TMI Blog1994 (6) TMI 140X X X X Extracts X X X X X X X X Extracts X X X X ..... g majority of the shareholders favouring the amalgamation of the two companies. A joint petition has been filed by the two companies in this court seeking sanction for such amalgamation. The learned single judge considered the objections filed by the four shareholders of MPI. After overruling the objections, the learned single judge granted sanction for the amalgamation of H C with MPI, as per the order impugned in this appeal. The appeal was filed by two among the four shareholders who raised objections against the amalgamation. One of the points raised before the learned single judge was that the High Court cannot sanction any arrangement for amalgamation without obtaining a report from the official liquidator to the effect that the affairs of H C have not been conducted prejudicially to the interest of its members or to the public. As per the second proviso to section 394 of the Companies Act such a report is indispensable for granting the sanction, according to the objectors. The learned single judge repelled the said contention for which he relied on the decision of the Division Bench of this court in Official Liquidator v. Madura Co. P. Ltd. [1975] KLT 562. In thi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... C. It is true that the learned single judge granted all the above reliefs. Hence, the contention is that as the scheme of amalgamation included dissolution of H C, the same relief could not have been granted without a report from the official liquidator as contemplated in the second proviso to section 394 of the Companies Act. It was also contended that "dissolution" of the transferor-company is inevitable in the implementation of any arrangement envisaged in section 394 of the Companies Act and hence without complying with the formality contained in the second proviso to the section no amalgamation could be ordered. Section 394 of the Companies Act is extracted below : "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 purposes of, or in connection with, a scheme for the reconstruction of any company or companies, or the amalgamation of any two or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... side has contended differently on that aspect. Section 394 of the Companies Act makes it clear that the High Court while sanctioning the scheme is not obliged to include all the provisions enumerated in clauses ( i ) to ( vi ) together in the order. The provision so included can be confined to the first clause alone or second clause alone or the fourth clause alone or a combination of two or more of those provisions. In other words, it is open to the High Court to sanction the scheme by providing for "the transfer to the transferee company of the whole or any part of the undertaking, property or liabilities of any transferor company." The first proviso says that the scheme of amalgamation pertaining to a company "which is being wound up" cannot be sanctioned without a report from the Company Law Board or the Registrar. The second proviso is with reference to clause ( iv ), which relates to "dissolution, without winding up, of any transferor company". The Division Bench in Official Liquidator v. Madura Co. P. Ltd. [1975] KLT 562 held that the second proviso would apply only in a case where the first proviso applies as the second proviso is intended to function as an additional ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o 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 do not think that the entire observations can be accepted as correct though we are in agreement with his conclusion that the two provisos may operate in two different situations and may apply to two different companies. Learned counsel for the appellants invited our attention to the decision of a Division Bench of the Calcutta High Court in Company Law Board v. R.K. Investments Ltd, [1978] Tax LR 1885. The Bench has made the following observations (at page 1890) : "The provisos are separate and independent and each proviso makes suitable provision for the purpose for which the same is introduced... It is not necessary that for the purpose of amalgamation the transferor company must necessarily be one which is being wound up. A company which is a going concern may choose for various reasons to amalgamate itself with another company." Of course, the learned judges envisaged the situation that even in such a case an order for dissolution without winding up of the company may be mad ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the organic unification of two entities or undertakings or the fusion of one with the other. In Halsbury's Laws of England, volume 7, paragraph 1539 of the 4th edition, "amalgamation" is described as "a blending of two of more existing undertakings into one undertaking, the shareholders of each blending company becoming substantially the shareholders in the company which is to carry on the blended undertakings. There may be amalgamation either by the transfer of two or more undertakings to a new company or by the transfer of one or more undertakings to an existing company. Strictly 'amalgamation' does not, it seems, cover the mere acquisition by a company of the share capital of other companies which remain in existence and continue their undertakings, but the context in which the term is used may show that it is intended to include such an acquisition. The question whether a winding up is for the purposes of reconstruction or amalgamation depends upon the whole of the circumstances of the winding up." In General Radio and Appliances Co. Ltd. v. M.A. Khader [1986] 60 Comp. Cas. 1013 ; [1986] 2 SCC 656, the Supreme Court has held that after amalgamation of two companies the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t, as the general clause follows specific and particular situations. "According to well-established rule in the construction of statutes general terms following particular ones apply only to such persons or things as are ejusdem generis with those comprehended in the language of the Legislature." (Vide Cockburn C.J. in R. v. Cleworth [1864] 4 B S 927 as quoted by Maxwell On the Interpretation of Statutes). This rule of construction has gained acceptance in India as the Supreme Court has adopted it time and again. The aforesaid observations of Cockburn C. J. have been quoted with approval in N.B. Pimputhar v. L.P. Pimputhar, AIR 1974 SC 111. It was contended that the rule of ejusdem generis can be departed from in this case as the Legislature has employed the word "whatsoever" after the words "any reason". We are not impressed by the said argument. If the Legislature intended that dissolution can be ordered for "any reason whatsoever" when the court is of the opinion that it is just and reasonable the Legislature need not have separately set out the first two situations in the provision because the words "or for any other reason whatsoever" are apparently wide enough to ..... X X X X Extracts X X X X X X X X Extracts X X X X
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