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Law presentation
BY (GROUP7)
VINOD JAISHY
RONAK PUROHIT
JATIN AGARWAL
UTKARSH BHATNAGAR
OM PRAKASH
LALJI TIWARI
ANKIT JAIN

Contents
 ALTERNATIVE DISPUTE RESOLUTION
 EFFICACY OF ADR
 MECHANISM OF ADR
 ARBITRATION
 CONCILIATION
 RECONSTRUCTION & AMALGAMATION
 MERGERS AND ACQUISITIONS
 WINDING UP

Alternative Dispute Resolution(ADR) refers to:

Process other than judicial determination,
In which an impartial person,
assists those in dispute,
to resolve the issue between them

EFFICACY OF ADR
 ADR can be speedier

ADR can save money

ADR can permit more participation

ADR can be flexi+

ADR can be cooperative

ADR can be more satisfying

DISADVANTAGES OF ADR

 Second class justice

 Encourages compromise

 Settlement are private and not in public record or

expose to scrutiny.

MECHANISM OF ADR
The four commonly known dispute resolution methods
are:

ARBITRATION

CONCILIATION

MEDIATION

NEGOTIATION

ARBITRATION

As per Section 2(1)(a) of the The Indian Parliament in
the 47th year
Act, “ arbitration” means of the Republic has enacted

Any arbitration, The Arbitration and
Conciliation Act, 1996
Whether or not administered
(to establish a unified legal
By the permanent arbitral framework for the fair and
efficient settlement of
institution disputes arising in
international trade
relations)

Objectives of the Act
 To comprehensively cover international and domestic
arbitration and conciliation.

 To make provision for an arbitral procedure which is
fair, efficient and capable of meeting the needs of the
specific arbitration.

 To minimize the supervisory role of Courts in the
arbitral process.

Essentials of arbitration agreement
 It must be in writing though it need not be contained in a
formal document
 It must have all essential elements of a valid contract and
the parties must be ad idem.
 It must be refer to a dispute, present or future, between the
parties to arbitration.
 It may be in the form of an arbitration clause in a contract
or in the form of a separate agreement.
 Stamp duty is chargeable on an agreement to refer a dispute
to arbitration.

A dispute arose among A, B and C, three neighbors, on
the distribution of wages paid to the street watchman. A
and B decided to refer the dispute to X for arbitration. C
never gives his consent to the arbitration. X, by an
award, fixed the liability of A, B and C to contribute
wages in the ratio of 3:2:2.
Is the award binding on C ? is award dependent on C

No, as C had not given his consent to refer the dispute to
arbitration.

CONCILIATION
It means bringing the opposite parties or individuals
into an undisputed territory of harmony.

It may:
 Advise or determine the process of conciliation
whereby resolution is attempted,
 Make suggestions for terms settlement,
 Give expert advice or likely settlement terms, and
 Actively encourage the participants to reach an
agreement.

Commencement of Conciliation Proceedings
Invitation :
 The party initiating conciliation shall send to the other party a
written invitation to conciliate, briefly identifying the subject
of the dispute.
 Conciliation shall commence when the other party accepts in
writing the invitation to conciliate
 If the other party rejects the invitation, there will be no
conciliation proceedings.
Rejection:
If the party initiating the conciliation does not receive a reply
within 30 days from the date on which he sends the
invitation, or within such other period of time as specified in
the invitation, he may elect to treat this as a rejection of the
invitation to conciliate and if he so elects, he shall inform in
writing the other party accordingly.

RECONSTRUCTION & AMALGAMATION
Sections 394 and 395 provide for facilitating Arrangements
for the purpose of ‘Reconstruction’ or ‘Amalgamation’ of
companies .
 The term Reconstruction implies the formation of a new
company to take-over the Assets of an existing company with
the idea that the persons interested and the nature of business
substantially remains the same .

 The term Amalgamation is taken to mean as the union of two
or more companies , so as to form a third entity or one
company is absorbed into another company .

PROCEDURE TO BE FOLLOWED
Sec.394

Approval of scheme by holders of three-fourths in value of shares

Courts Sanction

Transfer of the undertaking,property,liability
Allotment or appropriation of any shares,debentures,policies
Legal proceedings
Dissolution of transferor company

Certified copy of Tribunal order to be filed with registrar

Acquisition of Shares of dissenting shareholders
Sec.395
Scheme may involve transfer of shares
Approval of holders not less than 9/10ths value of
shares required within 4 months
Right to acquire the shares of dissenting shareholders
Notice to dissenting shareholders
Registration of transferee company as holder of shares
in transferor company
Deposit of money received into a separate bank
account

Amalgamation of Companies in National
Interest
sec396

 If the central govt. is satisfied that it is essential in the
public interest that two or more companies should be
Amalgamated .
 the order aforesaid may provide for the continuation
by or against the transferee company of any legal
proceedings pending by transferee company.
 Every member , debenture holder or any other
creditors of the Amalgamation companies , continue
to have the same interest in the new company

Mergers and Acquisitions
 Merger- A merger is a combination of two or more
businesses into one business.
 Acquisition- A corporate action in which a
company buys most, if not all, of the target company's
ownership stakes in order to assume control of the target
firm.
for example Bharti Airtel acquired Kuwait based Zain Telecom's
African business for USD 10.7 billion

Laws in India for Merging
Income Tax Act,1961 [Section 2(1A)]

Laws in India use the term ‘AMALGAMATION’ for merger

 All assets and liabilities of the amalgamating companies become assets and
liabilities of the amalgamated company.

 Companies become shareholders of the amalgamated company.

Forms of Merger
 Merger through Absorption:- An absorption is a combination of

two or more companies into an 'existing company'. All companies
except one lose their identity in such a merger

 Merger through Consolidation:- A consolidation is a combination

of two or more companies into a 'new company'. In this form of
merger, all companies are legally dissolved and a new entity is
created

Examples:
Absorption:
 For example, absorption of Tata Fertilizers Ltd (TFL) by
Tata Chemicals Ltd. (TCL). TCL, an acquiring company (a
buyer), survived after merger while TFL, an acquired
company (a seller), ceased to exist. TFL transferred its
assets, liabilities and shares to TCL.
Consolidation:
 For example, merger of Hindustan Computers
Ltd, Hindustan Instruments Ltd, Indian Software Company
Ltd and Indian Reprographics Ltd into an entirely new
company called HCL Ltd.

Types of Merger
 HORIZONTAL MERGER
For example, combining of two book publishers or two luggage
manufacturing companies to gain dominant market share.

 VERTICAL MERGER
For example, joining of a TV manufacturing(assembling) company and a TV
marketing company or joining of a spinning company and a weaving company.
When a company combines with the supplier of material, it is called
backward merger and when it combines with the customer, it is known as
forward merger.
 CONGLOMERATE MERGER
For example, merging of different businesses like manufacturing of cement
products, fertilizer products, electronic products, insurance investment and
advertising agencies. L&T andVoltas Ltd are examples of such mergers.

Winding Up
Winding up of a company is the process whereby
its life is ended and its property administered for
the benefit of its creditors and members.

Modes of Winding up -
 compulsory winding up ie., by Court (s.433)
 voluntary winding up; (s 484)
 voluntary winding up subject to the
supervision of
the Court.(s 522)

Compulsory winding up
 Section 433 provides that a company may be wound up by the Court :
 if the company has, by special resolution, so resolved

 if default is made in delivering the statutory report to the
Registrar

 if the company within a year from its incorporation, or does not
commence its business suspend its business for a whole year

 if the number of members is reduced-
in the case of a public company, below 7, and
in the case or a private company, below 2
 if the company is unable to pay its debts

 if the Court is of the opinion that it is just and equitable

Case:
 GERMAN DATE COFFEE COMPANY Object clause of the
company stated that it was form for the working of a German
patent which would be granted for making a partial substitute for
coffee from dates and for the acquisition of invention thereto and
also other inventions for similar purposes. The German patent was
never granted but the co. did acquire and work a Swedish patent
and carried on business at Hamburg where a substitute coffee was
from dates but not under the protection of patent.
 The objects of the company were specific in that it was to make
coffee from dates using a German patent. The patent was never
granted and coffee was made with a Swedish patent. the company
was solvent and the majority of shareholders wanted it to
continue. However two shareholders petitioned for a winding up
on the grounds that its objects had failed.

Voluntary Winding up
 Voluntary Winding up - Winding up by the members or creditors
without any intervention of the Court is called voluntary winding
up.
As per section 484, a company may be wound up voluntarily
 by Ordinary resolution or by Special resolution

Types of Voluntary Winding up - Voluntary winding up may be of
two types, namely,
a) Members’ voluntary winding up
b) Creditors’ voluntary winding up

 Members’ Voluntary Winding up –
Members’ voluntary winding up is possible only in
case of solvent companies.

 Creditors’ voluntary winding up -

Where the Board of directors does not file a
declaration as to solvency of the company, the
voluntary winding up is called ‘ the Creditors ‘
voluntary winding up.

Winding up under supervision of the
court
A voluntary winding up may be effected under
supervision of the Court where an application to
that effect is made by a creditor or a contributory
or the company or the liquidator and the Court
makes an order that the voluntary winding up
should continue subject to the supervision of the
Court.

References
 www.investopedia.com
 www.indiancourts.nic.in
 Elements of mercantile law ( N D KAPOOR)

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