D.G. Karnik, J.@mdashThe petitioner herein Goodlass Nerolac Paints Limited, has two wholly owned subsidiary companies viz. Saurashtra
Paints Limited (hereinafter referred to as ''first transferor company'') and GNP (Madras) Limited (hereinafter referred to as ''second transferee
company'') A scheme of arrangement (for short ''the scheme'') was proposed by the first transferor company as well as second transferor company
proposing their amalgamation and their merger into the petitioner company. Under the scheme of amalgamation, all the assets and liabilities of the
first transferor company as well as second transferor company are to vest in the petitioner company. The whole of the share capital of the first
transferor company as well as second transferor company is held by the petitioner company which is the transferee company and no shares are to
be issued to the shareholders of the first and second transferor companies whose shares are to stand cancelled on amalgamation. Thus, the scheme
does not involve any increase of the share capital of the petitioner company.
2. The first transferor company has it''s registered office at Ahmedabad within the jurisdiction of High Court of Gujarat. By an order dated 4th
March 2003, passed in Company Petition No. 221 of 2002, the High Court of Gujarat at Ahmedabad has sanctioned the scheme of
Amalgamation of the first transferor company with the petitioner.
3. The second transferor company has it''s registered office at Perungudi, State of Tamil Nadu. By an order dated 7th March 2003, passed in
Company Petition No. 14 of 2003 the High Court of Judicature at Madras has also sanctioned the scheme of amalgamation of the second
transferor company with the petitioner company subject to the sanction to be obtained by transferee company from the High Court of Judicature at
Bombay.
4. The petitioner company moved this court by Company Application No. 56 of 2003 for dispensing with the holding of the meetings of the
members, as well as the secured and unsecured creditors. By the order dated 28th January 2003 this Court (Coram D.K. Deshmukh, J.)
dispensed with the holding of the meetings of the members as well as the secured and unsecured creditors.
5. By the order dated 7th February 2003, this Court (Coram D.K. Deshmukh, J.) admitted the Company Petition and directed issuance of a
notice of hearing of the petition to the Central Government (Regional Director) and also directed publication of the notice of the date of hearing of
the petition in Free Press Journal in English and Nav Shakti in Marathi, but dispensed with the publication of notice in the Maharashtra Government
Gazette. The Court also dispensed with the issuance of notices of hearing of the petition individually on the members and secured creditors and
unsecured creditors below Rs. five lakhs. The petitioner has filed on record three separate Affidavits all dated 5th March 2003 sworn in by G.T.
Govindrajan, Company Secretary of the petitioner company. By the first affidavit, the petitioner has proved the service of notice on the Central
Government through the Regional Director, Western Region on 11th February 2003. By the second affidavit, the petitioner has proved the
publication of the notice in the newspapers viz. Free Press Journal dated 20th February 2003 and Nav Shakti dated 20th February 2003. By the
third affidavit, the petitioner has proved the service of individual noticed to unsecured creditors of the company having a credit of more tan Rs. five
lakhs.
6. Shri Chakradhara Paik, Regional Director, Western Region, Bombay has filed an affidavit sworn in on 12th March 2003 in which he has stated
that the scheme is not prejudicial to the interest of the creditors and shareholder. The learned counsel appearing for the Regional Director states
that the Regional director has no objection for sanctioning of the scheme. At the hearing of the petition, no one has appeared to oppose the
sanction of the scheme.
7. In Bank of India v. Ahmedabad Manufacturing and Callico Pvt. Ltd. reported in 1972 42 Comp Cas 211, this Court (Coram Vimadalal, J.) has
held that if a scheme by way of a transfer of an undertaking does not affect the rights of the members or creditors of the transferee company, as
between themselves and the company, or does not involve a re-organisation of the share capital of the transferee company, no application by the
transferee company u/s 391 or 394 would be necessary. This judgment was followed by another Single Judge (Dr. D.Y. Chandrachud, J.) of this
Court in Mahamba Investments Limited v. IDI Limited. In that case, a petition was filed by the transferor company for approval of the scheme of
amalgamation with the transferee company. The transferee company had not filed a separate petition for sanction of the scheme of amalgamation of
the transferor company with it. Office of this court has therefore, raised an objection. After observing that the proposed scheme would not affect
the members of the transferee company, the creditors of the transferee company were not likely to be affected by the scheme and no new shares
were sought to be issued to the members of the transferor company by the transferee company and there was no re-organisation of the share
capital, following the judgment of this Court in the case of Bank of India v. Ahmedabad Callico (Supra), it was held that it was not necessary to file
a separate petition for sanction by the transferee company. The office objection was thus disposed of. The present case also appears to be
covered by the decisions of this Court in the two cases referred to above. The rights of the members of creditors of the petitioner company are not
likely to be affected by the Scheme. The scheme does not involve any re-organisation of the capital of the transferee company. As such, it was not
necessary for the transferee company to file a petition for sanction of the scheme.
8. No judgment however, was cited before me to show that other High Courts has followed this view. In particular, it was not cited that Madras
High Court has followed this view. On the other hand, in the Company Petition No. 14 of 2003 filed by second transferor company, the High
Court of Judicature at Madras has granted conditional approval to the scheme subject to the approval to be obtained by transferee company from
the High Court of Judicature at Bombay. The petitioner company is thus required to obtain the sanction of the scheme from this Hon''ble Court
failing which the scheme of approval by the second transferor company would not be effective in view of the specific directions issued by Madras
High Court.
9. It is true that in the case of Bank of India v. Ahmedabad Callico and in the case of Mahamba Investments v. IDI Ltd., this Court has taken the
view that it is not necessary for the transferee company to file an application for sanctioning of the scheme where the entire undertaking of the
transferor company is transferred to the transferee company without affecting any rights of the members or the creditors of the transferee company
as between themselves and the Company and the scheme does not involve re-organisation of the share capital of the transferee company.
However, the said judgments do not lay down that the transferee company cannot file a petition, if it so desires. It is one thing to say that it is not
necessary to file a petition and another thing to say that petition cannot be filed. The transferee company may choose to file a petition and seek
approval of the scheme by way of an abundant caution or because of any doubts as to whether it''s members or creditors are in any way affected
by the scheme or any other reason. I therefore, hold that though it may not be necessary in certain cases, the transferee company is not precluded
from filing of the petition for approval especially when while approving the scheme, another High Court has given a direction that the scheme shall
stand approved subject to the approval of the scheme by this Court.
In view of this, scheme is approved and the petition is allowed in terms of prayer Clauses (a) to (d).
The petitioner company shall pay Rs. 2,500/- as costs to the Regional Director.
Parties to act on a cop of this order duly authenticated by the Company Registrar.
