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TMI Blog2002 (11) TMI 675X X X X Extracts X X X X X X X X Extracts X X X X ..... 002 and by an order dated 19th April, 2002 the convening and holding of the meetings of the shareholders, members and creditors was dispensed with. 3. It further appears that the transferor companies have also taken out a summons for direction in the High Court at Gujarat and orders in respect of the applications filed were passed by that Court. 4. The learned Counsel appearing for the petitioner company has filed affidavit proving service of notice of hearing upon the Regional Director and also affidavit proving publication of notice of the date of hearing of the petition. The petitioner company has also filed affidavit proving service of notice on shareholders. All the three affidavits have been taken on record and marked as Exhibits A, B and C colly. Pursuant to the publication of the company petition, it appears that one Shri N.H. Thakkar addressed a letter to the petitioner company objecting to the scheme of amalgamation and requesting the company to pay off his dues appearing in the books. He had also forwarded a copy of his letter to this Court. It further appears that his misunderstanding was cleared and he addressed another letter dated 13th August, 2002 to the pet ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hare capital of the transferor companies shall stand transferred to the transferee-company and as such transfer of the entire share capital of transferor company is only a consequence of the scheme of amalgamation, section 97 will not be attracted, says the learned Counsel. The increase in the authorised share capital of the transferee-company is by virtue of the scheme of amalgamation and, therefore, it would not be necessary for the transferee-company to undergo the procedure prescribed for increase in the authorised share capital as it is not independently seeking to increase its authorised share capital, submits the learned Counsel for the petitioner. The share capital of the transferor company get merged with that of the transferee-company as a result of the lawfully permissible scheme of amalgamation of the two companies, submits Ms. Chandurkar. She further contends that having fully complied with the mandatory provisions of sections 391 to 394, there is no legal requirement to once again formally duplicate the work. She also relied upon an unreported judgment of the Andhra Pradesh High Court in Company Petition No. 56 of 2002 between M/s. Godrej Plant Biotech Ltd. and Godrej ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s to be transferred to another company (in this section referred to as the transferee-company ); the Court may, either by the order sanctioning the compromise or arrangement or by a subsequent order, make provision for all or any of the following matters : ( i )the transfer to the transferee-company of the whole or any part of the undertaking, property or liabilities of any transferor-company; ( ii )the allotment or appropriation by the transferee-company of any shares, debentures, policies or other like interests in that company which, under the compromise or arrangement, are to be allotted or appropriated by that company to or for any person; ( iii )the continuation by or against the transferee-company of any legal proceedings pending by or against any transferor-company; ( iv )the dissolution, without winding up, of any transferor company; ( v )the provision to be made for any persons who, within such time and in such manner as the Court directs, dissent from the compromise or arrangement; and ( vi )such incidental, consequential and supplemental matters as are necessary to secure that the reconstruction or amalgamation shall be fully and effectively carried out: ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Registrar is obliged to record the increase of the share capital or increase in the number of members and to effect alterations in the company s memorandum or articles or both. According to the Regional Director, in the present case, as a consequence of the amalgamation scheme, the share capital of the transferee company would increase and, therefore, it is mandatory under section 97 of the Act to send the prescribed notice of the increase of the capital. The transferee-company is required to pass a resolution to that effect and communicate the same within 30 days to the Registrar of the Companies who shall modify the records of the transferee-company. 10. I fail to understand how it can be said that this section will not apply when the increase in the share capital is a consequence of the scheme of amalgamation. It is true that when two companies get amalgamated, the share capital of the transferor company is transferred to the transferee-company as a result of which the total authorised share capital of the transferee-company is bound to increase as a result of the scheme of amalgamation. There is absolutely nothing in sections 391 to 394 or thereafter in the chapter whic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Such a construction of two provisions is not permissible. In fact, there is absolutely no clash or conflict between the said two provisions. Section 97 is only a procedural part which a company has to comply with, when there is an increase in the share capital or increase in the number of its registered members, regardless of how such increase takes place. 11. It is not possible to hold that section 97 can be ignored by the transferee-company when its share capital is bound to increase after the scheme of amalgamation. Section 97 is only calling upon the transferee-company to pass a resolution to that effect and give notice to the authority so that the records can be updated. 12. I fail to understand how the judgment of the Andhra Pradesh High Court is helpful to the learned counsel in any way. The learned Judge was not at all called upon to interpret section 97 in the light of section 394. From the said judgment, it does not appear that the learned judge was faced with the issue which is raised before me that a transferee-company is not required to comply with section 97 of the Act when there is increase in the share capital as a result of the scheme of amalgamation. In th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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