- (1.) THIS is an application by a. company under Section 391 (1) of the Companies Act which has given rise to preliminary questions at the outset before the issue of any notice either to the Centra] Government under Section 394-A or to the share-holders of the company. Mr. Jagdish Swarup, learned counsel for the applicant company, submitted that no notice at this stage need be given either to the Central Government or to the share-holders because all that was prayed for, by means of summons in Form 33, was a set of directions for convening, holding and conducting of meetings after the appointment of a chairman for the con sideration of a scheme by equity and pre ference share-holders of the company. It was submitted that neither the Central Government nor the share-holders had a locus standi before meetings had been convened and had considered the propos ed amalgamation of the company with M/s. Automobile Products of India Ltd., Bombay.
(2.) MR . S. N. Kacker has appeared on behalf of a share-holder even before issue of notice and has been heard on the ques tion whether the share-holders are en titled to a notice of such an application before any directions are Riven, By an order of this Court, passed on 7-10-1968, a notice of the application was also ser ved upon the Standing Counsel for the Central Government so that he may also be heard on the preliminary question whether a notice of the application before the Court should go to the Central Gov ernment at this stage. Consequently, Mr. H. N. Seth appeared for the Central Government and submitted that the Central Government was also entitled at this stage to a notice under Section 394-A of the Act, before any order is passed to convene a meeting. Learned counsel for the applicant has pointed out that there are two methods under the Companies (Court) Rules 1959, in which applications may be made. The first is by means of an application through summons and the other is by means of a petition. The method for applying under Section 391 (1), given by Rule 67, is by means of a summons supported by an affidavit. The summons has to be in Form, 33 which may be reproduced as follows: "Company Application No.19, .................. Applicant (s) Summons for directions to convene a meeting under Sec tion 391. Let all parties concerned attend the Judge in Chambers on day, the day of 19 at O'clock in the noon of the hearing of an application of the above named company (or of the applicant (s) ) above named for an order that a meeting (or separate meet ings) be held at of (here enter the creditors or class of creditors e.g. deben tures holders, other secured creditors, un secured creditors etc., or the members or class of members e.g., preference share holders, equity share-holders etc., of which class or classes, the meetings have to be held) of the above company for the pur pose of considering and if thought fit, ap proving with or without modification, a scheme of compromise or arrangement proposed to be made between the com pany and the said (here mention the cre ditors or class of creditors or members, or the class of members) of the said com pany. And that directions may be given as to the method of convening, holding and con ducting the said meeting (s) and as to the notices and advertisements to be issued. And that a Chairman (or Chairmen) may be appointed of the said meeting (s), who shall report the result thereof to the Court. Advocate for the applicant (s) Re gistrar. The affidavit of.........will be used In support of the summons."
(3.) ANOTHER method of applying Is by means of a petition prescribed for pro ceedings under Section 391 (2) after a pro posed arrangement has been considered by a meeting or meetings of the creditors or any class of creditors or members. These petitions are provided for in R. 11 of the Companies (Court) Rules where Rule 11 (a) (10) mentions that an applica tion under Section 391 (2) "to sanction a compromise or arrangement" must be made by means of a petition. Rule 11 (b) provides: "All other applications under the Act or under these Rules shall be made by a Judge's summons, returnable to the Judge sitting in Court or in Chambers as hereinafter provided.";