1. S.145 – Evidence on Affidavit – Negotiable Instrument Act

The Supreme Court held that the evidence by way of an affidavit was filed both in the civil proceedings as also in the criminal proceedings. S.145 contains a non-obstante clause and the provisions of code of civil procedure, 1973 was thus not attracted. If an affidavit in terms of the provisions of S.145 is to be considered to be a evidence, it is difficult to comprehend as to why the court will ask the deponent of the said affidavit to examine himself with regard to completion of his evidence, he may be re-examined Thus the words “examine any person giving evidence on affidavit as to the facts contained therein,” in the event, the deponent is summoned by the court in term of sub-sec (2) of s. 145 would mean for the purpose of cross examination. The provision seeks to attend salutary purpose. Therefore there is no justification for arriving at a finding that a witness can again be summoned for his examination-in-chief in the court despite affirming affidavit in that behalf.

Radhey Shyam Garg vs. Naresh Kumar Gupta [2009] 94 SCL 85 (SC).

2. S.391-Compromise and arrangement –companies Act, 1956

The petitioner–companies; i.e., transferor–company and its wholly owned three transferee –companies, engaged in exploration of minerals, sought for sanction of a scheme of arrangement of demerger with a object to concentrate and focus on specific areas of mining, depending on the nature of the minerals and with a view to consolidate the business of the transferor–company and to enable the transferee-companies to concentrate on specific minerals and for achieving organizational efficiency and optimal utilization of various resources. The Court held that since there is no objection raised by the Regional Director and the petitioners submitted that they would comply with the requirements as necessitated and expressed in the affidavit of the Registrar of the Companies on behalf of the Regional Director and since the entire arrangement was with a view to enhance the business prospects of the petitioners-companies, on the basis of their economic prudence, there was no reason to decline the arrangement and accordingly , the scheme of arrangement was to be sanctioned.

Geomysore Services India (P) Ltd . In Re. [2009] 94 SCL 116 (Kar).

3. Ss.391, 393,294 – Scheme of amalgamation – Share exchange ratio – Companies Act

The petitioner company sought the sanction of the court to a scheme of amalgamation by which a 75% subsidiary was merged with it. The scheme was approved by the majority of the equity shareholders, secured creditor and unsecured creditors, in the meeting convened for that purpose. The Regional Director and the Registrar of the Companies approved the proposed scheme. The objectors raised the objection and suggested different methods of valuation which would benefit the shareholders and sought a direction for revaluation. The court held that the companies had appointed a renowned firm to undertake the determination of the share exchange ratio and the expert was also verified and approved by two independent firms who agreed that the determination was fair. The creditors and members were furnished with the relevant materials at the meeting for approving the scheme. The scheme was therefore neither violative of any provisions of law nor against the public policy and was just, fair and reasonable from the point of view of taking commercial decision which was beneficial to a class represented by them for whom the scheme was made.

Reliance Industries. , In Re [2009] 151 Comp Cas 124 (Bom)

4. S. 52 -Pre-deposit of penalty – Foreign Exchange Management Act, 1973

The adjudicating order was passed imposing penalties upon the appellants for the contravention of s. 8 and 9 read with section 64(2). The appellant filed appeals along with separate applications for dispensation of pre-deposit. The Tribunal, by impugned order, rejected the separate applications for dispensation of pre-deposit but allowed them to make pre-deposit of their respective penalties within the prescribed period. However, the appellants instead of making compliance of pre-deposit order filed an application for modification, inter alia, arguing that the Tribunal had overlooked legal position and the order of pre-deposit was required to be recalled with grant of full dispensation. The Tribunal has no authority to interpret it in a different manner only because of harsh consequences arising there from. The legalization cannot be recast or rewritten by Tribunal on the face of the clear texture of second proviso, Therefore, the appeal were to be dismissed when the appellants had failed to make pre-deposit of the penalty in compliance with the impugned order passed by the tribunal.

Niyogi N. Patel v. Direcotr, Enforcement Directorate [2009] 93 SCL 126 (ATFFE-New Delhi).

5. S. 529 & s. 529A – Interim Disbursement – Companies Act, 1956

If all relevant materials are available and substantial bodies of creditors are identified, it shall always be possible in a winding up to make interim disbursement, which would be subject to final outcome of the adjudication after entertaining claims. One of the secured creditors of the company in liquidation had obtained a recovery certificate from Debts Recovery Tribunal. The court in an earlier order had directed the official liquidator to settle the claims from the sale proceeds of the assets of the company in liquidation at an early date and as there was delay, the applicant had sought disbursement or interim disbursement of sale proceeds in terms. The court after noting that a direction for interim disbursement would always be subjected to final adjudication of claims passed an order entitling the official liquidator to consider the issues of interim disbursement. As the amount had not been disbursed even subsequent to order secured creditor moved another application. The court held that the applicant would disburse 25% of the claim less expenses incurred for the conduct of sale on an undertaking and the applicant would reimburse any excess amount, if paid. The applicant was also to pay interest at 9% from the date of disbursement till the date when the accounts were drawn finally considering all the claims and when the money was distributed to the workmen also.

IFCI Ltd. vs. Punjab Wireless System Ltd. (In Liquidation) [2009] 151 Comp Cas 523 ( P&H).