9911796707
TMI Blog1995 (9) TMI 228X X X X Extracts X X X X X X X X Extracts X X X X ..... Mrs. Webb and her children are the shareholders of the companies. Webb's Method Mfg. (P.) Ltd., was incorporated on 2-9-1985, but in view of termination of contracts for truck and bus body building the company was running in losses and in March 1992, the company passed a resolution for voluntary winding up as prescribed under section 484 of the Act. Mrs. Webb was appointed as Liquidator. The liabilities of the company at the relevant time was to the tune of Rs. 62 lakhs while cash balance and book debts were to the extent of Rs. 5 lakhs. The machinery and the structure of the company was mortgaged to Karnataka State Finance Corpn. 2. Webb's Group of companies thereupon decided that to avoid liquidation of the company in voluntary liquidation and to save the prestige of the Webb's Group, the five companies including the one under voluntary liquidation should be amalgamated. The object of amalgamation was to pay off all outside creditors in full and wiping off all debts of the company in liquidation. The scheme of amalgamation provided that the four companies would be amalgamated in Webb's Sales Service (P.) Ltd. and the amalgamated company will take over all the assets and li ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t winding up unless the official liquidator has made a report after scrutiny of the books and papers of the company. The Company Judge noticed that such report is required only in respect of those companies which are not under liquidation and which are sought to be merged with other company. As far as the company under liquidation is concerned, response was not received from the CLB or the Registrar of Companies in spite of notifying those authorities under first proviso to sub-section (1) of section 394. The Company Judge, therefore, directed the offcial liquidator to file the report in respect of the three transferor-companies. 4. The order of the Company Judge passed in Company Petition Nos. 68 to 72 of 1994 is under challenge in this batch of appeals. The appeals were posted for hearing before a Division Bench on 7-7-1995. The Division Bench expressing doubt about the correctness of the view of the Division Bench in Mysore Galvanising Co. (P.) Ltd's case ( supra ), referred the appeals to Chief Justice for constituting a larger Bench. The appeals are, accordingly, placed for disposal before this Bench. 5. Section 391 entitles the Court to sanction any compromise or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ding up, of transferor-company. The provisions of sections 391 and 394 are to be read together, and section 391 confers power upon the Company Court to sanction the scheme while section 394 sets out the procedure to be followed. The plain reading of second proviso to subsection (1) of section 394 makes it clear that no order for dissolution of any transferor-company shall be made by the Court unless the official liquidator has on scrutiny of the books and papers of the company made a report that the affairs of the company are not conducted in a manner detrimental to the interests of the shareholders or to general public. It was contended on behalf of the appellants that the order of dissolution without winding up of transferor-company is not required as the scheme for amalgamation prescribes for merger of transferor-companies with the transferee-company. The contention that the order of dissolution under clause ( iv ) of sub-section (1)( b ) of section 394 is not required, is not correct. The scheme of amalgamation is bound to provide for merger of transferor-company with transferee-company, but such merger cannot take effect without the transferor-company being dissolved. An ama ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s to amalgamate itself with another company and in such a case an order for dissolution without winding up of the company is required to be made. The Division Bench of the Calcutta High Court disapproved the decision of a single Judge in the matter of Mary bong Kyel Tea Estate Ltd. [1977] 47 Comp. Cas. 802 and expressed agreement with the view taken by the Division Bench of this Court in Mysore Galvanising Co. 's case ( supra ) . A single Judge of the Bombay High Court in Sumani (P.) Ltd, In re [1979] 49 Comp. Cas. 547 approved the view of the Division Bench of this Court in Mysore Galvanising Co. (P.) Ltd's case ( supra ) and disagreed with the view of the learned single Judge of the Calcutta High Court in Marybong Kyel Tea Estate Ltd. 's case ( supra ) . In our judgment, the view taken by the Division Bench of this Court as well as the Division Bench of the Calcutta High Court and the single Judge of the Bombay High Court is the only view possible on plain reading of second proviso to sub-section (1) of section 394 and it is not possible to appreciate why the Division Bench felt considerable doubt about the correctness of the view. The reference order does not ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
