HIGH COURT OF CALCUTTA

Mahendra Papatlal Shah

v.

Alfred Herbert (India) Ltd.

Bhaskar Bhattacharya & Kishore Kumar Prasad, JJ.

A. C. O. No. 75 of 2004

And A. P. O. No. 241 of 2004 with O. P. No. 178 of 2000

March 19, 2007

Section 100 of the Companies Act, 1956 - Share capital - Reduction of - Whether where all requirements of reduction of share capital under a scheme of arrangement/amalgamation had been complied with, proceeding for framing of scheme could not be said to be tainted with mala fide intention - Held, yes

FACTS

The appellant, who was a shareholder of two companies including the respondent, neither attended the meetings held by those companies from time to time regarding their proposed scheme of arrangement/amalgamation including reduction of respondents share capital nor raised any objection to the same despite receipt of notices thereof. Further, when the said scheme was ultimately sanctioned by the company Court and the respondent issued dividend warrants on its reduced share capital accordingly, the same were encashed by the appellant without any objection. It was also on record that said sanction order was served on the appellant through his advocate during the pendency of a suit filed by him against the respondent for evicting it from his premises. However, he filed an application for setting aside said order but the Single Judge of the company Court rejected the same. In the instant appeal before the division bench, the appellant contended that the companies framed the scheme with mala fide intention inasmuch as the provisions of sections 100-103 were not complied with by them.

Held

The appellant was quite conscious of the meeting of the shareholders and in spite of knowledge of amalgamation and reduction of share capital did not raise any objection. It further appeared that the appellant even encashed the dividend warrants issued on the reduced share capital and at the same time, in the pending suit for eviction, he came to know the existence of the order passed by the single judge when specific notice was served upon his advocate. There was also no substance in the contention of the appellant that the provisions contained in sections 100-103 were not complied with. All the requirements of the reduction of share capital had been complied with as would appear from the narration of the fact of the instant case and those were supported by the various annexures and, thus, the proceeding for framing of scheme could not be said to be tainted with mala fide intention. [Para 7]

Therefore, there was no reason to interfere with the order passed by the Single Judge. [Para 9]

The instant appeal was thus, devoid of any substance and was to be dismissed accordingly. [Para 10]