M. L. PENDSE, C. J. ( 1 ) THE question which falls for consideration in these appeals referred to the Full Bench is of application of second proviso to sub-sec. (1) S. 394 of the Companies Act, 1956, (hereinafter referred to as 'the Act'), on application made under Section 391 of the Act for amalgamation of two companies where the order is to be passed for dissolution without winding up transferor-company. Webb's Sales and Service (P.) Ltd. , Webb's Farm Mechanization (P.) Ltd. , Webb's Agricultural and Automobile Industries (P.) Ltd. , Webb's Agricultural and Automible Service (P.) Ltd. , and Webb's Method Manufacturing (P.) Ltd. (in liquidation) are companies comprising Webb's Group of companies. The directors of all the companies are the same persons and the Governing Director of all the Group companies is Mrs. Shirley Webb. Mrs. Web and her children are the shareholders of the companies. Webb's Method Manufacturing (P.) Ltd. , was incorporated on September 2, 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 Corporation. ( 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 of 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 M/s. Webb's Sales and Service (P.) Ltd. and the amalgamated company will take over all the assets and liabilities of the remaining four companies. After amalgamation the amalgamated company would have surplus assets of over Rs. 6 crores. The scheme of amalgamation provided that the four companies would be amalgamated in M/s. Webb's Sales and Service (P.) Ltd. and the amalgamated company will take over all the assets and liabilities of the remaining four companies. After amalgamation the amalgamated company would have surplus assets of over Rs. 6 crores. The requisite resolutions were passed by Board of Directors of all the companies, and on October 28, 1993, Company Application No. 449/93 was filed before the Company Judge under Section 391 of the Act for sanction of the scheme. The Company Judge directed that meetings of the shareholders be convened and after approval was secured for the scheme in the meetings the Company Judge was moved for sanctioning the scheme. On June 2, 1994 statement was filed on behalf of the companies claiming that the scheme provides for amalgamation and taking over of four companies including the one in liquidation and direction for dissolution of the three transferor-companies is not required. ( 3 ) THE Company Judge notified the Registrar of Companies, the Company Law Board and the Official Liquidator about the proposed scheme. On July 5, 1994 the Official Liquidator made Report No. 78/94 to the Company Judge pointing out that order for dissolution of transferor-companies under clause (iv) of sub-sec. (1) (b) of Section 394 of the Act cannot be passed unless the Official Liquidator on scrutiny of books and papers of the transferor-companies makes a report that the affairs of the transferor-companies have not been conducted in a manner prejudicial to the interests of the members or to public interest. The Official Liquidator requested the Company Judge to issue directions for such scrutiny and claimed that an amount of Rs. 10,000/- should be deposited towards charges of Chartered Accountant required for scrutiny of books and papers of the companies. The transferor-companies objected to the claim of the Official Liquidator that the Company Judge is required to pass order for dissolution of the transferor-companies before sanctioning of the scheme. The companies also claimed that the report of the Official Liquidator under the second proviso to sub-sec. (1) of Sec. 394 of the Act is not necessary. The Company Judge, by impugned order dated November 8, 1994, accepted the claim made by the Official Liquidator in view of the decision of the Division Bench reported in Regional Director, Company Law Board, Government of India v. Mysore Galvanising Co. (1) of Sec. 394 of the Act is not necessary. The Company Judge, by impugned order dated November 8, 1994, accepted the claim made by the Official Liquidator in view of the decision of the Division Bench reported in Regional Director, Company Law Board, Government of India v. Mysore Galvanising Co. Pvt. Ltd. , (1976) 46 Com Cas 639 : (1976 Tax LR 2001 ). The Company Judge held that there can be no dissolution of any transferor-company without 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, response was not received from the Company Law Board or the Registrar of Companies in spite of notifying those authorities under first proviso to sub-sec. (1) of S. 394 of the Act. The Company Judge therefore directed the Official Liquidator to file the report in respect of the three transferor-companies. ( 4 ) THE order of the Company Judge passed in Company Petitions Nos. 68 to 72/94 is under challenge in this batch of appeals. The appeals were posted for hearing before a Division Bench on July 7, 1995. The Division Bench expressing doubt about the correctness of the view of the Division Bench in the case reported in (1976) 46 Com Cas 639 : (1976 Tax LR 2001), referred the appeals to the Chief Justice for constituting a larger Bench. The appeals are accordingly placed for disposal before this Bench. ( 5 ) SECTION 391 of the Act entitles the Court to sanction any compromise or arrangement between a company and its creditors or between a company and its members. The section authorises the Court to sanction the scheme even without a company first being wound up. The section was amended in the year 1965 in pursuance of the recommendation of the Daphtary-Sastri Committee Report which inter alia provided that before Company Court proceeds to sanction the arrangement or amalgamation, information as to important facts should be made available and for that purpsoe notice of every application for the scheme of amalgamation should be served on the Registrar of Companies. Relevant part of Section 394 of the Act reads as follows :"394. Relevant part of Section 394 of the Act reads as follows :"394. Provisions for Facilitating Reconstruction and Amalgamation of Companies.- (1) Where an application is made to the Court under Section 391 for the sanctioning of a compromise or arrangement proposed between a company and any such persons as are mentioned in that section, and it is shown to the court - (a) that the compromise or arrangement has been proposed for the purpose of, or in connection with, a scheme for the reconstruction of any company or companies, or the amalgamation of any two or more companies, and (b) that under the scheme the whole or any part of the undertaking, property or liabilities of any company concerned in the scheme (in this section referred to as a "transferor company") is 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) to (iii ). . . . . . . . . (iv) the dissolution, without winding up, of any transferor company;. . . . . . . . . . . . . . . . . . . Provided further that no order for the dissolution of any transferor company under clause (iv) shall be made by the Court unless the Official Liquidator has on scrutiny of the books and papers of the company made a report to the Court that the affairs of the company have not been conducted in a manner prejudicial to the interests of its members or to public interest. "the plain reading of sub-sec. (1) of S. 394 of the Act makes it clear that when an application is made to the Court under S. 391 for sanction of scheme of amalgamation the Court while sanctioning the scheme or by subsequent order should make provision for dissolution, without winding up, of transferor-company. The provisions of Secs. 391 and 394 of the Act 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 sub-sec. The provisions of Secs. 391 and 394 of the Act 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 sub-sec. (1) of S. 394 of the Act 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 appellant 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 of the Act 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 amalgamation is not possible without dissolution of the transferor-company. Where two companies are proposed to be amalgamated into a new company, though the scheme may not involve the winding up of the respective companies, it does involve the dissolution and consequently a report by the Official Liquidator as contemplated by the second proviso to sub-sec. (1) of Section 394 of the Act would be necessary. ( 6 ) THE Division Bench of this Court in the case of Mysore Galvanising Co. (1976 Tax LR 2001) after examining the two provisos to sub-sec. (1) of Section 394 of the Act observed (at pp. 2002-03 of Tax LR) :"it is plain from the above analysis of the two provisos that the said provisos deal with different situations, in that while the first proviso relates to the sanction of a compromise or arrangement involving a scheme of amalgamation of a company "which is being wound up", the second relates only to an order for dissolution of a transferor-company without winding up. It is no doubt true that a single scheme of amalgamation or reconstruction in a given case may involve both types of companies, namely, those under winding up and those which are not, one or more of the latter category coming in for dissolution. In such a situation both the provisos come into operation. On the other hand, there may be cases where, as in the instant case, no company which is under winding up may be involved. In such an event, the first proviso does not come into play at all and only the second proviso will be operative. This is not the same as saying that the second of the provisos would come into operation only when the first proviso operates, as contended for the respondent-companies. "we are in agreement with the view expressed by the Division Bench. This view was also adopted by a Division Bench of Calcutta High Court in the case reported in Regional Directors Company Law Board, Calcutta v. R. K. Invesments, 1978 Tax LR 1885. Mr. Justice A. N. Sen, as he then was, while speaking for the Bench, observed that the Legislature in its wisdom has thought it fit to make special provision in case of an order for dissolution without winding up of any transferor-company and it is fallacious to suggest that the second proviso to sub-sec. (1) of S. 394 of the Act has no application if the transferor-company is not in the process of being wound up. The Division Bench held that a company which is a going concern may choose for various reasons 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 Calcutta High Court disapproved the decision of a single Judge in the matter of Maribong Kyel Tea Estate Ltd. (1977) 47 Com Cas 802 and expressed agreement with the view taken by the Division Bench of this Court in Mysore Galvanising case (1976 Tax LR 2001 ). A single Judge of Bombay High Court in Sumani Pvt. Ltd. (1979) 49 Com Cas 547 approved the view of the Division Bench of this Court in Mysore Galvanising case and disagreed with the view of the learned single Judge of Calcutta in Maribong Kyel Tea Estate case. A single Judge of Bombay High Court in Sumani Pvt. Ltd. (1979) 49 Com Cas 547 approved the view of the Division Bench of this Court in Mysore Galvanising case and disagreed with the view of the learned single Judge of Calcutta in Maribong Kyel Tea Estate case. 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-sec. (1) of S. 394 of the Act 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 set out any reason for the doubt felt by the Division Bench. The object of calling for report of the Official Liquidator is to satisfy the Company Court that the interests of the shareholders and public interest are not prejudicially affected by the amalgamation. We are unable to appreciate why the report of the Official Liquidator should be dispensed with merely because the appellants claim that the scheme of amalgamation provides for merger of transferor-companies and the order of company Judge for dissolution without winding up of transferor-companies is not required. ( 7 ) SECTION 448 of the Act provides for appointment of Official Liquidator for each High Court. The submission that Official Liquidator under Section 448 is appointed so far as it relates to the winding up of companies by the Court and the Official Liquidator has no role to play when the transferee-company is not wound up is not correct. The principal function of the Official Liquidator is undoubtedly in relation to the winding up of the company, but that cannot lead to the conclusion that the Official Liquidator has no existence for any other purpose of the Act. Section 448 merely prescribes the manner or mode of appointment of Official Liquidator and once such an appointment is made by the Central Government then it is open to clothe the Official Liquidator with any other duty which the Legislature considers expedient and necessary. Second proviso to sub-sec. Section 448 merely prescribes the manner or mode of appointment of Official Liquidator and once such an appointment is made by the Central Government then it is open to clothe the Official Liquidator with any other duty which the Legislature considers expedient and necessary. Second proviso to sub-sec. (1) of Section 394 of the Act demands submission of the report from the Official Liquidator in cases of dissolution of the company without winding up and we are unable to appreciate how it can be claimed that the Official Liquidator does not come into picture unless the transferor-company is being wound up. The first proviso to sub-section (1) of Section 394 deals with the transferor-company which is being wound up while the second proviso deals with a transferor-company which is to be dissolved without being wound up. The two provisos are attracted to different sets of circumstances. In our judgment, the impugned order passed by the Company Judge calling upon the Official Liquidator to file report under second proviso to sub-sec. (1) of Section 394 of the Act in respect of the transferor-companies which are not in liquidation is correct and does not suffer from any infirmity. The appeals, therefore, are devoid of any merit. ( 8 ) ACCORDINGLY, all the appeals are dismissed, but without any order as to costs. Appeals dismissed. --- *** --- .