Asia Satellite Telecommunications Company Limited vs Dish TV India Limited and others [DELHI HIGH COURT, 08 Oct 2010]

Corporate - Company Act, 1956, ss. 391 and 394 - Present application raising objections to a composite scheme of amalgamation and arrangement propounded by respondents, all of whom have moved a first motion application - Objector has alleged that creditors of demerged company are likely to suffer because substantial assets are sought to be transferred under Scheme, as a result of which, creditors of demerged company - Whether there is an obligation on part of Company Court to issue notices to creditors and shareholders at first motion stage itself? - Held, s. 391(1) is unique and that there is no obligation for Company Court to hear anybody at first motion stage because no prejudice will be caused by not hearing them, for reason that before any effect is given to any outcome which is likely to affect such parties, they will get a chance to be heard - Legal basis for universal rule that no matter be heard without previous notice to other party is that latter may be adversely affected by outcome without being afforded an opportunity of being heard before that outcome is arrived at - It is undisputed that every motion with regard to a proposed Scheme u/s. 391 can only be sanctioned by Company Court after second motion petition is heard, with adequate opportunity to all parties likely to be affected thereby to be heard - Even if such an opportunity is denied at first motion stage, no prejudice can ensue since unique scheme of Companies Act provides necessary safeguards while prescribing a complete code for Amalgamations etc. u/s 391 thereof, and any effort to import procedural considerations applied generally elsewhere would prove deleterious to Scheme of Act and render it unworkable - Objections dismissed