1999 (11) TMI 789 - HC - Companies Law

Summary

Issues:
Amalgamation petition filed for three companies - Kwality Zippers Ltd., Shamil Industries (P.) Ltd., and Avadh Udyog Ltd.

Analysis:
The petition sought the amalgamation of three companies based on the convenience and advantage of combining their businesses. The transferee-company and transferor-company No. 1 were located nearby, sharing the same place of registration, and dealing with similar products like 'Polyester Zip Fasteners', 'Zip Sliders', and 'Polyster Tapes'. It was argued that merging these companies would create a stronger capital base, enabling them to raise resources for growth and diversification. A scheme of amalgamation was framed to facilitate this process.

The Court directed the companies to convene meetings of their shareholders and creditors to approve the proposed scheme. Chairmen were appointed for each company to oversee the meetings and submit reports to the Court. After the meetings were held, the scheme of amalgamation was adopted and accepted by the shareholders and creditors of all companies. Subsequently, a petition was filed for the Court's approval of the scheme, with notices issued to relevant authorities and published in newspapers for objections.

The Regional Director of the Department of Company Affairs confirmed no objection to the proposed scheme. However, the Official Liquidator raised an objection regarding the sufficiency of the transferee-company's authorized capital to accommodate the transferred capital of the transferor-companies based on the share-exchange ratio. In response, the transferee-company increased its authorized capital to Rs. 60 lacs, addressing the concern raised by the Official Liquidator.

Considering the resolutions passed by the shareholders and creditors of all companies, the Court sanctioned and approved the Scheme of Amalgamation. The transferor-companies, Shamil Industries (P.) Ltd. and Avadh Udyog Ltd., were ordered to be resolved in accordance with the provisions of section 394(1)(iv) of the Companies Act, 1956. The petition was disposed of accordingly, marking the final decision on the amalgamation process.