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2009 DIGILAW 237 (CAL)

Ambika Prasad Modi v. Roadco (India) Private Ltd.

2009-03-19

PINAKI CHANDRA GHOSE, SANKAR PRASAD MITRA

body2009
Judgment : GHOSE, J. (1) This appeal is directed against an order dated 3rd December, 2007 passed by the Honble Single Judge dismissing an application of the appellant for recalling of an order dated 16th January, 2003. By the said Order dated 16th January, 2003, the Honble Court granted sanction of the scheme of amalgamation of the respondent Nos. 2 to 7 with respondent No. 1. (2) The facts revealed in this case that on February 26,2002, a meeting was convened on the equity shareholders of respondent Nos. 2 to 7. The appellant challenged the said amalgamation on the ground that no notice was served as directed in clause 8 of the order dated 26th February, 2002 and that in terms of clause 16 of the said order the Chairpersons appointed for the meeting or any person authorized by him to issue or send notice of the meeting to the shareholders. Further, in terms of clause 18 of the said order it provides that the quorum for the meeting of the shareholders shall be 3 persons either personally or by proxy. (3) It has been held that no notice was served on any of the shareholders or in terms of the said order and the meeting took place as it was directed. Resolutions were submitted to show that the limited share-holders being present are invalid and fraud was perpetuated on this Honble Court which would be apparent from the records and the respondents are guilty in suppression of facts in obtaining the order of sanction. (4) The transferee or the transferor companies have not applied for dissolution without winding up for the transferor companies and the requisites statutory procedure for supporting a scheme not having been complied with, the sanction order should be recalled. (5) It is further submitted that the impugned order has failed to consider the violations of the statutory procedure the instances of fraud committed on Court and the factum of materials on record in obtaining the order of sanction. (6) Mr. P. C. Sen, learned Senior Advocate appearing in support of this appeal particularly on these grounds submitted that the order so passed by the Honble Company Judge should be recalled. (7) Mr. Sen further pointed out that the appellant is shown to be presented by a proxy but according to him, he did not appoint any proxy. (6) Mr. P. C. Sen, learned Senior Advocate appearing in support of this appeal particularly on these grounds submitted that the order so passed by the Honble Company Judge should be recalled. (7) Mr. Sen further pointed out that the appellant is shown to be presented by a proxy but according to him, he did not appoint any proxy. The appellant did not have any notice of the meeting as such, the question of appointing proxy does not arise and the signature appearing in the said form is forged. (8) His further point that no meeting could be held since a single shareholder cannot hold a meeting and there must be more than one person and the word "meeting" prima facie means coming together of more than one person present. He also drew our attention to certain provisions of the Companies Act. According to him, none attended in the said meeting in person. (9) It appears from the facts that the Honble Company Judge dismissed this petition since the appellant holding less than 7% shares in only one of the transferor companies that is respondent No. 4 and he did not hold any share in any of the 5 other transferor companies or in the transferee companies. (10) It further appears from the facts that the some of the appellants supporters including the appellant himself had instituted proceeding before the Rajasthan High Court seeking recalling of the order sanctioning the scheme of amalgamation that was passed by the said Court on 17th October, 2003 which was dismissed by the said Rajasthan High Court and also by the Honble Division Bench. (11) It is further evident from the facts that even if the certified copy of the order sanctioning the scheme was filed with the Registrar of the Companies only in March, 2004, there were at least general meetings for two financial years (the years ended oh 31 st March, 2004 and 31 st March, 2005 respectively) that ought to have been held by September, 2005. There was, however, no explanation in the appellants application as to why it had not occurred to the appellant upon not receiving notices convening the annual general meetings of the respondent No. 4 for these two financial years that something was amiss. There was, however, no explanation in the appellants application as to why it had not occurred to the appellant upon not receiving notices convening the annual general meetings of the respondent No. 4 for these two financial years that something was amiss. The appellants application was silent as to whether the annual accounts for the two financial years had been forwarded to the appellant or as to whether the appellant had made any attempt to receive the same. (12) Further, the appellants apparent supporters had due notice and knowledge of the meetings and of the scheme propounded and had as such not applied for setting aside the order of sanction but merely chosen to support the appellant. This in itself fastened knowledge of the sanctioning of the scheme on the appellant. (13) Furthermore, the appellant could make no grievance as to the meetings of the transferor companies other than the respondent No. 4, even if the appellant had due notice of the meeting under Section 391(1) of the Companies Act convened in respect of the respondent No. 4 and had attended the same. The appellant would not have had the numbers to upset the resolution passed therein in support of the said scheme. (14) It also appears that it was not necessary to go into the charges of fraud leveled by the appellant as, even if it were to be assumed that the appellant was deliberately and fraudulently kept out of the meeting and kept in the dark in respect of the proposed scheme of amalgamation the appellant could not have stopped or stalled the resolution passed by the respondent No. 4 or the other transferor companies or by the transferee companies as he lacked the shareholding strength to do so. (15) The vicarious grievance of the appellants supporters could not ride on the appellants shoulder without such supporters coming to the fore. (16) It further appears that by the scheme of amalgamation in question the respondent Nos. 2 to 7 having their registered offices at Kolkata were amalgamated with the respondent No. 1 having its registered office at Jaipur in Rajasthan. While the order sanctioning the scheme of amalgamation was passed by this Honble Court on 16th January, 2003, it was passed by the Honble Court at Rajasthan on 17th October, 2003. 2 to 7 having their registered offices at Kolkata were amalgamated with the respondent No. 1 having its registered office at Jaipur in Rajasthan. While the order sanctioning the scheme of amalgamation was passed by this Honble Court on 16th January, 2003, it was passed by the Honble Court at Rajasthan on 17th October, 2003. The G.A. No. 669 of 2005 seeking the recalling and/or setting aside of the order so passed by this Honble Court on 16th January, 2003 was, however, filed by the appellant only on 30th September, 2005 after the expiry of more than 2 years and 8 months since the passing of the same. This in itself demonstrates that the said application was without merits and was filed by the appellant as an afterthought. (17) We are also not satisfied with the explanation given by the appellant that the notices which were published in the Financial Express and Kalantar in terms of the direction given by the Court, had limited circulation and that he had no knowledge of the said meeting or it cannot be accepted that he came to learn of the amalgamation only in course of his visit to his native village place in September, 2005. (18) Therefore, we do not find that the appellant has been able to find any ground to explain the delay as has been stated in the petition. (19) On the contrary, Mr. (18) Therefore, we do not find that the appellant has been able to find any ground to explain the delay as has been stated in the petition. (19) On the contrary, Mr. Mukherjee, learned Senior Advocate appearing in support of the respondent, however contended before us that the appellant did not disclose how and from whom he came to learn of the amalgamation of the respondents, in fact, which was pointed out by the learned Counsel for the respondent that the appellant himself has suppressed the following facts : "a) in terms of an order passed by the Rajasthan High Court on 17th April, 2002, publication of notice of the meeting of the equity shareholders of the respondent No. 1 was made in the Hindustan Times and in Dainik Navjyoti on 25th April, 2002 ; b) pursuant to an order passed by this Honble Court on 15th May, 2002, notices were published in Aajkal and Economic Times intimating that the petition for confirmation of the scheme of amalgamation had been presented and had been fixed for hearing on 17th June, 2002 ; c) apart from the appellant no other shareholder of the respondent No. 4 has made any complaint with regard to the non-service of notice or with regard to absence of knowledge of the amalgamation." (20) Furthermore, the holding of the appellant in respondent No. 4 was only 10,000 shares representing a meager 6.04% as such even if the appellant had voted against the resolution in the meeting of the equity shareholders of the respondent No. 4, his vote would not have made it different. (21) Mr. Sen, however, substantiating his submission relied on the decisions reported in AIR 1994 SC 853 [S. P. Chengalvaraya Naidu v. Jagannath]; (2005)4 SCC 605 (MCD v. State of Delhi) and (2006)7 SCC 416 (Hamza Hazi v. State of Kerala) in support of his contention. (22) Mr. Mukherjee, further pointed out that apart from the appellant no other shareholder has made any complaint with regard to the sanction of the said scheme and he relied on a decision reported in (2000)1 BCLC 331 [Fletcher and Anr. v. Royal Automobile Club Ltd.] and submitted that even in the case of a judgment obtained by fraud, the Court should not set aside the same and it is satisfied that the result would not have been different if fraud had not been practiced. v. Royal Automobile Club Ltd.] and submitted that even in the case of a judgment obtained by fraud, the Court should not set aside the same and it is satisfied that the result would not have been different if fraud had not been practiced. (23) He further pointed out that on the order of amalgamation the respondent Nos. 2 to 7 have ceased to exist in law. Therefore, the said submission has no bearing in the facts and circumstances of this case: He further submitted that Sections 484 to 486 of the Companies Act, 1956 deals with voluntary winding up. As per Section 486 of the Companies Act, voluntary winding up is deemed to commence at the time when the resolution for voluntary winding up is passed. Section 559(2) of the Act provides that it is the duty of the person on whose application order of dissolution is made to file certified copy of the order with the Registrar of Companies "who shall register the same". This has admittedly been done in so far as the respondent Nos. 2 to 7 is concerned. The Rules relating to termination of winding up are contained in Rules 281 to 285 of the Companies (Court) Rules, 1959. Rules 281 to 284 relate to winding up by Court and require an application by the Official Liquidator. Rule 284(b) which relates to voluntary winding up and winding up subject to supervision of Court provides-at the date of dissolution of the Company, which must be the date of dissolution as mentioned in the order sanctioning the scheme. (24) The points of quorum and of the right of proxy holders to vote at a meeting, only on a poll were also not a part, of the appellants pleadings. In any event Sections 174, 176 and 179 of the Companies Act, 1956 can have no application to meetings of compromise or arrangement held under orders of Court. The Rules relating to compromise and arrangement under Sections 391 to 394 of the Act are Rules 67 to 87 of the Companies (Court) Rules, 1959. Rule 69(4) provides that the Judge shall give directions, inter alia, in respect of fixing the quorum and the procedure to be followed at the meeting or meetings including voting by proxy. The Rules relating to compromise and arrangement under Sections 391 to 394 of the Act are Rules 67 to 87 of the Companies (Court) Rules, 1959. Rule 69(4) provides that the Judge shall give directions, inter alia, in respect of fixing the quorum and the procedure to be followed at the meeting or meetings including voting by proxy. Rule 69 of the said Rules of 1959 further provides that the order made on the summons shall be in Form No. 35 with such variations as may be necessary. (25) After analyzing the decisions cited at the Bar and after going through the materials on record placed before us, it appears to us that the appellant has not been able to make out a case in this matter on the question which has been strenuously held before us by Mr. Sen and in our considered opinion, on the given facts, it would reveal that the appellant although tried to explain the delay stating that he had not received any communication with regard to the scheme of amalgamation, the said submission cannot have any bearing in the facts and circumstances of this case since the advertisement was duly published in the Financial Express and Kalantar. (26) Furthermore, the matter has also been gone into Rajasthan High Court and the Rajasthan High Court dismissed the application filed by some of the shareholders in respect of the said scheme of amalgamation. It is further to be noted that the petitioner shareholder is only about 6.04% that too only in respect of the respondent No. 1. (27) In these circumstances, we find that the point urged before us by Mr. Sen cannot be accepted while on the contrary, we accept the submission made by the respondent and in our considered opinion, we do not find that the order so passed by the Honble Company Judge suffers from any illegality or irregularity and hence, we hold that His Lordship has assessed the facts rightly and correctly came to the conclusion. We do not find any reason to interfere in the said order in any manner whatsoever. (28) Accordingly, we affirm the order so passed by His Lordship and dismiss this appeal.