N. KUMAR J.
1. The six companies have presented these company applications under Sections 391 to 394 of the Companies Act, 1956, seeking appropriate directions for convening of the meetings of the shareholders and creditors of the respective companies and for dispensation with the holding of such meetings. The office has raised objection regarding maintainability of a single/common application by six companies which reads as under :
As per Section 391(1)(b)... "on the application of the company or of any creditor or member of the company", a single application with separate number is not maintainable in respect of six companies.
2. In reply to the said office objections, learned counsel for the applicants requested the office to place the matter before the court to hear regarding the office objections. Accordingly, the matter was placed before the court. As the objection raised by the office was purely a question of law regarding the maintainability of a common application by several companies who are parties to a scheme of arrangement or a scheme of amalgamation, notice was ordered to the Registrar of Companies to elicit his views in the matter. The court also directed Sri Aditya, learned counsel to assist the court in deciding the aforesaid matter.
3. I have heard learned counsel for the applicants, learned counsel for the Registrar of Companies and Sri Aditya learned counsel. It is pointed out that the office objection is based on a decision of this court in the case of Electro Carbonium Pvt. Ltd., In re; Electric Materials Company Pvt. Ltd., In re [1979] 49 Comp Cas 825. A learned single judge of this court while dealing with the question whether both the companies can maintain a joint petition or should file two separate petitions has held as under (page 826) :
"Having regard to Section 394A of the Companies Act which requires that on any application made u/s 391 to 394, notice shall be taken out to the Central Government, it is indicative that both the companies which are distinct entities must take out that notice to the Central Government. Therefore, I am inclined to take the view that a common petition is not maintainable but two separate petitions must be filed by the transferee and transferor-companies though for the same purpose. This view is further strengthened by the proviso to Clause (b)(vi) to Sub-section (1) of Section 394, which contemplates that no order for amalgamation and any scheme in connection therewith may be sanctioned by the court, unless the court receives a report from the Company Law Board or the Registrar that the affairs of the company have not been conducted in a manner prejudicial to the interests of its members or to public interest. In other words, the proviso contemplates that there must be a report in respect of each of the companies, in regard to the management of its affairs, until the date of amalgamation.
In this view of the matter, the office objection is upheld and the applicants are directed to make two separate applications for amalgamation u/s 391 of the Companies Act."
4. Learned counsel for the applicants submitted though that is the view expressed by a learned single judge of this court, another single judge of this court in the case of Kirloskar Electric Co. Ltd. [2002] 40 SCL 745 : [2003] 113 Comp Cas 670, 685 has held as under :
"... Hence, In an application made u/s 394 of the Act, the court will be in a position to make effective orders as provided under Clauses (i) and (ii) on the matters enumerated therein which would be binding on the transferor-company, its members and creditors.
Sub-clauses (ii) and (iii) of Clause (b) of Section 394 of the Act are referable only to transferee-company. The court cannot bind them to do things enumerated under the aforesaid clauses unless they are before this court by filing firstly an application u/s 391 of the Act? inter alia, seeking a direction to convene the meeting of the members and creditors of the company. In the said application, the company may also request the court to dispense with the holdings of the meetings of the members and creditors of the applicant-company for the reasons mentioned therein. After complying with those formalities, the transferee-company may present a petition inter alia seeking an approval of the resolutions passed in the board of directors meeting. On presentation of such a petition, the court shall issue a notice u/s 394A of the Act to the Regional Director, Department of Company Affairs, Chennai, who is the delegatee of the Central Government and take into consideration the representation made by the Regional Director before passing any order on the proposed scheme of arrangement or compromise. The object and purpose of introducing the aforesaid mandatory provision has been explained by the Madras High Court in the case of Ucal Fuel Systems Ltd., In re [1992] 73 Comp Cas 63, 71.
''Section 394A of the Act makes it obligatory on the court to give notice to the Central Government of every application made to it u/s 391 or Section 394 and to take into consideration the representations made by that Government before passing any order on the proposed scheme of amalgamation. This would enable the Central Government to study the proposal and raise objections thereto as it thinks fit in the light of the facts and information available with it, and also place the court in possession of certain facts which might not have been disclosed by those who appear before it so that the interests of the investing public at large may be fully taken into account by the court before passing its order. The powers and functions of the Central Government under this section have been delegated to the Regional Directors who are to exercise the same, subject to the control of the Company Law Board (Notification G. S. R. No. 416 dated February 22, 1969).''
In view of the above, it can safely be said that both the transferor and transferee-company should make either a joint petition or separate petition as envisaged u/s 394 of the Act."
5. It is to be pointed out that while rendering the said judgment the learned single judge has not noticed the earlier judgment which has taken a contrary view. However, learned counsel for the applicants contends that the Delhi High Court in the case of Mohan Exports India Ltd., In re; Tarun Overseas (P.) Ltd., In re [1999] 95 Comp Cas 53 considering the objections where joint petition by two companies, i.e., transferor-company and transferee-company is not competent and separate petitions should have been filed has held as under (headnote) :
"Neither the Companies Act, 1956, nor the Companies (Court) Rules, 1959, prohibits the filing of a joint petition under Sections 391 and 394 of the Act for sanction of a scheme of amalgamation or compromise when the subject matter is the same and common questions of law and fact would arise for decision ... So, I hold that a joint petition is maintainable by the transferor and the transferee-companies."
6. While rendering the said judgment, the Delhi High Court has noticed the judgment of this court in Electro Carbonium P. Ltd., In re [1979] 49 Comp Cas 825 and came to the conclusion that while rendering the said judgment the provision of Order 1, Rule 1 of the CPC was not considered.
7. In view of the aforesaid judgments, the question that arises for my consideration is as under :
"Whether a joint application/petition by the transferor and transferee-companies is maintainable under Sections 391 and 394 of the Companies Act ?"
8. It is settled law when there is a judgment of a co-ordinate Bench even if the other co-ordinate Bench does not accept the reasoning of the earlier Bench, the said judgment cannot be ignored however persuasive the reasoning given by a judgment of another Bench and follow the same and decide the said question. It is settled law as held by the Supreme Court in the case of
"When a Bench of the High Court gives a decision on a question of law, it should, in general be followed by other Benches unless they have reasons to differ from it, in which case the proper course to adopt would be to refer the question for the decision of a Full Bench.
Law will be bereft of all its utility if it should be thrown into a state of uncertainty by reason of conflicting decisions, and it is, therefore, desirable that in the case of difference of opinion, the question should be authoritatively settled. It sometimes happens that an earlier decision given by a Bench is not brought to the notice of a Bench hearing the same question, and a contrary decision is given without reference to the earlier decision. When two such conflicting decisions are placed before a later Bench, the correct procedure to follow in such a case would be for the Bench heading the case to refer the matter to a Full Bench in view of the conflicting authorities without taking upon itself to decide whether it should follow the one Bench decision or the other."
9. Again the Supreme Court in the case of
"As the learned single judge was not in agreement with the view expressed in the earlier decision of another single judge of that High Court it would have been proper, to maintain judicial discipline, to refer the matter to a larger Bench rather than to take a different view. It is noted with regret and distress that the said course was not followed. It is well-settled that if a Bench of co-ordinate jurisdiction disagrees with another Bench of co-ordinate jurisdiction whether on the basis of ''different arguments'' or otherwise, on a question of law, it is appropriate that the matter be referred to a larger Bench for resolution of the issue rather than to leave two conflicting judgments to operate, creating confusion. It is not proper to sacrifice certainty of law. Judicial decorum, no less than legal propriety forms the basis of judicial procedure and it must be respected at all costs."
10. Again the Supreme Court in the case of
". . . we would like to say that an earlier decision may seem to be incorrect to a Bench of a co-ordinate jurisdiction considering the question later, on the ground that a possible aspect of the matter was not considered or not raised before the court or more aspects should have been gone into by the court deciding the matter earlier but it would not be a reason to say that the decision was rendered per incuriam and liable to be ignored. The earlier judgment may seem to be not correct yet it will have the binding effect on the latter Bench of co-ordinate jurisdiction. Easy course of saying that earlier decision was rendered per incuriam is not permissible and the matter will have to be resolved only in two ways--either to follow the earlier decision or refer the matter to a larger Bench to examine the issue, in case it is felt that earlier decision is not correct on merits."
11. Learned counsel for the applicants submitted that the law laid down by the Supreme Court as aforesaid recognizes an exception to the said rule, i.e., where a court omits to consider a binding precedent of the same court or the superior court rendered on the same issue or where a court omits to consider any statute while deciding that issue, rule of per incuriam could be applied and such a judgment is not binding on a judge of co-ordinate jurisdiction and it would not be binding as a precedent. In support of his contention he relies on a judgment of this court in the case of
"While some of the exceptions to the rule of stare decisis can be applied to all decisions which can be called as precedents, some, like the exception based on per incuriam rule can be applied only in regard to decisions of co-ordinate Benches of the same court, and not to decisions of larger Benches of the same court or the apex court. While a decision rendered per incuriam by a co-ordinate Bench may not be binding as a precedent, a court in a lower tier (smaller Bench) cannot refuse to follow the ratio decidendi of a decision rendered by the court in a higher tier (larger Bench of the same court or the apex court) by stating that such decision is rendered per incuriam."
12. The Supreme Court in the case of
"A decision should be treated as given per incuriam when it is given in ignorance of the terms of a statute or of a rule having the force of a statute. So far as the order shows, no argument was addressed to the court on the question whether or not any direction could properly be made compelling the Municipal Corporation to construct a stall at the pitching site of a pavement squatter. Professor P.J. Fitzgerald, editor of the Salmond on Jurisprudence, 12th edition, explains the concept of sub silentio at page 153 in these words :
''A decision passes sub silentio, in the technical sense that has come to be attached to that phrase, when the particular point of law involved in the decision is not perceived by the court or present to its mind. The court may consciously decide in favour of one party because of point A, which it considers and pronounces upon. It may be shown, however, that logically the court should not have decided in favour of the particular party unless it also decided point B in his favour ; but point B was not argued or considered by the court. In such circumstances, although point B was logically involved in the facts and although the case had a specific outcome, the decision is not an authority on point B. Point B is said to pass sub silentio.''
... Precedents sub silentio and without argument are of no moment. This rule has ever since been followed. One of the chief reasons for the doctrine of precedent is that a matter that has once been fully argued and decided should not be allowed to be reopened. The weight accorded to dicta varies with the type of dictum. Mere casual expressions carry no weight at all. Not every passing expression of a judge, however eminent, can be treated as an ex cathedra statement, having the weight of authority." (underlining by me)
13. In Halsbury''s Laws of England (Fourth edition) vol. 26 : Judgment and Orders Judicial decisions as authorities (pages 297-298, para. 578) it is stated as under :
"A decision is given per incuriam when the court has acted in ignorance of a previous decision of its own or of a court of co-ordinate jurisdiction while covered the case before it, in which case it must decide which case to follow or when it has acted in ignorance of a House of Lords decision, in which case it must follow that decision; or when the decision is given in ignorance of the terms of a statute or rule having statutory force. A decision should not be treated as given per incuriam, however simply because of a deficiency of parties, or because the court has not the benefit of the best argument and, as a general rule, the only cases in which decisions should be held to be given per incuriam are those given in ignorance of some inconsistent statute or binding authority. Even if a decision of the Court of Appeal has misinterpreted a previous decision of the House of Lord, the Court of Appeal must follow its previous decision and leave the House of Lords to rectify the mistake."
14. Therefore, learned counsel for the petitioners contend that as the judgment rendered by the co-ordinate Bench of this court in Electro Carbonium Pvt. Ltd., In re [1979] 49 Comp Cas 825 by omitting to consider the provisions of Order 1, Rule 1 of the Civil Procedure Code, the said judgment is per incuriam and is not binding as a precedent on this court. In order to appreciate this contention we have to look into the provisions of company rules as well as the aforesaid provisions Order 1, Rule 1 of the Civil Procedure Code.
15. Company Rule 6 deals with practice and procedure of the court and provisions of the Code to apply which reads as under ;
"Rule 6. Save as provided by the Act or by these Rules the practice and procedure of the court and the provisions of the Code so far as applicable, shall apply to all proceedings under the Act and these Rules."
16. Therefore, it is clear the provisions of the CPC are applicable to the practice and procedure of the company court. Order 1, Rule 1 of the CPC deals with who may be joined as plaintiffs. It reads as under :
"Order 1, Rule 1.--Who may be joined as plaintiffs : All persons may be joined in one suit as plaintiffs where --
(a) any right to relief in respect of, or arising out of, the same act or transaction or series of acts or transactions is alleged to exist in such persons, whether jointly, severally or in the alternative ; and
(b) If such persons brought separate suits, any common question of law or fact would arise."
17. The learned single judge while rendering the aforesaid judgment has referred to Section 394A and Clause (b)(vi) to Sub-section (1) of Section 394 of the Act to come to the aforesaid conclusion. Section 394A of the Act reads as under :
"394A. Notice to be given to Central Government for applications under Sections 391 and 394.--The court shall give notice of every application made to it u/s 391 or 394 to the Central Government, and shall take into consideration the representations, if any, made to it by that Government before passing any order under any of these sections."
18. Clause (b)(vi) of Sub-section (1) of Section 394 reads as under :
"such incidental, consequential and supplemental matters as are necessary to secure that the reconstruction or amalgamation shall be fully and effectively carried out."
19. A reading of the aforesaid Section 394A of the Act does not indicate as held by the learned single judge that both the transferor and transferee-company has to take notice of the respective applications filed by them. All that it says is the court shall give notice on every application made to it u/s 391 or Section 394 to the Central Government, i.e., notice of the application to the Central Government is a must. It is not dependent on the number of applications filed or the number of parties in the application. Similarly, proviso to Clause (b)(vi) of Sub-section (1) of Section 394 stipulates that unless the court has received a report from the Registrar that the affairs of the company have not been conducted in a manner prejudicial to the interests of its members or to public interest, no compromise or arrangement shall be sanctioned. There is no indication in the said proviso that the transferee and transferor-companies have to make separate application at all. All that the said section says is the report of the Registrar in respect of the companies which are before the court seeking relief is a condition precedent before sanction is accorded. On the contrary Order 1, Rule 1 of the CPC clearly provides for joining of all persons in one suit. It states that all persons may be joined in one suit as plaintiffs where any right to relief in respect of, or arising out of, the same act or transaction or series of acts or transactions is alleged to exist in such persons, whether jointly, severally or in the alternative and if such persons brought separate suits, any common question of law or fact would arise. In a petition under Sections 391 and 394 of the Act, the scheme of compromise or arrangement or amalgamation or a scheme of reconstruction or amalgamation of any two or more companies is brought before the court for sanction and before sanctioned is accorded, permission of the court to convene the meetings of the shareholders and creditors of the company to consider and approve the said scheme, is necessary. When a request is made by a company by filing an application the court permits the companies to convene such meetings to consider such scheme. The scheme to be considered by the shareholders and creditors of the respective companies is one and the same. After such a scheme is approved by the requisite majority as contemplated u/s 392 of the Act the matter comes before the court for sanction. Again the sanction is sought by the companies for sanctioning of the scheme which is the same in all cases. Ultimately, the court has to consider whether the scheme placed before the court for sanction is valid, legal and requires to be sanctioned. In other words, the right to relief in all these applications arises out of the same act or transaction and even if the companies file separate applications, the common question of law or fact would arise in all the applications which has to be decided by the court. In fact the said scheme is in the nature of a contract between its members and its creditors. The parties under Order 1, Rule 1 have the option to join all of them in one proceedings and seek relief in respect of the scheme all of them has propounded. When such a company petition is filed u/s 394A notice shall be ordered to the Central Government. The Central Government on receipt of the notice has to submit its report in respect of each companies which are mentioned in the said application. Whether separate applications are filed or a common application is filed, as far as the Central Government is concerned, it has to submit its report in respect of each companies which are a party to the scheme. Similarly, the proviso to Clause (b)(vi) of Sub-section (1) of Section 394 is concerned, unless the report is received from the Registrar that the affairs of the company have not been conducted in the manner prejudicial to the interest of the members/ no sanction could be granted. Here again, whether a joint application is filed or separate applications are filed, in so far as the Registrar is concerned he is expected to submit his report in respect of each of the transferor-company which are a party to the scheme. Therefore, when the law specifically provides for filing of a joint petition, it cannot be said that the joint petition is not maintainable and separate petitions have to be filed by each of the companies. This problem could be viewed from one more angle. After the permission is granted to the companies to convene the meetings of their shareholders and creditors to approve the scheme and if the scheme is approved, then the companies move the High Court again for sanctioning of the scheme. When such an application is made for sanctioning of the scheme, the court is called upon to decide whether the scheme placed before the court which has been approved by the members and shareholders of the company by requisite statutory majority requires to be sanctioned. If two applications are filed and if two judges were to decide these matters separately there is a possibility of conflict of decisions. At any rate it is possible that one learned judge may approve the scheme without any modification and the other judge may sanction the scheme with modifications. In a case of scheme of amalgamation, the effect of sanctioning of a scheme would be that the transferor-company is ordered to be dissolved without there being a winding up order. If any further directions are required after the sanctioning of the scheme for implementation of the scheme, it is possible that the parties would approach the court again and in such a case a request would be made in the application made by the transferee-company and then the question would arise whether the scheme sanctioned without modification and scheme sanctioned with modification has to be looked into for issuing further directions in the matter. It would result in an anomalous situation. In fact dealing with a situation where a transferor-company and transferee-company are situated in two different States so that the two High Courts where those companies are situated are called upon to decide the validity of the scheme and grant sanction, the problems which would result are highlighted by a judgment of the Gujarat High Court in the case of Bank of Baroda Ltd. v. Mahindra Ugine Steel Co. Ltd. [1976] 46 Comp Cas 227, 233 :
"It is true that when the registered offices of the transferor and transferee-companies happen to be situate in difference places within the jurisdiction of two different High Courts, as in the present case, the compulsion of practical difficulties has necessitated the evolution of this somewhat ingenious formula. I cannot help observing, however, that the solution is far from happy and that in some cases the resultant situation might be embarrassing, especially in those cases in which, in the absence of a provision similar to that contained in Clause 14 of the scheme herein, the court in invitum has to accord sanction to a scheme subject to its approval and sanction by another company and court. In such a case, the High Court which is first moved for according sanction to a scheme of amalgamation--and it would ordinarily be the High Court within whose jurisdiction the registered office of the transferor-company is situate--will, if it sanctions the scheme, make a judicial order which will be conditional upon the approval of the scheme by the shareholders and creditors, if any, of the other company as well as upon the sanction of the scheme by the High Court within whose territorial jurisdiction the registered office of such other company is situate. Such an anticipatory or conditional judicial order, which depends for its becoming operative not only upon the concurrence of another court but also upon the will of the members and creditors, if any, of one of the parties to the amalgamation scheme, is possibly unknown to any other jurisdiction, particularly when it is realised that the order would be ordinarily made after full debate and deliberations. What is more, the possibility of conflicting orders being passed by two courts with regard to the same scheme cannot be altogether ruled out because the scheme might be looked at by all concerned from two totally different angles. One of the courts might sanction the scheme whereas the other might sanction it subject to certain modifications or it might altogether refuse to sanction it. This possibility is inherent in the very situation. If the court to which the petition for according sanction is presented earlier in point of time, say by the transferor-company, not only gives anticipatory sanction but also makes a conditional order giving consequential directions u/s 394 including the direction as to dissolution, it might possibly be urged that it becomes functus officio upon the passing of such orders and that if any modification is made in the scheme by the court to which a similar petition is subsequently presented by the transferee-company, it would have no jurisdiction to modify the scheme so as to bring it in line with the scheme as amended by the other court. Such a result would bring about a complete deadlock and the situation can presumably be remedied only by an appeal to the higher court. I am not expressing any opinion on the validity of such a contention; it may be right or wrong; it might be possible to urge that even in such a case the court can still exercise powers u/s 392 and find a suitable way out. But the possibility of some complications arising in such a situation cannot altogether be ruled out. There is also one more angle from which the question requires to be examined. In respect of some of the matters contemplated by Sub-section (1) of Section 394, both the courts would be required to pass orders giving suitable directions and it is somewhat incongruous that provision be made for the same thing or matter by two different judicial orders passed by two different courts presumably on two different dates. Could the Legislature have really envisaged a situation of this nature ? Even if both the amalgamating companies are required to initiate proceedings under Sections 391 and 394, would it not be conducive to the achievement of the legislative object if the jurisdiction to sanction the scheme after following the prescribed procedure in relation to both the companies is exercised on a comprehensive view of the whole matter by one court alone ? Is it possible to bring about this result by interpreting the word ''court'' occurring in Sections 391 and 394 in a manner which requires departure from its definition contained in Section 2(11) having regard to the subject and context ? Or is it a situation which can be remedied only by legislative intervention by way of amendment ? These are some of the most (sic) questions which suggest themselves to me. But I choose not to express any opinion on them in the present case and reserve liberty to consider them on an appropriate occasion in the future, for, having regard to the presence of Clause 14 in the scheme, I will not be required to make a conditional order of sanction."
20. Therefore, it is clear in a petition u/s 391 or 394 of the Companies Act more than one company is interested in either requesting the court to permit them to convene the meeting of the shareholders, creditors of their respective companies to approve the scheme propounded by them and after such scheme being approved by the requisite majority of the shareholders and creditors they would be requesting the court to accord sanction for the said scheme. Therefore, the companies would be seeking the relief in respect of the same transaction, namely the scheme. Even if those companies were to file separate independent petitions for the same relief, the court would be called upon to decide ultimately the validity of the scheme propounded by all of them. When Order 1, Rule 1 of the CPC is made applicable to the proceedings under the Act which categorically provides that all persons may be joined in one suit as plaintiff if the condition stipulated therein in that provision is satisfied a common application/petition by all the companies who have propounded the scheme is maintainable. The language employed in Section 394A does not indicate any contrary intention on the part of the Legislature. The words "every application'''' used in Section 394A do not mean that each company to the scheme should make separate application. All that it means is every application made to it u/s 391 or 394 should be notified to the Central Government and thereafter the views of the Central Government has to be considered by the court before passing any order under those provisions. When a joint application is filed it necessarily means there are more than one company and the Central Government will have ample notice of the same and they have to submit their views in respect of each company which is included in the said application. Therefore, in the absence of any specific provision in the Act prohibiting a joint petition and as the provisions of the CPC are made applicable to the proceedings under the Act and in view of the express provision contained in Order 1, Rule 1 of the CPC providing for filing of one suit/application by all persons who satisfy the requirements of the said provision, a joint petition/ application by all the companies who are party to the scheme propounded by them is maintainable. Such a course as explained above would also avoid conflicting decisions if separate applications are filed and also enables the court to issue appropriate direction even after sanctioning of the scheme in working out the terms of the scheme. Besides it also saves a lot of labour and avoid avoidable expenses and voluminous paper work. It is also to be remembered it is the practice of the court to pass a common order disposing of several applications filed together for sanctioning of the scheme. Therefore, seen from any angle there is no legal impediment for filing of a joint application by all the companies who are parties to the scheme.
21. However, it is made clear that though a joint petition by all the companies which have propounded the scheme, is maintainable, such joint application is to be numbered separately with reference to each company, each company has to pay separate court fee on their application and when the court grants permission to convene the meeting of the shareholders and creditors of each company, the notice of such meeting shall be published in two newspapers as required under law by each of the companies separately. The reason being the shareholders and creditors of each company are different, the registered office of the place where the meeting is convened would be separate and the date and time of such meeting may be separate. In this regard, there should not be any confusion. Therefore, even if a joint petition is filed, either the notice of the meeting of the shareholders and creditors in a petition u/s 391 or the notice of hearing of the petition under Sections 391(2) and 394 of the Act before according sanction shall be published separately by each company bearing the separate company petition or company application number given to the said company, mentioning the place, date and time of such meeting or the date of hearing of the petition.
22. Under those circumstances, I am constrained to hold as the learned judge who passed the order in
"The joint application/petition by the transferor-company and the transferee-company is maintainable under Sections 391 and 394 of the Companies Act."
23. Accordingly, I pass the following order :
Office objection is overruled.
