while the Union Services Private Ltd. is referred to as the transferor-company. As far ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ection 391(1) is an amalgamation of two companies. Therefore, if the relevant rules apply to the transferor-company, they would equally apply to the transferee-company as well. Under all these circumstances, I am of the view that the transferee-company should also hold the statutory meeting of its shareholders. However, this petition is not to be dismissed. In the Calcutta case referred to above, the petition for approving the scheme of amalgamation came to be dismissed not on the ground that the transferee-company had not held the statutory meeting of its shareholders but on merits. Further, in the present case as already seen, all the 13 shareholders of the transferee-company have given affidavits of consent for the approval of the sche ..... X X X X Extracts X X X X X X X X Extracts X X X X
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