TMI Blog2003 (1) TMI 554X X X X Extracts X X X X X X X X Extracts X X X X ..... Thereafter, by an order dated 13-7-2001, the scheme of arrangement was sanctioned and a decree was drawn up in accordance with the said order as per Annexure-A. The relevant portion of that scheme of arrangement which was sanctioned by this Court was 38,73,342 shares of face value of US $0.001 each held by the applicant Company in M/s Zhone Technologies Inc., as on February 20, 2001, was permitted to be transferred in the name of principal shareholders of the applicant-company. This arrangement was based upon the premise that shares would be freely transferable consequent upon the public offering, which was then proposed by M/s Zhone Technologies Inc. The said scheme was sanctioned subject to the necessary approval to be obtained from vario ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , has expressed its willingness on the scheme. 3. Respondent Nos. 1 to 9 are the shareholders of both the applicant-Company as well as the tenth respondent-company. Along with the petition, the consent letters have been filed giving their consent for modification of the Scheme as proposed. Thereafter, notice was ordered to the respondents. All of them have appeared through their counsel. On 4-12-2002, notice was ordered to the Central Government as required under section 394A. In pursuance of the said notice, the Registrar of Companies Karnataka, on behalf of the Regional Director, Department of Company Affairs, Southern Region, Chennai, has filed an affidavit bringing to the notice of this Court the fact that transfer of shares is with ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... there are in all 9 shareholders in transferor-company where as only 4 shareholders in transferee-company. Now 5 shareholders of the transferor-company who were not shareholders in transferee-company, have become shareholders in transferee-company by way of allotment and transfer of shares in their favour. Thus, the objection of R.B.I. is complied with. This fact is evident from the extract of the Registrar of Companies. 7. Learned counsel for Registrar of Companies submits that the said facts now brought on record are not in dispute. 8. Explaining the scope of section 392 of the Companies Act, the Supreme Court in the case of S.K. Gupta v. K.P. Jain [1979] 3 SCC 54 at paragraph 26 has held as under : "26. According to the def ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r adjudication of any right or interest claimed. Sub-section (1)( a ) confers power on the Court to supervise the carrying out of the compromise or arrangement. Sub-section (1)( b ) confers a discretion on the Court to issue such directions in regard to any matter or make such modifications in the compromise or arrangement as it may consider necessary of the proper working of the compromise or arrangement either at the time of making such order or at any time thereafter. Similarly, sub-section (2) expressly gives the Court the power to modify a compromise or arrangement. Parliament has conferred power on the Court not only to make modification at the time of sanctioning the scheme, but at any time thereafter during the period when the schem ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd it not possible to work the scheme in view of the regulation of Reserve Bank of India. In terms of the Reserve Bank of India Regulations, the modification sought for is that in the original scheme the transfer of the shares was agreed to be in the name of the individual shareholders. As there is a prohibition in law for transfer of shares in individual names and to satisfy the legal requirement, it has to be transferred in the name of company whose shareholders would be the same as that of the transferor-company. With the proposed modification, shares are to be transferred in the name of the tenth respondent-company, the shares of which are held by the very same shareholders in the applicant-company. In that view of the matter, it is onl ..... X X X X Extracts X X X X X X X X Extracts X X X X
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