CHEMBRA ORCHARD PRODUCE LTD. & ORS. versus REGIONAL DIRECTOR OF COMPANY AFFAIRS & ANR.

Citation: [2008] 17 S.C.R. 45 · Decided: 04-12-2008 · Supreme Court of India · Bench: S.H. KAPADIA, AFTAB ALAM · Disposal: Appeal(s) allowed
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Judgment (excerpt)

[2008] 17 S.C.R. 45 
CHEMBRA ORCHARD PRODUCE LTD. & ORS. 
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v. 
REGIONAL DIRECTOR OF COMPANY AFFAIRS & ANR. 
(Civil Appeal Nos. 7115-7120 of 2008) 
DECEMBER 4, 2008 
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[S.H. KAPADIA AND AFTAB ALAM, JJ.] 
COMPANIES ACT, 1956: 
s. 3_91(1) - Application seeking directions to convene a c 
meeting of creditors and members to consider Scheme of 
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amalgamation - Ex-parte hearing of -Propriety of - HELD: 
Application for an order for meeting is a preliminary step at 
the threshold stage whereat it is not necessary for company 
to give notice of hearing to the creditors, members and 
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shareholders - When r. 67 categorically states that summons 
for directions shall be moved ex-parte, the question of 
prejudice or rule of natural justice does not come into play 
- However, while issuing such summons Court is required to 
apply its mind to check list indicated in r. 69 and it needs to 
be prima facie satisfied about genuineness and bona tides 
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of application - After summons for directions are issued, 
when meeting is ordered to be convened, requirements of rr. 
73, 7 4 and 76 are to be complied with - Companies (Court) 
Rules, 1959 - rr. 67' and 69 - Natural justice - Opportunity 
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of hearing. 
Miheer H. Mafatlal v. Mafatlal Industries Ltd. 1997 (1) 
sec 579; relied on .. 
Sakamari Steel & Alloys Ltd. In re.: 51 Company Cases 
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page 266, approved . 
. ., 
Hind Auto Inda Ltd. v. Mis Premier Motors (P) Ltd. AIR 
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1970 Allahabad 165, distinguished. 
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SUPREME COURT REPORTS 
[2008] 17 S.C.R. 
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Palmer's Company Law, referred to. 
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Case Law Reference: 
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1997 (t) sec 579 
relied on 
51 Company Cases page 266 approved 
para 8 
para 9 
AIR 1970 Allahabad 165 
·distinguished para 11 
CIVIL APPELLATE JURISDICTION : Civil Appeal No. 
7115-7120 of 2008. 
From the Judgment and Order dated 20.8.2007 of the High . 
Court of Karnataka at Bangalore in C.A. Nos. 354 to 359 of 
2003. 
Shyam Divan, Shamik Sanjawala, Srinivasa Raghavan 
D and Meenakshi Arora for the Appellants. 
The following Order .of the Court was delivered: 
ORDER 
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1. Leave granted. 
2. The short question which arises for determination in 
these Civil Appeals is whether ari application filed by the 
Company under Section 391(1) of the Companies Act, 1956 
F (for short the '1956 Act') seeking directions to convene a 
meeting of creditors and members to consider a scheme of 
.. 
amalgamation is required to be heard and decided ex-parte 
as· per Rule 67 of the Companies (Court) Rules, 1959? 
3. To answer the above question we need to quote 
G hereinbelow the relevant Rules. 
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"Rule 2(9) 'Judge's summons' means a summons 
returnable before the Judge in Chambers or1 in Court. 
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CHEMBRA ORCHARD PRODUCE LTD. & ORS. v. 
47 
"? 
REGIONAL DIRECTOR OF COMPANY AFFAIRS & ANR. 
67. Summons for directions to convene a meeting. - An A 
application under section 391(1) for an order convening a 
meeting of creditors and/ or members or any class of them 
shall be by a Judge's summons supported by an affidavit. 
A copy of the proposed compromise or arrangement shall 
be annexed to the affidavit as an exhibit thereto. Save as B 
provided in rule 68 hereunder, the summons shall be 
moved ex parte. The summons shall be in Form No. 33, 
and the affidavit in support thereof in Form No. 34. 
68. Service on company- Where the company is not the c 
applicant, a copy of the summons and of the affidavit shall 
be served on the company, or, where the company is 
being wound-up, on its liquidator, not less than 14 days 
before the date fixed for the hearing of the summons. 
69. Directions at hearing of summons.- Upon the hearing D 
of the summons or any adjourned hearing thereof, the 
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Judge shall, unless he thinks fit for any reason to dismiss 
the summons, give such directions as he may think 
necessary in respect of the following matters: -
(1) determining the class or classes of creditors E 
and/or of members whose meeting or meetings 
have to be held for considering the proposed 
compromise or arrangement; . 
(2) fixing the time and place of such meeting or F 
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meetings; 
(3) appointing a chairman or chairmen for the 
meeting or meetings to be held, as the case may 
be; 
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(4) fixing the quorum and the procedure to be 
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followed at the meeting or meetings, including voting 
by proxy; 
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(5) determining the values of the cr~ditors and/or H 
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SUPREME COURT REPORTS 
[2008] 17 S.C.R. 
the members, or the
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