IN RE: SWIFT FORMULATIONS PRIVATELIMITED Vs. STATE

JUDGEMENT

(1.) IN this reference, we are called upon to interpret Sub -section (2) of Section 391 of the Companies Act 1956 (for short "the Act") and determine its true meaning and import. This provision reads as under :

(2.) COMPANY Petition No. 138 of 2003 is a petition under Sections 391(2) and 394 of the Act for sanctioning the scheme of amalgamation of companies, namely, Swift Formulations Pvt. Ltd. and Mukur Pharmaceuticals Company Pvt. Ltd., with another company ; namely, Ind -Swift Ltd.

(3.) WHEN the petition came up for consideration before the company judge, a question arose as to whether the arrangement had been approved by the requisite majority as prescribed in Sub -section (2) of Section 391 of the Act or not ? It was contended on behalf of the petitioners that since the arrangement had been approved by a majority representing three -fourths in value of the creditors/shareholders present and voting at the respective meetings, the requirement of Sub -section (2) of Section 391 of the Act stood fulfilled. In support of its claim, counsel for the petitioners had placed reliance on the judgment of the Calcutta High Court in Hindustan General Electric Corporation Ltd., In re [1959] 29 Comp Cas 46, 49 ; AIR 1959 Cal 679, wherein it has been held that "the intention of the framers of this section was that the majority of the three -fourths value must be of the persons, who were present and who took part in the voting". However, the company judge noticed that in C. P. No. 324 of 2002 in the matter of Euro Cotspin Ltd., decided on July 11, 2003, it had been held that the three -fourths majority envisaged in Sub -section (2) of Section 391 of the Act has to be of the total value of the creditors/shareholders and not merely of the value of the creditors/shareholders present and voting at the meeting. Since the company judge entertained his doubts about the correctness of the view expressed in the case of Euro Cotspin Ltd. he was of the view that the matter required consideration by a larger Bench for resolving the following question :