2000 (8) TMI 1035 - HC - Companies Law

Summary

Issues:
1. Scheme of amalgamation between two companies.
2. Approval of the scheme by shareholders and creditors.
3. Objection by the Official Liquidator.
4. Objection by the regional director regarding the exchange ratio.
5. Decision on the objections raised.

Analysis:

Issue 1: Scheme of Amalgamation
The case involved a scheme of amalgamation between two companies, one being the transferee-company and the other the transferor-company. The transferee-company applied for the scheme, which was to be approved by shareholders and creditors through meetings convened for this purpose.

Issue 2: Approval of the Scheme
The shareholders unanimously approved the scheme, with 29 shareholders representing 90.62% of the total paid-up share capital in favor of the resolution. Similarly, all five creditors voted in favor of the resolution, constituting 100% of the total value of creditors. The Chairman reported that all procedural formalities were completed, and no dissent was raised.

Issue 3: Objection by Official Liquidator
The Official Liquidator did not object to the scheme but suggested that the transferee-company should increase its authorized share capital to accommodate the transferred paid-up capital of the transferor-company. Additionally, the transferor-company was to be dissolved as per the Companies Act, 1956.

Issue 4: Objection by Regional Director
The regional director objected to the exchange ratio proposed in the scheme, suggesting a 1:1 ratio instead of the proposed 5:1 ratio. However, the board of directors of both companies agreed to the 1:1 ratio, and the Court cited precedents to reject the regional director's objection.

Issue 5: Decision on Objections
The Court rejected the objection regarding the exchange ratio raised by the regional director, citing expert opinion and shareholder approval. Consequently, the Court sanctioned the scheme of amalgamation, declaring it binding on all members of both companies. The Court outlined the transfer of property, rights, powers, liabilities, duties, and the dissolution of the transferor-company, ensuring compliance with the Companies Act, 1956.

In conclusion, the Court approved the scheme of amalgamation, resolving all objections raised by the Official Liquidator and the regional director, and provided detailed instructions for the implementation and dissolution of the companies involved.