YKM HOLDING PRIVATE LIMITED Vs. UNION OF INDIA

JUDGEMENT

(1.) The. above reference is on the point that whether notices to the Central Government as envisaged in Section 394A of the Companies Act, 1956 (for short "the Act"), is required to be given both of the first application under Section 391 (1) of the Act for convening a meeting and of the second application under sub-section (2) of Section 391 of the Act before sanctioning the compromise or arrangement.

(2.) Necessity to make reference by the Company Judge arose because of conflicting views expressed by two learned Judges of this Court in two separate decisions. Y.K. Sabharwal, J. in re:- 'Jindal (India) Ltd. reported as 1993 (76) Co. Cases 443 held that notice to the Central Government is necessary before making any order under sub-section (1) of Section 391 of the Act. P.K. Bahri, J. in Mohan Exporters India Ltd. Vs. Tarun Overseas (P) Ltd. 1994(3) C.L.J. 193 (Delhi) held that no notice was required to be issued to the Central Government at the time the Judges Summons are taken out under sub-section (1) of Section 391 of the Act for holding meetings of the creditors and the shareholers. The view expressed by Sabharwal, J. in Jindal (India) Ltd was not placed before P.K. Bahri. J.

(3.) The applicant company filed application under Section 391 (1) and 393 of the Act praying for issuing necessary direction regarding holding of meeting of equity shareholders and creditors of the applicant companies. A question arose whether at this stage notice of the application should or should not be given to the Central Government in view of Section 394A of the Act. Sections 391 and 393 read:-