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2011 Supreme(Cal) 1476

High Court Of Calcutta
S.K. Mukherjee, J.
Castron Technologies Limited : Appellant
Versus
Castron Mining Limited : Respondent
Decided On : Dec 02, 2011

The court held that the consent of the State Government was sufficient for the transfer of the mining lease under the scheme of arrangement, and the prior approval of the Central Government was not required.

Headnote:

COMPANY - SCHEME OF ARRANGEMENT - RECALLING - VALIDITY - MINING LEASE - TRANSFER - APPROVAL OF CENTRAL GOVERNMENT - NOT REQUIRED - CONSENT OF STATE GOVERNMENT - OBTAINED - SCHEME VALID - APPLICATION FOR RECALLING DISMISSED.

Fact of the Case:

Castron Technologies Limited (CTL) and Castron Mining Limited (CML) applied for sanctioning a scheme of arrangement under Sections 391 and 393 of the Companies Act, 1956, based on a family arrangement concerning the control and management of the companies. The scheme involved the transfer of a mining lease from CTL to CML. The Central Government decided not to oppose the scheme, and the scheme was sanctioned by the court on May 13, 2003. Subsequently, CTL filed an application for recalling the order, arguing that the scheme was in violation of Rule 37 of the Mines and Minerals Rules, 1960, as it did not have the prior consent of the State Government for the transfer of the mining lease.

Finding of the Court:

The court held that the application for recalling the order was not maintainable under Sections 391 and 392 of the Companies Act, as it was not in aid of the scheme but for frustrating it. The court also held that the scheme was not in violation of Rule 37 of the Mines and Minerals Rules, 1960, as the consent of the State Government had been obtained for the transfer of the mining lease. The court further held that the order sanctioning the scheme was passed with jurisdiction and could not be termed unfair.

Issues: 1. Whether the application for recalling the order sanctioning the scheme of arrangement was maintainable under Sections 391 and 392 of the Companies Act, 1956? 2. Whether the scheme of arrangement was in violation of Rule 37 of the Mines and Minerals Rules, 1960? 3. Whether the order sanctioning the scheme was passed with jurisdiction and could be termed unfair?

Ratio Decidendi: 1. The application for recalling the order was not maintainable under Sections 391 and 392 of the Companies Act, as it was not in aid of the scheme but for frustrating it. 2. The scheme of arrangement was not in violation of Rule 37 of the Mines and Minerals Rules, 1960, as the consent of the State Government had been obtained for the transfer of the mining lease. 3. The order sanctioning the scheme was passed with jurisdiction and could not be termed unfair.

Final Decision: The application for recalling the order sanctioning the scheme of arrangement was dismissed. The application for implementing the scheme was allowed, and the authorities were directed to take steps for implementation of the scheme in accordance with law.

JUDGMENT:

1. I am invited to decide following four applications being C.A. no. 209 of 2006, C.A.Tender no. 209 of 2006 (re-numbered as C.A. no.667 of 2006), C.A. no.96 of 2007 and C.A.no.689 of 2009. C.A. no.209 of 2006 is an application purportedly filed by Castron Technologies Limited and Castron Mining Limited (in short, CTL and CML respectively) for re-calling of the order dated May 13, 2003, inter alia, sanctioning a scheme of arrangement passed in C.P. no.594 of 2002 connected with C.A. no.202 of 2002.

2. THE application filed under C.A.Tender no 209 of 2006, which has, since, been re-numbered as C.A. no.667 of 2006, is an application filed by CML and Anup Agarwalla seeking directions for implementation of the scheme sanctioned by the order dated May 13, 2003 in C.P. no.594 of 2002 connected with C.A. no.202 of 2002. C.A. no. 96 of 2007 is an application filed by CML and the said Anup Agarwalla for leave to rely upon letters dated May 18, 2006, June 7, 2006, July 6, 2006, August 12, 2006, August 25, 2006, August 30, 2006 and September 4, 2006 - all issued by CTL; letter dated September 4, 2006, issued by Anup Agarwalla of CML and letters dated November 17, 2006, December 20, 2006, December 21, 2006 and December 26, 2006 being annexures -A-, -G-, -I-, -J-, -K-, -L-, -M-, -N-, -O-, -P- respectively and, also, for leave to rely upon inspection reports dated July 28, 2006 and September 5, 2006 being annexures -R- and -S- respectively and, also, to rely upon a Press Report dated December 24, 2006 being annexure -Q-, at the time of hearing of the C.A. no. 667 of 2006.

In substance, in the said application, the petitioners pray for taking into consideration events subsequent to the order passed by this Court and for leave to rely upon certain documents in support of their application. In C.A. no.689 of 2009 is filed by CML and the said Anup Agarwalla seeking leave to bring on record the letter of Central Government dated February 26, 2009 being annexure -A- to the said application, the letter dated May 27, 2009 being annexure -B- to the said application and the deed of rectification dated June 8, 2009 being annexure -C- to the said application. Facts relevant for the purpose of disposal of all the said four applications are as under: - (a) CTL and CML (formerly known as Industrial Alliance Private Limited) were family companies of the Agarwallas. (b)On April 18, 1996, CTL applied for grant of lease of an abundant underground Coal Mine in Giridi, then in the State of Bihar, now in the State of Jharkhand. The mine was known as Brahmadiha Coal Mine. (c) On May 26, 1999, Agarwallas entered into a family arrangement concerning control and management of the said companies. It was, inter alia, agreed that upon the said mining lease being granted, which was applied for by CTL, the said mining lease would be assigned in favour of Parameswar Kumar Agarwalla or his nominees. (d) The Clause 5 of the family arrangement runs as under:- -5. The First Party has applied for grant of lease of a Coal Mine in Giridi, Bihar in the name of CTL and in the case, the said lease is granted then in such event, the Third Party hereto agree that the Directors of CTL (castron) shall assign and transfer the right, title and interest of Castron in the said lease-hold property in favour of the First Party or his nominees.

5.1. All costs and expenses so far incurred or is likely to be incurred in the matter of obtaining such lease from the date of applicability till the grant of lease and, thereafter have been and shall be paid by the First Party and the Third Party shall not be liable on account of such costs and expenses. 5.2. The First Party will be entitled to follow up the application for grant of lease on behalf of CTL. 5.3. Unless the transfer as contemplated in Clause 5, hereinabove, is made, the Third Party agrees to have granted from Castron an irrevocable registered Power of Attorney in favour of the First Party or his nominee to do all acts, deeds and












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