9911796707
TMI Blog1994 (11) TMI 310X X X X Extracts X X X X X X X X Extracts X X X X ..... eror-company is a subsidiary of the transferee-company, which has the holding to the extent of 97.58 per cent of the paid-up equity share capital of the transferor-company. Bearing in mind this glaring fact it was thought advantageous to combine the activities of both the companies with a view to carrying on the same in a single company. The idea is to economise and run the company efficiently. The proposed amalgamation would also result in enlarging the activities of the transferee-company which would be conducive to avoidance of duplication and reduction in adminis- tration costs and other overhead expenses. It would also result in the optimum utilisation of the management and other resources. For all these reasons the proposed amalgamation has been sought to be sanc- tioned by this Court. 4. Necessary advertisements have been published in the month of May 1994 in The Times of India and Jansatta in various editions. The court notice was also issued to the Central Government in accordance with the provisions contained in section 394A of the Act in each of the petitions. Meeting of the shareholders and creditors of the transferor-company and the meeting of the shareholders ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s made by the learned additional standing counsel for the Central Govern-ment, it would be necessary to visualise what is the object clause of the transferee-company. The object clause of the transferee-company is divided into three sub-clauses: ( A ) Main objects of the company to be pursued by the company on its incorporation, ( B ) Objects incidental or ancillary to the attainment of the main objects, and ( C ) Other objects. It would be appropriate to set-out the main objects in the first instance: "1. To carry on the business of an investment company and to underwrite, sub-underwrite, to invest in and acquire and hold, sell, buy or otherwise deal in shares, debentures, debenture-stocks, bonds, units, obligations, and securities issued or guaranteed by Indian or foreign Government, dominions, sovereigns, municipalities, public authorities, bodies sovereign rulers, commissioners or trusts and shares, stocks, debentures, debenture-stocks, bonds, obligations and securities issued and guaranteed by any company, corporation, firm or person whether incorporated or established in India or elsewhere. 2. To finance industrial enterprises. 3. To manage investment pools, mutua ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... b-clause ( i ); and" 11. According to the submission of Mr. Sanghi, the effect of the amended clause is that when business as set out in other objects is to be carried on by the company, requirements of the provision contained in section 149(2A) would have to be followed. According to his submission, there- fore, section 17 has no role to play, for the simple reason that the object clause contains within itself, although in the sub-head 'Other objects', the required object, which in future can be pursued by the company. In order to meet with the argument of Mr. Jayant Patel, Mr. Sanghi also read section 17, according to which a company may by special resolution alter the provisions of its memorandum so as to change the place of its registered office from one State to another, or with respect to the objects of the company so far as may be required to enable it to carry on its business more economically or more efficiently or to attain its main purpose by new or improved means, or to enlarge or change the local area of its operations, or to carry on some business which under existing circumstances may conveniently or advantageously be combined with the business of the company o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed on record a true copy of registration of resolution pursuant to section 149(2A). Accordingly the resolution dated 21-5-1990 for commencement of other objects mentioned in sub-clauses (48) and (49) of clause IIIC of memorandum and articles of association has been approved by the shareholders and registered. A true copy of the declaration of compliance of sub-sections (2A) and (2B) of section 149A has also been produced. A true copy of the resolution has also been placed on record. Hence the transferee-company has complied with the provi- sions contained in sub-section (2A) of section 149A. What is now prayed for by the petitioners is the amalgamation of the transferor-company with the transferee-company with a consequential prayer of switching over the aforesaid objects appearing in the 'other objects' into the existing sub-clause (3) of clause IIIA of the memorandum of association. 13. In the above background Mr. Sanghi has placed reliance upon a decision of the Bombay High Court in the case of PMP Auto Industries Ltd. (supra). In that case three company petitions were filed for sanctioning scheme of amalgamation. Pursuant to the notice issued under section 394A, objecti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... edure of making repeated applica- tions to the court for various other alterations or changes which might be needed effectively to implement the sanctioned scheme whose overall fairness and feasibility has been judged by the court. What this Court said in Maneckchowk Ahmedabad Mfg. Co. Ltd's case ( supra ) has been excerpted. It would be useful to excerpt the same in this judgment also: "...If section 391 was subject to other provisions of the Act every time the scheme of compromise and arrangement is put forth for the sanction of the court, if it includes things for which specific provisions are made and that will have to be gone through before the scheme is sanctioned, it would result in unnecessary duplication of procedure and would be cumbersome. On the contrary, it appears that if the creditors and members of the company arrive at a certain compromise which the Court considers fair, it can be sanctioned under section 391 despite the fact that for some of those things included in the compromise another procedure is prescribed in the Companies Act and which has not been carried out. It, therefore, appears that section 391 is a complete code which provides for sanctioning of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on. If the Court is satisfied that the objection based on alteration of memorandum has no substance, the court itself can accord its sanction incidental to the sanctioning of scheme. It would be permis-sible for the Court to accord sanction under section 394 even if the scheme contemplates a consequential alteration in the object clause of the memorandum of association of the company. This would apply with greater force in the facts of the present case. In that view of the matter, the objection raised in the affidavit filed by the Registrar of Companies and submitted by the learned additional standing counsel would not hold good. On the merits of the scheme, there is no ground shown as to why sanction to the proposed scheme of amalgamation as prayed for should not be granted. The scheme appears to be a fair one and makes detailed provision for the protection of interest of all concerned including the employees of transferor-company. 17. In the result the petitions deserve to be granted. In view of what is stated above, it is ordered that the transferor-company be amalgamated with the transferee-company with effect from 1st April, 1993 and as per the proposed scheme of amalgam ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
