TMI Blog2001 (12) TMI 821X X X X Extracts X X X X X X X X Extracts X X X X ..... vene a meeting of the creditors or any class of the creditors of the applicant company. It was contended that merger of a company with another involves only an arrangement between the company and its members and as such it is not necessary to order convening of a meeting of the creditors or any class of them and it is not necessary to obtain their consent for the proposed amalgamation. 3. There are three types of arrangements which are common, namely, ( i ) an arrangement between a company and its members; ( ii ) an arrangement between a company and its creditors; and ( iii ) a composite scheme in which the members as well as creditors of the company are part of a compromise or arrangement. 4. It was contended that in the case falli ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that the compromise or arrangement ( the scheme ) shall no be effective until a certified copy of the order of the Court has been filed with the Registrar. Sub-section (4) imposes a condition that the copy of the order of the Court shall be annexed to every copy of the memorandum of company issued after certified copy of the order is filed with the Registrar under sub-section (3). Sub-section (5) prescribes a penalty for not complying with sub-section (4). Sub-section (6) lays down that the Court, may order stay of the suits or proceedings against the company while the scheme is under consideration. Sub-section (7) makes a provision for an appeal against any order passed by the Court. 8. Under sub-section (2), the scheme can be sanction ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Court observed : "An anomaly appears to exist in the Act in as much as creditors of the transferor company which is being amalgamated were not entitled as of a right at any stage to participate in the process of consideration or sanction of any compromise or arrangement proposed between the company and its members which may eventually result in amalgamation of the company by its absorption in the other or by merger of the two creating third. There is no provision of the notice to the creditors of any such proceedings at any stage either prior to the making of the order or subsequent thereto....." [Emphasis supplied] 11. This judgment was followed by the same Court in the case of Telesound India Ltd., In re [1983] 53 Comp. Cas. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of participating in the process of consideration of the scheme. It is, however, not necessary to dwell further, in view of the undertakings given by the counsel for the applicant and referred to later in this judgment. 14. I am of the firm view that the while considering any scheme of arrangement or compromise proposed under sections 391 to 394 of the Act the Court is duty bound to consider the interests of all the creditors. What importance should be given to the fact that the creditors are likely to be affected would vary from case to case but the Judge would certainly treat whether the creditors are adversely affected or not as the relevant circumstance. How then Court is to ascertain as to whether the creditors are adversely affecte ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n, to order convening of the meeting of the creditors or any class of them for two reasons, namely; ( i ) in my opinion the creditors of the transferor-company are not, prima facie, likely to be adversely affected; and ( ii ) in view of the undertakings given by the counsel for the transferor-company, as discussed below. 16. It was contended that the present scheme does not adversely affect creditors. The arrangement does not contemplate extinction or reduction of liability to any creditor nor are the terms of payment nor other terms of credit are proposed to be altered. All the assets to which the creditors could look forward to for repayment of their dues would remain intact and be transferred to and vest in the transferee-company, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rdingly, the Court while considering the sanction of the scheme would grant hearing to all objecting creditors and consider their objections, if any. 18. Shri Kadam also undertakes that the notice of hearing of the petition shall be given in English in two national newspapers, i.e., Times of India (all editions) and Economic Times (all editions) and also in regional languages in the leading regional newspapers in all regions of India where the creditors are located. This would sufficiently protect the interest of the creditors. 19. At the hearing of the petition, Commerzbank A.G. (who claims to have a claim against the applicant and hence, a creditor) appeared and sought leave to intervene and file an affidavit of Shri C.G. Pr ..... X X X X Extracts X X X X X X X X Extracts X X X X
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