DIAMOND INTERNATIONAL PRIVATE LIMITED Vs. UNION OF INDIA

JUDGEMENT

(1.) M/s. Diamond International (P) Ltd.(transferee company), M/s. Diamond Polymers (P) Ltd. and M/s. Diamond Elastomers (P) Ltd. (transferor companies) had filed judges summons under Section 391 of the Companies Act, 1956 (hereinafter called the 'Act'). The said company applications were registered as CAs. 374,375 and 376 of 1990 seeking directions for convening of meeting of its shareholders for the purposes of considering, and if thought fit, approving with or without any modifications, the arrangement proposed to he made between the compromise or arrangement as embodied in the scheme of amalgamation. C.A.No. 374/90 was moved by M/s. Diamond Polymers Pvt. Ltd. C.A.No. 375/90 was filed by M/s. Diamond Elastomers Pvt. Ltd. and C.A.No. 376/90 was filed by M/s. Diamond International Pvt, Ltd. seeking similar directions.

(2.) The transferor and transferee companies have stated in their affidavits that all the companies inter alia deal in the manufacture, buy, sell, refine, prepare, import, export and to carry on business in minerals, nethylated and rectified spirits, dry or other colours, coalter dyes, die intermediates, raw materials, pigments dyes etc. and also deal in all type of containers, packing materials and articles of PVC, rubber plastic pollythance, paper, card board, wood or any other material. So far as M/s. Diamond Elastomers (P) Ltd. is concerned, it also deals in ail kinds of PVC footwear, PVC compound, Rubber Footwear with leather sole, canvas etc. It is in their petition that the amalgamated companies would enjoy the benefit of combined operation which would be beneficial for all.

(3.) The premises of the transferor companies situated at A-9, Mayapuri Industrial Area, Phase-II, New Delhi, where the factory and registered office of these companies was Siuated was burnt on 5th May, 1988 because of devastating fire. This resulted in complete annithilation and destruction of machinery and plant and huge stock. Though these transferor companies received insurance compensation but it is not enough to rehabilitate the units. The cost of rehabilitation of the units would be much more because of the cost of machinery, plant and material going high. It would not be possible for these companies So function profitably. These companies have the license, technical knowhow, the expertise and also the technical staff which these companies want to utilize. It was in this background, that these companies deem it fit to merge with the transferee company, which company is in the same line and business and has goodwill in the market.