2000 (8) TMI 1032 - HC - Companies Law

Summary

Issues:
1. Scheme of amalgamation between two companies.
2. Approval of the scheme by shareholders and creditors.
3. Objection raised by the Regional Director regarding the exchange ratio in the scheme.
4. Resolution of the objection and final sanction of the scheme by the Court.

Analysis:

Issue 1: Scheme of Amalgamation
The case involved a scheme of amalgamation between a transferor-company and a transferee-company. The transferor-company applied for the scheme, which was to be considered by the shareholders and creditors of both companies. The meetings were duly convened, and the resolution for the scheme was unanimously approved by the shareholders and creditors present, representing a significant percentage of the total share capital and creditor value.

Issue 2: Approval of the Scheme
The Chairman's report confirmed that the resolution for the scheme was adopted by both the shareholders and creditors without any dissent. The Official Liquidator did not raise any objections, indicating that the scheme was not prejudicial to any party's interest. All procedural formalities were completed, and the Court found no dissenting voices regarding the scheme.

Issue 3: Objection by Regional Director
The Regional Director raised an objection regarding the exchange ratio proposed in the scheme, suggesting it should be 1:1 instead of the initially proposed 5:1. However, the Directors of both companies, in response to the objection, agreed to the 1:1 exchange ratio. The Court considered expert opinions and legal precedents, ultimately rejecting the Regional Director's objection and upholding the original exchange ratio proposed in the scheme.

Issue 4: Resolution and Sanction
After considering all aspects of the case, including the objections raised, the Court sanctioned the scheme of amalgamation. The Court declared the scheme binding on all members of both companies, outlining the transfer of property, rights, powers, liabilities, and duties between the transferor and transferee companies. The Court also directed the necessary steps for the implementation of the scheme, including the dissolution of the transferor-company and consolidation of relevant documents with the Registrar of Companies.

In conclusion, the Court approved the scheme of amalgamation, dismissing objections and ensuring the legal transfer of assets and liabilities between the involved companies as per the provisions of the Companies Act, 1956.