TMI Blog2003 (3) TMI 550X X X X Extracts X X X X X X X X Extracts X X X X ..... d of Directors of the Company was convened on 23-12-2002 which passed an unanimous resolution in favour of the proposed amalgamation. The Annual Report of the Company for the year 2001-2002 has been annexed to the petition showing the financial status of the company. The effective date on which the proposed amalgamation comes into operation on the scheme being sanctioned by this court is with effect from 1-4-2002. In an application filed by the petitioner-company in C.A. No. 140 of 2002, the meeting of the shareholders of the transferor company was dispensed with by an order of this court dated 18-2-2003. The application filed by the transferor company having been admitted, this court directed notice to the Regional Director and Official Liquidator inasmuch as the proposed scheme involves dissolution of the transferor company without undergoing the process of winding up. Public notice has also been ordered by means of advertisement in Economic Times and Andhra Jyothi both in English as well as in vernacular language. Accordingly, the publication was effected in both the papers on 3-3-2003. Pursuant to the general publication, no objections whatsoever have been received from any cor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion has been filed only by the transferor company for the sanction of the scheme of arrangement for amalgamation with another. The other being the Andhra Bank which is a body corporate, the transferor company is 100 per cent subsidiary of the body corporate. Evidently, no application has been filed by the Andhra Bank either to appoint a Chairman for the purpose of convening the meeting of its shareholders or to dispense with such meeting. It has also not filed any application for the sanction of the scheme either before this court or before another court having the necessary territorial jurisdiction. Since the Andhra Bank with which the transferor company seeks to amalgamate is a body corporate and since it has not filed any such similar application for the sanction of the scheme, having regard to the counter filed by the Registrar of Companies that the Andhra Bank is not a company registered under the Act, can there be an amalgamation of the transferor company with a body corporate is the first question. The next question that arises for determination is as to whether a similar such application seeking sanction of the scheme of an amalgamation need be filed by the Body Corporate. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... have not been conducted in a manner prejudicial to the interests of its members or to public interest : Provided further that no order for the dissolution of any transferor company under clause ( iv ) shall be made by the Court unless the official liquidator has, on scrutiny of the books and papers of the company, made a report to the Court that the affairs of the company have not been conducted in a manner prejudicial to the interests of its members or to public interest. (2) Where an order under this section provides for the transfer of any property or liabilities, then, by virtue of the order, that property shall be transferred to and vest in, and those liabilities shall be transferred to and become the liabilities of, the transferee company; and in the case of any property, if the order so directs, freed from any charge which is, by virtue of the compromise or arrangement, to cease to have effect. (3) Within (thirty) days after the making of an order under this section, every company in relation to which the order is made shall cause a certified copy thereof to be filed with the Registrar for registration. If default is made in complying with this sub-section, the com ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... within the meaning of the Act. However, the transferor company includes a "body corporate" regardless of the fact that the said "body corporate" is a company within the meaning of the Act or not. Therefore, for the purpose of section 394 of the Act, the transferee company does not include any company other than a company within the meaning of the Act. The word "company" has been defined in section 3 of the Act. That means a company which has been registered under the Act. However, the expressions "holding company" and "subsidiary" have been defined under section 4 of the Act. Therefore, it is appropriate here to consider section 4 of the Act which reads as under: Section 4 of the Companies Act : "4. Meaning of holding company and subsidiary . (1) For the purposes of this Act, a company shall, subject to the provisions of sub-section (3), be deemed to be a subsidiary of another if, but only if, ( a )that other controls the composition of its Board of directors; or ( b )that other ( i )where the first-mentioned company is an existing company in respect of which the holders of preference shares issued before the commencement of this Act have the same voting rights i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... c )any shares held or power exercisable by any person by virtue of the provisions of any debentures of first-mentioned company or of a trust deed for securing any issue of such debentures shall be disregarded; ( d )any shares held or power exercisable by, or by a nominee for, that other or its subsidiary (not being held or exercisable as mentioned in clause ( c ) shall be treated as not held or exercisable by that other, if the ordinary business of that other or its subsidiary, as the case may be, includes the lending of money and the shares are held or the power is exercisable as aforesaid by way of security only for the purposes of a transaction entered into in the ordinary course of that business. (4) For the purposes of this Act, a company shall be deemed to be the holding company of another if, but only if, that other is its subsidiary. (5) In this section, the expression company includes any body corporate, and the expression equity share capital has the same meaning as in sub-section (2) of section 85. (6) In the case of a body corporate which is incorporated in a country outside India, a subsidiary or holding company of the body corporate under the law of such ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sferee company which is a holding company which includes a body corporate is a company for the purpose of the Act. In my considered view, it seems that the transferee company also includes a body corporate but that body corporate shall be a company within the meaning of the expression "company" under the Act. There also the transferee company includes a body corporate but that body corporate need not necessarily be a company within meaning of the expression "company" under the Act. 10. Here is a case where the transferor company is obviously 100% subsidiary of the Andhra Bank, a body corporate. Therefore, Andhra Bank becomes the holding company qua its subsidiary as can be seen from sub-section (4) of section 4 of the Act. For that purpose, the expression "company" includes a body corporate as per sub-section (5) thereof. Therefore, on an analysis Andhra Bank which is a body corporate is the holding company qua its subsidiary transferor company here. Although it is a body corporate it comes within the realm of the expression "company" as is obvious from sub-section (5) of section 4. Andhra Bank for the purpose of this Act when an application is filed seeking amalgamation of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as held thus : "Having regard to the fact that sections 391 and 394 of the Companies Act make no distinction between a transferor company and a transferee company, the test for determining whether the provisions of those sections are attracted or not must be the same, both in the case of the transferor company as well as in the case of the transferee company, viz., whether as between the company and its members or creditors, the proposed arrangement or compromise affects the rights of those members or creditors, or any class of them. In the case of the transfer of its undertaking, property and liabilities by one company to another, the transaction may or may not affect the rights of its members or creditors. If it does affect the rights of its members or creditors, either because it involved a re-organisation of its share capital or otherwise, it would certainly fall within the term arrangement , and, in that event, proceedings by the transferee company in the appropriate court under sections 391 and 394 would be necessary. It must follow that if a scheme by way of transfer of an undertaking does not affect the rights of the members or creditors of the transferee company, as b ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
