9911796707
TMI Blog1974 (2) TMI 58X X X X Extracts X X X X X X X X Extracts X X X X ..... Gungaram Tea Co. Ltd., Bunglee Rungliot Tea Co. Ltd., New Cinnatolliah Tea Co. Ltd., Kotamillai Tea Co. Ltd and Ledo Tea Co. Ltd,, have merged with the petitioner No. 2. It appears that with the approval of the Central Government contained in their letter dated 24th of November, 1972, for purchase of 15,000 ordinary shares in the petitioner No. 1, the petitioner No. 2 has purchased the said shares and consequent thereupon the petitioner No. 1 is now a wholly-owned subsidiary of the petitioner No. 2. It further appears that while granting the said approval under section 372(4) of the Companies Act, 1956, to the petitioner No. 2 to purchase the said shares of the petitioner No. 1, the Central Government imposed, inter alia , the conditions that the petitioner No. 2 shall initiate necessary steps and make formal application to the competent authorities in order to bring about the merger of petitioner No. 1 with the petitioner No. 2 within a period of one year from the date of acquisition of the said shares in the petitioner No. 1 by the petitioner No. 2. It is stated that the said amalgamation, besides it was a condition in the said letter approving the purchase by the petitioner No. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... terms of the memoranda and articles of association. It is further submitted in the said affidavit that no order in terms of prayer ( a ) of the petition, being dissolution of the company, be made at this stage without the official liquidator making scrutiny of the books and papers of the petitioner No. 1 and making a report to this court that the affairs of the petitioner No. 1 had been conducted in a manner prejudicial to the interest of its members or to the public. For the petitioner, Mr. S.B. Mukherjee appeared and submitted that under the provisions of section 394 of the Companies Act, 1956, the court can make an order for dissolution at the time of sanctioning the scheme of amalgamation under section 391(2) of the Companies Act, 1956. He further submitted that the second proviso to section 394(1)( b ) has no application in the present case where the transferor-company is admittedly a going concern and not being wound up by any order or was not in voluntary liquidation. He further submitted that under section 3 of the English Companies Act a company may by special resolution alter the provisions of its memorandum with respect to the objects of the company which included powe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... it has been held : "If a Government company is incorporated and registered outside India such a Government company comes within the definition of an 'unregistered' company under section 582( b ) and all the provisions of Part X consisting of the sections 582 to 590 shall apply mutatis mutandis to such a Government company which do not militate against the special provisions of Government company in sections 617 to 620 of the Companies Act". Mr. Mukherjee also referred me to the report of the Special Committee in support of his proposition that the proviso to section 394(1)( b ) applies only to companies in liquidation where an official liquidator has been appointed. Thereafter, Mr. Mukherjee referred me to the English decision in Redow v. Great Britain Mutual Life Assurance Society (17 Ch D 600 at page 612) in support of the same proposition that, in the case of an unregistered company under the English Act, the provisions of the Companies Act apply in a stay of winding-up petition. Thereafter, Mr. Mukherjee referred to sections 448, 449, 451, 452, 456 and 481 of the Companies Act in support of his proposition that the official liquidator is only appointed in the case of a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... appears that the official liquidator made a report under section 394(1) of the Companies Act, 1956, that the affairs of the transferor-company have not been conducted in a manner prejudicial to the interest of its members or the public in terms of the said second proviso thereunder. There also the transferor-company was not wound up but was a going concern. I may point out that no point was taken, as it is the case before me, that no such report is necessary to be made by the official liquidator in case of a foreign company which has not been wound up either voluntarily or compulsorily by court. Mr. Bose also referred to an order of this court made by Sabyasachi Mukharji J., where a similar order of the official liquidator to make a report under the second proviso to section 394(1)( b ) of the Companies Act, 1956, was made. The said order is also in a case where such question did not arise or was not raised by any of the parties. Mr. Bose submitted that the wording of the section is clear and mandatory so that under the proviso there must be a report by the official liquidator before sanction can be granted to the said scheme of amalgamation in this application. Therefore, no orde ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (SC)). "Fifthly, where the main provision is clear its effect cannot be cut down by the proviso. But where it is not clear the proviso, which cannot be presumed to be a surplusage, can properly be looked into to ascertain the meaning and scope of the main provision". ( Hindusthan Ideal Insurance Co. Ltd. v. Life Insurance Corporation of India AIR 1963 SC 1083 at 1087 paragraph 28). "And lastly, there is no magic in the words of a proviso, and that the plain meaning must be given to the words of the legislature". ( Annie Besant v. Advocate-General of Madras [1920] ILR 43 Mad. 146, 155 (PC)). That being the principles on which a proviso is to be construed and interpreted and applying the principles to the provisions under consideration, it is to be seen whether the main provision to which the proviso is added is clear and unambiguous and even then whether the main provision and proviso can be harmoniously construed so as to give effect to the object and purpose of the Act. Now, in my view, section 394(1)( iv ) gives specific power to the court to pass an order of dissolution at the time of sanctioning the scheme of amalgamation of the transferor-company without winding u ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tions 394(1)( iv ), 481 and 509. Dissolution means "an end to the corporate existence of the company for all purposes". The Companies Act, 1956, prescribes the duties of the official liquidator and defines his appointment. In section 448(2) it is provided : "All references to the 'official liquidator' in this Act shall be construed as references to the official liquidator referred to in clause ( a ) or clause ( b ), as the case may be, of sub-section (1) and as including reference to deputy or assistant official liquidators appointed under sub-section (1A)". Under section 449 it is provided that, on a winding-up order being made in respect of a company, the official liquidator shall, by virtue of his office, become the liquidator of the company. Section 450 provides that at any time after the presentation of the winding-up petition, the court may appoint the official liquidator as a provisional liquidator. There are other provisions which I need not refer providing for the powers and duties of the official liquidator, but I have not been able to find any section providing for appointment or discharge of any function by the official liquidator or pursuant to an order of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the transferor-company is a going concern in respect of which no winding-up petition has been presented or there is no voluntary winding up pending. In my view, that construction seems to me a reasonable and harmonious construction without any violence to the language or the scheme, object and purpose of the Companies Act under the provisions of section 394(1)( iv ). I cannot accept the contention of Mr. Bose that in all cases of dissolution to be ordered by court under section 394(1)( iv ) the second proviso applies and the report of the official liquidator is a condition precedent to such an order. That construction would mean and lead to a position of appointment of official liquidator by the court even in cases where no winding-up petition is pending or the company is not in voluntary liquidation, without any specific powers being given to court for such appointment. In my view, the words "without winding up" in section 394(1)( iv ) include all types of companies which I have enumerated before and is a general provision giving the court wide discretion to make an order of dissolution even in cases where the company is a going concern and the second proviso has no application t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ompany. The provisions contained in sections 391 to 396 and 494 illustrate some instances of statutory power of amalgamating a company with another company without any specific power in the memorandum". The said principle seems to me also to be applicable in the present case if the objects clause in the memorandum of association of any of the companies is construed as not to specifically empower any of the companies to amalgamate with any other company as there is a statutory power of amalgamation under the said section. I may also refer to an unreported judgment of mine in United Bank of India Ltd. Since reported as United Bank of India Ltd . v. United India Credit and Development Co. Ltd. [1977] 47 Comp. Cas. 689 (Cal.). , which is under appeal, where I have held the same view as I am doing here as to the statutory power to amalgamate without any specific power for amalgamation in the memorandum of association of a company. Therefore, I am unable to accept any of the contentions of Mr. Bose raised on behalf of the Company Law Board and I accept the contention of S.B. Mukherjee for the petitioners. I find no impediment in sanctioning the scheme and also making an older ..... X X X X Extracts X X X X X X X X Extracts X X X X
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