Case Note & Summary
The judgment addresses a Company Summons for Direction filed by Godrej Industries Limited (GIL) seeking approval of a Scheme of Amalgamation with Wadala Commodities Limited (WCL) under Sections 391 and 394 of the Companies Act, 1956. The applicant sought dispensation from convening a physical meeting of shareholders, arguing that Section 110 of the Companies Act, 2013 and a SEBI Circular dated 21st May 2013 allow voting by postal ballot (including electronic means) as a complete substitute for a meeting. The court examined the interplay between the 1956 Act and the 2013 Act, noting that the 2013 Act had been partially brought into force but the relevant provisions for schemes of amalgamation were not yet notified. The court held that Section 110 of the 2013 Act does not override the requirement of a meeting under Section 391 of the 1956 Act, as the 2013 Act is not retrospective and the 1956 Act continues to govern pending proceedings. The court also noted that the SEBI Circular does not have the force of law to override statutory requirements. However, in the peculiar facts of this case, where the transferee company had only two shareholders and the scheme was unanimously approved, the court dispensed with the meeting. The court directed that the scheme be advertised and that the Regional Director be notified. The judgment clarifies that for schemes under Section 391, a physical meeting is generally required unless the court exercises its discretion to dispense with it based on specific facts.
Headnote
A) Company Law - Scheme of Amalgamation - Meeting Requirement - Section 391, Companies Act, 1956 - Section 110, Companies Act, 2013 - The court considered whether Section 110 of the 2013 Act and SEBI Circular dated 21st May 2013 eliminate the need for a physical meeting for approving a scheme of amalgamation under Section 391 of the 1956 Act. Held that the 2013 Act provisions do not override the requirement of a meeting under Section 391, and postal ballot cannot substitute a court-directed meeting. (Paras 1-18) B) Company Law - Transitional Provisions - Applicability of 2013 Act to Pending Proceedings - Section 391, Companies Act, 1956 - Section 110, Companies Act, 2013 - The court examined whether the 2013 Act applies to pending proceedings under the 1956 Act. Held that the 2013 Act does not have retrospective effect and the 1956 Act continues to govern schemes of amalgamation filed before the 2013 Act came into force. (Paras 1-18)
Issue of Consideration
Whether a resolution for approval of a Scheme of Amalgamation can be passed by a majority of equity shareholders casting their votes by postal ballot (including electronic means) in complete substitution of an actual meeting, in view of Section 110 of the Companies Act, 2013 and SEBI Circular dated 21st May 2013.
Final Decision
The court held that Section 110 of the Companies Act, 2013 does not substitute the requirement of a meeting under Section 391 of the Companies Act, 1956. However, in the peculiar facts of this case, where the transferee company had only two shareholders and the scheme was unanimously approved, the court dispensed with the meeting and directed that the scheme be advertised and the Regional Director be notified.
Law Points
- Section 110 of Companies Act
- 2013 does not substitute physical meetings for scheme of amalgamation under Section 391 of Companies Act
- 1956
- SEBI Circular dated 21st May 2013 does not override statutory requirements
- Postal ballot cannot replace court-directed meetings for scheme approval
