SURI, NAYAR LTD. v. . — 1981 DIGILAW 347 (KAR)

M. P. CHANDRAKANTARAJ, J. ( 1 ) IN Coy. Appln. No. 1763/81, made under rule 67 of the Company Court rules, 1951, read with S. 391 of the companies Act, applicant Suri and Nayar ltd. , Bangalore had prayed for permission and directions to convene the meetings of members of the Company as well as Company's Creditors, secured and unsecured, for the purpose of obtaining their consent to the scheme of amalgamation of the applicant-Company with spraymetal Pvt. Ltd. , Bombay, which was the transferor Company. That prayer was granted to the applicant-Company by an order made by me on 15-9-81, in the sourse of which apart from fixing the venue, the date and the time of the meetings, the quorum was also fixed for such of the meetings as were required to he held and an Advocate of this Court was appointed as Chairman of the meetings. ( 2 ) TWO days before these meetings were scheduled to take place an application was made in this Court in Coy. Appln. No. 1801/81 by Spraymetal Pvt. Ltd. seeking virtually an order recalling the order passed by me in Coy. Appln. No, 1763 of 1981 sanctioning the holding of the meeting. The argument at the time advanced was that certain information was either suppressed or information was given which would tend to mislead the members of the Company (Suri and Nayar) and its creditors and that the object of the exercise of holding meetings was not bona-fide to pursue the amalgamation but to defeat the same. In that circumstance there was a prayer to prevent the meetings from taking place. However, Sri R. N. Byra Reddy the Counsel appearing for the applicant in Coy. Appln. 1801/81 could not per suade me to postpone the meetings or cancel them. The meetings were allowed to take place to see whether the apprehensions of the applicant in Coy. Appln. 1801/81 were genuine. The reports of the meetings has been since received and taken on record. ( 3 ) A perusal of the report of Mr. M. Gopalakrishna Shetty, who was appointed Chairman of the meetings indicates that meetings were held as directed on the date fixed by the Court and at the time specified. Appln. 1801/81 were genuine. The reports of the meetings has been since received and taken on record. ( 3 ) A perusal of the report of Mr. M. Gopalakrishna Shetty, who was appointed Chairman of the meetings indicates that meetings were held as directed on the date fixed by the Court and at the time specified. It is seen that the unsecured creditors' meeting was the first to be held at 10 A. M. The number of unsecured creditors of the Company was 984, but the meeting could not be continued as only 189 of the unsecured creditors attended personally or by proxy and that fell very much short of the quorum fixed by this Court in its order dated 15-9-1981, which was at 51% of the total number and the value of the credit of unsecured creditors. Similarly, in the secured creditors' meeting, which was held at 10-30 A. M. , 4 "of the 5 secured creditors were present by proxy and voted unanimously against the scheme of amalgamation. That has been recorded by the Chairman. He also reports that the credit value of secured creditors who voted against the amalgamation amounts to Rs. 1,52,19,958. 17 ps. The meeting of the shareholders of both equity and preference shares could also not be continued as there were no quorums for those meetings ( 4 ) IN the result, three of the four meetings were abortive on account of want of quorum while in one meeting that was held, that of secured creditors, the amalgamation was not approved. ( 5 ) IN the result, this Court has no further jurisdiction to decide as to what the applicant-Company (Suri and Nayar) should do. Had all the meetings been convened and all the classes of members and creditors voted in favour of the amalgamation, then perhaps this Court would record the same and await petition being presented by Suri and Nayar under sub-section (3) of S. 391 of the companies Act. ( 6 ) AS the scheme has not been approved specifically by the secured creditors, it will be virtually impossible for this Court to move further in the matter. The report requires only to be recorded and the application closed. ( 6 ) AS the scheme has not been approved specifically by the secured creditors, it will be virtually impossible for this Court to move further in the matter. The report requires only to be recorded and the application closed. ( 7 ) BUT, Spraymetal (Pvt.) Ltd. , has intervened (without an application) and reasserted their earlier arguments that the holding of the meetings as directed by the Court by Suri and Nayar Ltd. , was a deliberate exercise in order to frustrate the agreement that it had earlier entered into for the same scheme of amalgamation. But no material has been placed before this Court as to any defect either in the statement which was required to be made by Suri and Nayar Ltd. , u/s 393 (1) of the Companies Act, which was required to be circulated to all the members and creditors, secured and unsecured. Though an attempt was made to point out here and there certain facts, which according to Spraymetal (Pvt.) Ltd. , would tend to prejudice the creditors and members of the Company, who as a result might not accept the amalgamation. If in the facts stated were otherwise true, one possibly could not object to the statement u/s. 393 resulting in bias against the scheme of amalgamation. The purpose of the statement is to give a true and accurate pictute to all concerned. Unless per se fradulent intention should be gathered from such statements, and i am unable to see any such intention in the statement of facts of Suri and Nayar, this Court will not investigate the bona-fides of the statement required to be made u/s. 393 (1) of the Companies Act. ( 8 ) THEN, next comes the question, whether the transferor company situated outside the jurisdiction of this Court and within the jurisdiction of the High Court of Judicature at Bombay, can in this court question the bonafides of the application made by the transferee-Company which is situated in this State and subject to the jurisdiction of this Court. I am unable to see, not having commenced any proceedings in furtherance of the scheme of amalgamation of the Company in the State of Maharashtra, the propriety of Spraymetal (Pvt.) Ltd. , to intervene as if they can under the provisions of the companies Act, compel the amalgamation, which is not contemplated in the scheme of the Companies Act. I am unable to see, not having commenced any proceedings in furtherance of the scheme of amalgamation of the Company in the State of Maharashtra, the propriety of Spraymetal (Pvt.) Ltd. , to intervene as if they can under the provisions of the companies Act, compel the amalgamation, which is not contemplated in the scheme of the Companies Act. If there is any breach of agreement between spraymetal (Pvt) Ltd. , and the applicant suri and Nayar, that breach of the agreement must be agitated in another appropriate forum for such remedies as may be available to Spraymetal (Pvt.) Ltd. I would not hesitate to hold that in the position explained above Spraymetal (Pvt.) Ltd. , has no locus standi to intervene in this application. In the result, the report of the chairman is recorded and the Coy. Appln. 1763/81 is closed. Coy. Appln. 1801/81 does not survive for consideration any longer as it has become infructuous and the applicant has no locus standi. --- *** --- .