TMI Blog2005 (8) TMI 406X X X X Extracts X X X X X X X X Extracts X X X X ..... rectification and intimated to the advocate. On 16-5-2002, the shares were again lodged for registration on behalf of the project, the same was refused by Peerless on 27-8-2002. In none of those refusals Peerless assigned any reason in detail. Project and Vijaya both approached the Company Law Board (hereinafter referred to as "CLB") by filing an application under section 111A of the Companies Act, 1956, on 28-10-2002. In the course of the hearing pursuant to the direction of the Company Law Board Peerless disclosed the resolution by which the rectification was disallowed. The Company Law Board upon hearing the parties allowed the application of Project by directing Peerless to register the original shares in favour of Project however, granted no relief to Vjaya. Vijaya accepted the order and did not prefer any appeal. Peerless being dissatisfied with the decision of the Company Law Board Vijaya Finance Corpn. Ltd. v. Peerless General Finance Investment Co. Ltd. [2006] 129 Comp. Cas. 733 (CLB - Kol.), filed the instant appeal which was heard by me on the above mentioned dates. Reason for refusal assigned by Peerless in board meeting : ( i )No application for registration ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... inciples of section 5 of the Limitation Act could not be invoked for condoning such delay. Cases cited : ( i ) Albian Jute Mills Co. Ltd. v. River Steam Navigation Co. [1957] 100 Cal. LJ 70. ( ii ) Singer India Ltd. v. Chander Mohan Chadha [2004] 122 Comp. Cas. 468 (SC). ( iii ) Hindustan Lever v. State of Maharashtra [2003] 117 Comp. Cas. 758 1 (SC). ( iv ) Vasudev Ramchandra Shelat v. Pranlal Jayanand Thakar AIR 1974 SC 1728. ( v ) Mannalal Khetan v. Kedar Nath Khetan [1977] 47 Comp. Cas. 185 (SC). ( vi ) Madhu Intra Ltd. v. Registrar of Companies [2006] 130 Comp. Cas. 510 2 (Cal.). Statute law : Amalgamation/compromise : 2. Sections 391, 392 and 394 read together provide that a scheme for amalgamation/arrangement would bind class of persons between whom the same is propounded. In case of amalgamation after the order of sanction the rights and liabilities of the transferor automatically merge with the transferee company without any further act being done. After the same is done the transferor company is dissolved without winding up. It means that two separate entities by order of amalgamation merge and become one single entity. It ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ingle entity with their respective rights and liabilities. It might be so that the relevant sections provide for scheme being formulated between class or classes or persons. Once final sanction is made and the transferor is dissolved it becomes binding upon all concerned for all practical purposes. General Radio Appliances Co. Ltd. s case ( supra ), made a departure by saying that a tenancy could not be transferred by way of amalgamation to the transferee as tenancy was not a transferable right under the appropriate laws of tenancy. 5. In Albian Juts Mills Co. Ltd. s case ( supra ), the learned Single Judge of this Court in 1957 held that right to sue for damages could not be transferred by way of sanction of scheme as it was not a transferable interest under section 6( e ) of the Transfer of Property Act. In the case of arrangement the situation is somewhat different. Here two entities do not merge as a whole. However, partial merger or demerger is contemplated. The Apex Court decision in Singer India Ltd. s case ( supra ) or Hindustan Lever s case ( supra ). However held a different view which is different from the issue in controversy before me. In Hindustan Lever ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e intent to the extent that such section is clearly prohibitory in nature and the words "shall not register" are mandatory in character. My view on amalgamation/compromise : 11. On a careful reading of the relevant sections and the decisions cited, I am of the view that the order of sanction of compromise as in the present case although binding between the class or persons being the shareholders of Udyog and shareholders of Project once the same was effected and implemented by filing the certified copy with the Registrar the process was complete. Whether such transfer would attract payment of stamp duty or not is not point in issue hence, I refrain from dealing with the same. Sub-section (2) of section 111A clearly provides that shares in public companies are freely transferable. Hence, the restrictions discussed in General Radio Appliances Co. Ltd. s case ( supra ) or Singer India Ltd. s case ( supra ), are not in any way relevant herein. When shares are freely transferable between the transferor and transferee the company has nothing to do with the same in the case of sanction of scheme by court. The company is only obliged to record such rectification once the shar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ntion of the Legislature to allow the company to refuse rectification on the plea of limitation in the case of public companies. It was urged before me that under section 108(1A) shares were to be lodged within two months from the date of its presentation for stamping and endorsement. This was possibly incorporated to avoid a speculation and other illegal transaction. When a share is properly stamped and endorsed by the appropriate authority the same are to be lodged within two months from the date of such stamping and/or endorsement. In the instant case, when the order of sanction itself was not required to be endorsed or stamped (at the relevant time there was no provision of payment of stamp duty in the West Bengal Stamp Act on the order of amalgamation/compromise). Hence, the question of lodgment of shares within two months from that date would not arise. In the case of Madhu Intra Ltd. ( supra ), the learned Single Judge held that the stamp duty was payable and such decision was upset by the Division Bench. Thereafter, the State Government imposed stamp duty on the order of amalgamation/compromise. However, in the instant case, at the relevant time the order of sanction did ..... X X X X Extracts X X X X X X X X Extracts X X X X
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