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TMI Blog2005 (2) TMI 531X X X X Extracts X X X X X X X X Extracts X X X X ..... passed approving the scheme of amalgamation. Accordingly the present petition is moved for seeking final approval under sections 391 to 394 of the Companies Act-I of 1956. All the procedural requirements for the purpose of amalgamation as contemplated under section I of the Company court rules have been complied with by the petitioner. An affidavit has been filed by the Regional Director dated 1-12-2004 and has confirmed that there are no objections except that the company should follow the procedure for reduction of capital as contemplated under section 101(2) of the Companies Act. 4. The only objection raised by the Regional Directors and which requires my consideration that under Clause (20.2)( a ) of the proposed scheme for amalgamation some of the shares held by the transferor company in the transferee company will stand automatically cancelled on the scheme being sanctioned. According to the Regional Director the same amounts to reduction of share capital and thus attracts the provision of sections 100 and 101 of the Companies Act-I of 1956. He further contends that the companies are thus required to follow the procedure contemplated under sub-section (2) of section 101 o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , the names of those creditors and the nature and amount of their debts or claims and may publish notices fixing a day or days within which creditors are not entered on the list are to claim to be so entered or are to be excluded from the right of objecting to the reduction; ( c )where a creditor entered on the list whose debt or claim is not discharged or has not determined does not consent to the reduction, the (Tribunal) may, if it thinks fit, dispense with the consent of that creditor, on the company securing payment of his debt or claim by appropriating, as the (Tribunal) may direct the following amount: ( i )if the company admits the full amount of debt or claim, or, though not admitting it, is willing to provide for it, then, the full amount of the debt or claim; ( ii )if the company does not admit and is not willing to provide for the full amount of the debt or claim, or if the amount is contingent or not ascertained, then, an amount fixed by the (Tribunal) after the like inquiry and adjudication as if the company were being wound-up by the (Tribunal)." 8. This sub-section (2) of section 101 is a subject matter of interpretation before me in the present case. The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a ), ( b ) and ( c ) or not to direct the compliance thereof. In the present case admittedly there is no question of diminution of any liability in respect of unpaid share capital nor there is a situation where the payment is made to any shareholder out of any paid-up share capital. However the learned counsel appearing for the Regional Director has contended before me that reduction of share capital even if by virtue of automatic operation of law results in the shares of the transferor company being extinguished by virtue of amalgamation and thus the provisions of sub-section (2) of section 101 are attracted by virtue of the third category, i.e., any other case. The learned counsel has further contended that though there is a discretion for the court in the third category of the case still the court cannot grant dispensation of the provisions of sub-section (2) of section 101 of the Companies Act. On the other hand as far as of the provisions of sub-section (2) of section 101 are concerned I am of the opinion that the words appearing in any other cases must necessarily be read ejusedem generis with the words preceding in other cases. It is because only if the reduction in shar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... operational identity of a holding company and its subsidiaries and thereby preserve the respective shareholder s control on them. Section 77 imposes a restriction on purchase by a company of its own shares. It is not necessary that extinguishment of shares in all cases should necessarily result in reduction of share capital. Section 100 will not come into play where the scheme of amalgamation contemplate the transfer of the entirety of assets and liabilities of the transferor company to the transferee company. In such a case, in my view, there is no release of assets, the assets of the transferor company, on amalgamation, stand transferred to and vested in the transferee-company. Further, rule 85 of the Companies (Court) Rules, 1959 which is part of the scheme of section 101 and section 102 of the Act, provides that where a proposed compromise or arrangement involves reduction of capital of the company, the procedure prescribed by the Act and the rules relating to reduction of capital shall be complied with before the compromise or arrangement as far as it relates to reduction of capital is concerned, it is, therefore, evident that section 101 and section 102 and rule 85 would ..... X X X X Extracts X X X X X X X X Extracts X X X X
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