1999 (11) TMI 798 - HC - Companies Law

Summary

Issues:
1. Amalgamation of 13 companies under sections 391(2) and 394 of the Companies Act, 1956.

Detailed Analysis:
The judgment deals with a petition seeking the amalgamation of 13 companies under sections 391(2) and 394 of the Companies Act, 1956. The companies involved in the scheme include various entities engaged in businesses such as investing, dealing in shares and securities, providing finance, and trading in different products. The scheme of amalgamation entails the transfer of all assets, liabilities, workmen, and employees of the transferor-companies to the transferee-company. The service conditions for the staff post-transfer are mandated to be at least as favorable as before the transfer. Both the Official Liquidator and the Regional Director have submitted reports stating no objections to the scheme, ensuring it is not prejudicial to public interest, creditors, or shareholders. Additionally, provisions have been made to safeguard the interests of the workmen of the transferor-companies.

The rationale behind the proposed scheme of amalgamation includes various factors such as the reduction in overheads and expenses, streamlining of management and finances, internal economies, and enhanced productivity. The amalgamation is expected to lead to better control, running, and management of the businesses involved, resulting in a larger company with a stronger financial base for further growth and development. The scheme aims to facilitate better facilities for raising capital, conducting trade, and obtaining favorable terms by combining the businesses of the companies involved. Overall, the scheme is projected to contribute to the growth and development of the combined business, benefiting the companies, shareholders, employees, and all stakeholders.

The court, after hearing the arguments of the petitioners, Regional Director, and Official Liquidator, has carefully examined the scheme of amalgamation. It has concluded that the rights and interests of shareholders, creditors, and employees are not likely to be compromised. The court finds the scheme fair, reasonable, and not contrary to public policy or public interest. Consequently, the court sanctions the scheme of arrangement/amalgamation, making it binding on all equity shareholders and creditors of both companies. The transferor-companies are to be dissolved without winding up, and a formal order is to be drawn up in accordance with the law, thereby disposing of the petition.