1996 (1) TMI 345 - HC - Companies Law

Summary

Issues:
1. Sanction for the scheme of arrangement for amalgamation sought by transferor and transferee companies.

Analysis:
The judgment involves two petitions filed by a transferor-company and a transferee-company seeking approval for a scheme of arrangement for amalgamation. The transferor-company, engaged in the manufacture of pesticides, is being amalgamated with the transferee-company, involved in the distribution of pesticides. The purpose of the amalgamation is to enhance operational efficiency and benefit both companies, their shareholders, employees, and stakeholders. Meetings of equity shareholders of both companies were held as directed by the court, and the scheme of amalgamation was unanimously approved without any modifications.

Analysis (contd.):
The Central Government raised objections related to the increase in the authorized capital of the transferee-company to accommodate the shares of the transferor-company's members and the potential classification of the transferee-company as a public company post-amalgamation. The court acknowledged the objections but ruled that post-amalgamation issues, such as an increase in the number of members, should be addressed by the transferee-company in compliance with the Companies Act. As no other objections were raised, the court found no reason to disallow the applications.

Analysis (contd.):
Considering the facts and circumstances, the court sanctioned and confirmed the scheme of arrangement for amalgamation, effective from a specified date. The order directed the dissolution of the transferor-company without winding up and mandated the delivery of a certified copy to the Registrar of Companies for necessary actions. The parties involved were granted liberty to seek court directions for implementing the scheme. The judgment concluded by ordering the petitions as per the decision, without any costs involved.