TMI Blog2000 (3) TMI 914X X X X Extracts X X X X X X X X Extracts X X X X ..... . By two other orders of the same date, made in Company Petition Nos. 1008 and 1009 of 1998, the learned Single Judge, following his reasoning in the first order, allowed the petitions by short orders. Basically, what is under challenge in these three appeals is the reasoning of the learned Single Judge in the lengthy judgment in Company Petition No. 1007 of 1998. We shall, hereinafter, refer to the judgment of the learned Single Judge in Company Petition No. 1007 of 1998 as the judgment under appeal. 5. We have been taken through the judgment under appeal, and we find that the learned Single Judge has elaborately set out the facts of the three company petitions. It is not, therefore, necessary for us to set out or refer to the facts in detail. Nonetheless, we shall refer to the necessary and material facts to deal with the contentions that were urged in support of the appeals by the learned counsel for the appellants. 6. The appellant is a trade union of Federation of the Employees of the company known as Blue Star Ltd. (BSL). The appellant is registered as a trade union under the provisions of the Indian Trade Unions Act and claims to represent its member employees. BSL ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... reduce its capital by making the Company Petition No. 1009 of 1998 absolute. Though a large number of contentions were urged before the learned Single Judge, the appellants pressed only the following contentions to which we shall hereinafter refer. 9. The first contention urged by the learned counsel for the appellant is that the scheme presented to the Company Court prejudicially affects the workmen of BSL inasmuch as there is insufficient protection given to the interests of the workmen of the BSL in the scheme. 10. As a matter of fact, clauses 3.8.1 to 3.8.5 deal with the employees of BSL and what would happen to them upon the scheme coming into operation. On a careful perusal of these clauses, we are satisfied that none of the conditions of service applicable to any workmen or employees of BSL would, in any way, be prejudiced, if the scheme is permitted to become effective. The employees are to be carried over as employees of BSL with the same conditions of service which they enjoyed before the scheme. Their services shall not be treated as broken or interrupted for all purposes including for terminable benefits. As far as the employees of BSIL are concerned, only such ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ory statement attached to the notice calling for meeting of creditors and shareholders. We agree with the learned Single Judge s view that there is misapprehension as to the provisions of section 393(1)( a ) on the part of the appellant. What section 393(1)( a ) requires is that, if any director has any material interest in the terms of compromise arrangement and the interest of the director is of a different nature than the interest of the shareholders, and the compromise has different effect on the interest of the shareholders as compared to the interest of the director, then such material interest has to be disclosed. The appellants have failed to produce any material whatsoever before the learned Single Judge that any of the directors of BSL had any such material interest in the terms of the scheme or that the terms in the compromise were likely to have any effect on such interest in a manner different from their effect on the interests of other shareholders. The learned Single Judge was, therefore, right in not countenancing this argument of the appellants. 14. It is also urged that there was non-disclosure of facts, namely, that a director by name Ashok Advani held 36,0 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o accept the contention of the appellants. 15. It is next contended that there is no disclosure of the method by which the shares were valued and, therefore, there was no informed consent on the part of the shareholders when they approved the terms of the scheme in the meeting specially called for that purpose. In our view, this contention has no merit. It cannot be gainsaid that this was not a case where BSL was merging into another company, nor was this a situation where, as a result of merging, the shares of BSL were to become extinct. It was also not a situation where there was any compromise of merger with another company, whose shares were listed on the Stock Exchange and had certain market value. It was a unique situation in which ISD, which was part and parcel of BSL, was spun off into another company known as BSIL and the BSL shareholders were entitled to cash compensation for the consequent decrease in their capital by 25 per cent. Instead of cash compensation being handed over to the shareholders, and the shareholders thereafter applying for shares of BSIL, the scheme propounded a package deal by which the cash payment due to the shareholders would be deemed to hav ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... meeting shall, within 7 days of the conclusion of the meeting, report the result thereof to the Court, stating clearly the number of creditors or class of creditors or the number of members or class as the case may be, "who were present and who voted" at the meeting either in person or by proxy, their individual values and the way they voted. The report shall be in Form No. 39. Our attention was also drawn to Form No. 39 prescribed under the Company Court Rules, particularly to clause 1 thereof which reads : "1. The said meeting was attended either personally or by proxy by (here state the number of creditors or the class of creditors or the number of members or the class of members as the case may be, who attended the meeting) of the said company entitled together to. . . (here mention the total value of the debts, or debentures, where the meeting was of creditors, and the total number and value of the shares, where the meeting was of members, of those who attended the meeting.)" It is urged that clause 1 of this form would require that the Chairman s report must indicate that total number of persons who attended as well as the total number of persons of each category who att ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... has clearly got earmarked. The following broad contours of such jurisdiction have emerged : ( 1 ) The sanctioning court has to see to it that all the requisite statutory procedure for supporting such a scheme has been complied with and that the requisite meetings as contemplated by section 391(1)( a ) have been held. ( 2 ) That the scheme put up for sanction of the court is backed up by the requisite majority vote as required by section 391(2). ( 3 ) That the concerned meetings of the creditors or members or any class of them had the relevant material to enable the voters to arrive at an informed decision for approving the scheme in question. That the majority decision of the concerned class of voters is just and fair to the class as a whole so as to legitimately bind even the dissenting members of that class. ( 4 ) That all necessary material indicated by section 393(1)( a ) is placed before the voters at the concerned meetings as contemplated by section 391(1). ( 5 ) That all the requisite material contemplated by the proviso to sub-section (2) of section 391 of the Act is placed before the Court by the concerned applicant seeking sanction for such a scheme and the cour ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
