ANSAL PROPERTIES AND INDUSTRIES LIMITED Vs. IN RE:

JUDGEMENT

(1.) There are two Company Petitions before the Court for considering a scheme of arrangement whereby Ansal Steels Private Limited, referred to as the transferor company, has to merge with Ansal Properties and Industries Limited, referred to as the transferee company. The scheme of arrangement and amalgamation between these two companies has been independently considered by the shareholders of both companies. As per the report of Mr. K. C. Dewan, Advocate, Chairman of a meeting of the share-holders of Ansal Properties and Industries Lited held on 10th July, 1976, the scheme was unanimously approved by the share-holders present and voting at the meeting either in person or through proxy. Similarly, as per the report of Mrs. Santosh Jain, Advocate, Chairman of a meeting of the share-holders of Ansal Steels Private Limited held on the same date, the share-holders present and voting at that meeting also unanimously approved the scheme. Thus at meetings held under the directions of this Court, the share-holders of both companies have unanimously approved the scheme. Now, these Company Petitions (C.P. No. 50/76 and C.P. 49/76) have been moved to obtain the sanction of the Court, and also, for the purpose of passing a consequential orders under section 394 of the Companies Act, 1956, which arc necessary as one of the features of the scheme is that Ansal Steels Private Limited is to be dissolved and its share-holders have to be allotted shares in the transferee company in terms of the scheme.

(2.) Notices of this petition were published in newspapers under the directions of this Court, and also, issued to the Central Government and the Registrar of Companies. The Official Liquidator was also directed to scrutinise the books of Ansal Steels Private Limited for the purpose of making a report under the second proviso to Section 394(1) of the Act and he has made a report. A representation, or reply has been filed by the Central Government, Mr. H. S. Bhatia, Assistant Registrar of Companies has submitted that the Court may consider whether the scheme sufficiently safeguards the creditors of the two companies and, whether it is fair on the share-holders. I have examined the scheme from the point of view of the share-holders. As they have approved the scheme unanimously, I do not think that it is necessary to comment on the reasonableness of the allotment of the shares proposed. I had also considered this matter before directing the meetings.

(3.) Turning now to the more formidable question put forward by Mr. Bhatia, it is necessary to see that the Act does not envisage any notice being issued to the creditors. The effect of a scheme of merger between two companies is to make the creditors of the transferor company the creditors of the transferee company instead of the transferor company. This may in some cases effect their interest adversely and the Court would have to find out how their interest can best be protected. This question has to be considered now in the context of the two companies which are before me in these two Company Petitions. I directed a list of creditors being filed so as to be able to consider what material effect the merger of the two companies would have on their interest. In the case of Ansal Steels Private Limited, the major creditor is the transferee company itself. The only other creditor is a firm in Bengal having a credit of Rs. 1,660 only. On the other hand, the creditors of the transferee company amount to over Rs. 50,00,000. I cannot say that their interest can be said to be directly effected by the merger. I have to examine now the legal question whether a scheme of amalgamation also requires a meeting of the creditors to be held.