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TMI Blog2006 (10) TMI 513X X X X Extracts X X X X X X X X Extracts X X X X ..... considering and approving the proposed scheme of amalgamation was dispensed with. Meetings of the creditors of the transferor companies and the transferee company were also dispensed with. However, direction was given that meeting of the unsecured creditors of the transferor company No. 1 will be held. In terms of the said directions meeting of the unsecured creditors of the transferor company No. 1 was held on 20.2.2006. The Chairperson appointed by this Court for the purpose of the said meeting has submitted his report dated 27.2.2006. As per the report, 23 unsecured creditors were present in the said meeting and all of them have unanimously approved the proposed scheme of amalgamation. 5. After filing of the present petition, citations were directed to be published. Affidavit of service has been filed stating that citations have been duly published. 6. Notices were also issued to the O.L. and the Regional Director (NR). The O.L. has filed his report and stated that no objections/complaints had been been received by him to the proposed scheme of amalgamation. He has further stated that on the basis of information submitted by the two transferor companies, he is of the view ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f Asian Investments Limited and Ors. (1992) 73 Company Cases 835 and judgment of Calcutta High Court in the case of Mcleod Russel (India) Ltd. (1997) 4 Company Law Journal 60. 12. It was brought to the notice of the learned Counsel for the petitioner companies that this Court had dispensed with the requirement to issue notice to unsecured creditors of the transferor company No. 1 to whom ₹ 5,000/- or less was payable. Learned Counsel for the petitioners, however, pointed out that this was in terms of the directions issued by this Court in order dated 16th January, 2006 passed in CA(M) No. 12/2006 and CA No. 74/2006. It was further stated that only ₹ 1,18,000/- was due and payable to the said unsecured creditors of the transferor company No. 1. It was also stated that the other unsecured creditors to whom the transferor company No. 1 owed more than ₹ 11 crores had approved the scheme. It was submitted that the transferee company was/is the holding company of the transferor company No. 1 and transferor company No. 1 in turn was/is the holding company of transferor company No. 2. 13. My attention was also drawn to Clauses 9.1, 10.A1 and 10.B1 of the scheme whic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of amalgamation stipulated merger of transferor company with the identity of the transferee company, Rule 85 had no application as the transferor company stands transferred as a whole to the transferee company. 16. The relevant provisions have been considered in depth and detail by Gujarat High Court in the case of Maneckchowk and Ahmedabad Manufacturing Company Ltd. (1970) 40 Company Cases 819. Reference was made to definition of the term scheme in Section 390 of the Act and it was held that a scheme could also envisage modification and/or reduction of share capital. With reference to Rule 85 of the Rules it was observed that a scheme could certainly envisage re-organisation of share capital as a part of the scheme itself but in cases where the scheme envisaged reduction of share capital Rule 85 had to be given full effect to. Therefore, Company Court can sanction re-organisation of share capital in a scheme, without following the procedure for reduction of share capital as envisaged under Section 100 to 104 of the Act. However in cases of reduction of share capital, Rule 85 was applicable and accordingly sections 100 to 104 of the Act were applicable. The court also made a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s have given their written consent to the proposed scheme of amalgamation including reduction of the share capital by payment from security premium account. Similarly, the transferee company has only two unsecured creditors and no secured creditors. Two unsecured creditors are group companies of the transferee company. The unsecured creditors have also unilaterally given their consent letters and no objection certificates to the proposed scheme of amalgamation. In these circumstances, I am exercising my discretion under Section 101(3) of the Act and I do not think it is necessary and required that the procedure mentioned in Section 101(2) should be followed. Passing of special resolution and calling for meeting of the two unsecured creditors of the transferee company would be an empty and meaningless formality. I may state here that strictly speaking creditors of the two transferor companies are not concerned with and do not fall within the four corners of Section 101(2) of the Act. The creditors of the transferor companies do not become creditors of the transferee company, till the scheme is sanctioned and duly approved. Till then they continue to be creditors of the transferor co ..... X X X X Extracts X X X X X X X X Extracts X X X X
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