1995 (12) TMI 267 - HC - Companies Law

Summary

Issues:
1. Approval of scheme and arrangement for amalgamation of two companies.
2. Consent of members and creditors.
3. Objection raised by Regional Director regarding eroded capital and accumulated losses.

Analysis:
1. The petitions were filed for the sanction of the Court regarding the scheme and arrangement for the amalgamation of the transferor company with the transferee company. The scheme involved the transfer of shares and liabilities, with the transferee company agreeing to take over all employees of the transferor company.

2. All members of the transferor company consented in writing to the scheme, and meetings of both secured and unsecured creditors were held to adopt the proposed scheme. The official liquidator's report was favorable, and the State Industrial and Investment Corporation of Maharashtra Ltd. approved the scheme subject to obtaining approvals from financial institutions and banks.

3. Initially, the scheme faced opposition from Punjab National Bank, a secured creditor of the transferee company. The bank had concerns regarding its dues and opposed the amalgamation. However, a mutual agreement was reached between the transferee company and the bank, resolving the issue. The objection raised by the Regional Director based on eroded capital and accumulated losses was overruled by the Court, considering the financial soundness of the transferee company and its agreement to take over the liabilities of the transferor company.

4. The Court sanctioned the scheme as modified by the consent terms between the transferee company and Punjab National Bank. Both petitions were made absolute, leading to the dissolution of the transferor company without winding up. Costs were directed to be paid to the Official Liquidator and the Regional Director. The certified copy issuance was expedited to conclude the legal process efficiently.