In Re: Aimco Pesticides Ltd.

D.K Deshmukh, J.—This is a petition filed by the transferee-company for sanction to the scheme for amalgamation of three companies. There is only one objection filed by one Mr. J.P. Dave (hereinafter referred to as the objector). There are three objections raised by the objector to the scheme, viz. :

(1) According" to the objector, he is a director of the petitioner-company and this scheme of amalgamation has been approved in the meeting of the board of directors which is not validly held.

(2) He did not receive notice of the meeting of the company where the scheme of amalgamation was considered and approved by the general body of the company, though he was entitled to attend the meeting.

(3) As in the memorandum of association of the company, it is not one of the objects of the company to amalgamate with other company, the transferee-company, i.e., the petitioner-company has no power to enter into the arrangement of amalgamation.

So far as the first objection is concerned, according to the petitioner-company, the objector was a director of the petitioner-company, however, by letter dated March 8, 1995, the objector resigned from the office of the director of the company, that resignation was accepted in the meeting of the board of directors of the company held on March 25, 1995, and, therefore, the objector ceased to be a director of the petitioner-company from the month of March, 1995. The petitioner is relying on the letters dated September 15, 1995, April 12,1994, written by the objector as also the resignation letter dated March 8, 1995, written by the objector and the letter dated March 8, 1995, written to the objector by one Mr. P. P. Dave as also a report dated November 9, 1993, submitted by Arun Karwa and Co., chartered accountants to assert that the objector had submitted resignation from the office of the director in March, 1995, and, therefore, he was no longer a director. According to the objector, he never submitted any letter of resignation and the letter relied on by the petitioner is a forged document. The objector has filed a criminal complaint on August 21, 1997, alleging forgery by the board of directors of the petitioner-company.

It is pertinent to note here that the letters dated September 13, 1993, and April 12, 1994, are admittedly written by the objector to the petitioner-company saying that he is not connected with the activities of his sons who are carrying on similar business in the name and style of Aimco Basic Chemical Ltd. These letters are filed by the petitioner along with the affidavit dated October 9, 1997. In the same affidavit, the petitioned has also stated that they have taken search of the records of the Registrar of Companies to find out whether the objector was signatory to the articles of association of Aimco Basic Chemical Ltd. It is stated that the search revealed that the objector has subscribed to the memorandum of the said company. There is no affidavit filed denying the allegations made in the affidavit dated October 9, 1997. Learned counsel for the objector could not explain as to how and why the petitioner could not file an affidavit in reply to the affidavit dated October 9, 1997, filed by the petitioner. Therefore, in the absence of any counter-affidavit, the allegations made in the affidavit dated October 9, 1997, and the documents filed therewith have to be accepted. A perusal of these documents shows that the objector had submitted resignation of his office in March, 1995. Learned counsel for the petitioner also pointed out that the meeting of the board of directors of the petitioner-company was held on March 25, 1995, wherein the resignation submitted by the objector was accepted. This meeting was attended by one Mr. A. G. Pradhan who was a representative of SICOM and, therefore, in the submission of the petitioner, it cannot be said that the minutes of the meeting held on March 25, 1995, wherein a resolution was passed accepting the resignation of the objector can be said to be manipulated or forged.

So far as the second objection regarding receipt of notice of the meeting where resolution was passed in the general body approving the scheme of amalgamation is concerned, I have already dealt with the same in my order passed in Company Petition No. 704 of 1995 holding that the objector had ample notice of the general body meeting which was held pursuant to the order passed by this court. The objection raised by the objector to the same effect has been rejected. That leaves the last objection, viz., in the memorandum of association of the petitioner-company, there is no clause entitling the petitioner-company to amalgamate with another company. Learned counsel for the objector, relying on the judgment of the Supreme Court in the case of Lakshmanaswami Mudaliar (A.) (Dr.) v. Life Insurance Corporation of India [1963] 33 Comp Cas 420 and the judgment of the Chancery Division in the case of Oceanic Steam Navigation Co., In re [1939] 9 Comp Cas 229, submitted that without there being a specific power in the memorandum of association, a company cannot enter into an arrangement for amalgamation of the company. It was further submitted by learned counsel that amalgamation should be included as one of the main objects of the company. Clause 6 of the memorandum of association of the petitioner-company reads as under :

"6. To take, acquire and obtain the assets, business property and liability, goodwill, or, undertaking of any other company, person or firm or to arrive at an arrangement with or to arrange with other company."

It is further to be seen that in Chapter V of the Companies Act, power is given to the company to apply for arrangement, compromise or amalgamation and power is vested in the court to sanction amalgamation. The Calcutta High Court by its judgment in the case of Marybong and Kyel Tea Estate Ltd., In re [1977] 47 Comp Cas 802 has observed thus (page 814) :

"The power to amalgamate may flow from the memorandum or it may be acquired by resorting to the statute. Section 17 of the Companies Act indicates that a company which desires to amalgamate with another company will take necessary steps to come before a court for alteration of its memorandum in aid of such amalgamation. The statute confers a right on a company to alter its memorandum in aid of amalgamation with another company. The provisions contained in Sections 391 to 396 and 494 illustrate some instances of statutory power of amalgamating a company with another company without any specific power in the memorandum.

The said principle seems to me also to be applicable in the present case if the objects clause in the memorandum of association of any of the companies is construed as not to specifically empower any of the companies to amalgamate with any other company as there is a statutory power of amalgamation under the said section. I may also refer to an unreported judgment of mine in United Bank of India Ltd. Vs. United India Credit and Development Company Ltd., which is under appeal, where I have held the same view as I am doing here as to the statutory power to amalgamate without any specific power for amalgamation in the memorandum of association of a company."

Apart from the fact that it cannot be said that the memorandum of association of the petitioner-company does not provide for the company to arrive at an arrangement with another company, the company has a statutory power to arrive at such arrangement which the court is required to sanction. In so far as the judgment of the Chancery Division relied on by the learned counsel for the objector is concerned, in that case the court was considering not a scheme of amalgamation or arrangement, but the company was amalgamating its business as a going concern on its own undertaking and according to the court, if such a power is not in the memorandum of association of the company, it cannot enter into such an agreement. In my opinion, the law laid down by the Chancery Division in the above referred case is not applicable to the present case. It is further to be seen that this question has not been at all raised by the objector in the various affidavits that have been filed in this court. Thus, I find no force in the objections raised on behalf of the objector. Therefore, the objection is rejected.