Content Provider | Supreme Court of India |
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e-ISSN | 30484839 |
Language | English |
Access Restriction | NDLI |
Subject Keyword | 1956: A B ss.391 and 394 - Amalgamation of companies Companies Act |
Content Type | Text |
Resource Type | Law Judgement |
Jurisdiction | India |
Act(s) Referred | Companies Act, 1956 (1 of 1956) |
Case Type | Appeal |
Court | Supreme Court of India |
Disposal Nature | Appeal Allowed |
Headnote | Companies Act, 1956:ss.391 and 394 - Amalgamation of companies - Amalgamation/merger scheme put up for sanction of Court -Obligation and jurisdiction of the Court - Held: The Court would not act as a court of appeal and sit in judgement over the informed view of the concerned parties to the scheme, as the same is best left to the corporate.and commercial wisdom of the parties concerned, yet the Court is not expected to put its seal of approval on the scheme merely because majority of the shareholders have voted in favour of the scheme - Before according its sanction to a scheme of amalgamation, the Court has to see that the provisions of the Act have been duly complied with; the statutory majority has been acting bona fide and in good faith and are not coercing the minority in order to promote any interest adverse to that of the latter comprising the same class whom they purport to represent and the scheme as a whole is just, fair and reasonable from the point of view of a prudent and reasonable businessman taking a commercial decision. ss.391 and 394 - Amalgamation of companies - Scheme of amalgamation between appellant company and another company - Single Judge of High Court sanctioned the scheme. Division Bench, however, revoked the sanction - On appeal, held : The Official Liquidator, though aware of the inspection report under s. 209A containing adverse comments on the affairs of both the companies, relied only on the report of the auditors, which admittedly was not even verified - The findings in the report under s.209A were nonetheless placed before the Single Judge, and he had considered the same while sanctioning the scheme of amalgamation - Therefore, the Single Judge had, before him, all material facts which had a direct bearing on the sanction of the amalgamation scheme, despite the aforestated lapse on the part of the Official Liquidator- In this view of the matter, the Single Judge, having examined all material facts, was justified in sanctioning the scheme of amalgamation.s.391(2), proviso and ss.209A, 235 and 237 - Amalgamation of companies - Amalgamation merger scheme put up for sanction of Court - Requirement of disclosing material facts relating to the companies - Whether existence of inspection proceedings under s.209A must be disclosed in terms of the proviso to s.391(2) - Held, Yes - Though inspection under s. 209A, strictly speaking, may not be in the nature of an investigation, but at the same time it cannot be construed as an innocuous exercise for record, inasmuch as if anything objectionable or fraudulent in the conduct of tho affairs of the company is detected during the course of inspection, it may lay the foundation for the purpose of investigations under ss.235 and 237. s.394(1), second proviso - Amalgamation of companies- Amalgamation/ merger scheme put up for sanction of Court. Duty of the Official Liquidator - Held: An Official Liquidator acts as a watchdog of the Company Court - His duty is to satisfy the Court that the affairs of the company, being dissolved, have not been carried out in a manner prejudicial to the interests of its members and the interest of the public at large - Only upon consideration of the amalgamation scheme, together with the report of the Official Liquidator, that the Court can arrive at a final conclusion.s.394(1), second proviso - Amalgamation of companies - Amalgamation/ merger scheme put up for sanction of Court - Effect of misdemeanour on the part of the Official liquidator .Whether sanction of a scheme of amalgamation can be held up merely because the conduct of an Official Liquidator is found to be blameworthy - Held: It is neither proper nor feasible to lay down absolute parameters in this behalf - The effect of misdemeanour, on the part of the Official Liquidator on the scheme as. such would depend on the facts obtaining in each case and ordinarily the Company Judge should be the final arbiter on that issue. Words and Phrases - Expression "public policy" - Meaning of - Held: The expression is incapable of precise definition - It connotes some matter which concerns the public good and the public interest. |
Judge | Hon'ble Mr. Justice D.K. Jain |
Neutral Citation | 2011 INSC 103 |
Petitioner | Sesa Industries Ltd. |
Respondent | Krishna H. Bajaj And Ors. |
SCR | [2011] 3 S.C.R. 317 |
Judgement Date | 2011-02-07 |
Case Number | 1430-1431 |
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