2003 (4) TMI 401 - HC - Companies Law

Summary

Issues Involved:
1. Sanction of the scheme of amalgamation u/s 394 read with section 391 of the Companies Act, 1956.
2. Necessity for the transferee company to seek sanction from the appropriate High Court.
3. Compliance with sections 391 and 394 of the Companies Act, 1956.
4. Jurisdictional considerations for sanctioning the scheme of amalgamation.

Summary:

1. Sanction of the Scheme of Amalgamation u/s 394 read with section 391 of the Companies Act, 1956:
The petitioner-company, a 100% subsidiary of the transferee company, seeks sanction for a scheme of amalgamation. The scheme involves the transfer of the entire business, properties, and assets of the petitioner-company to the transferee company, with the transferor company being dissolved without winding up. The scheme aims to create synergies, reduce costs, and enhance operational efficiency. The Board of Directors of the petitioner company passed a resolution in favor of the amalgamation, and no objections were received from the shareholders, creditors, or the public.

2. Necessity for the Transferee Company to Seek Sanction from the Appropriate High Court:
The Registrar of Companies raised the issue that the transferee company, located in New Delhi, has not filed an application for sanction before the Delhi High Court. The court examined whether it is necessary for the transferee company to seek sanction from the appropriate High Court. The court referred to sections 391 and 394 of the Act and relevant case law, concluding that if the scheme does not affect the rights of the members or creditors of the transferee company, there is no need for the transferee company to file a separate application.

3. Compliance with Sections 391 and 394 of the Companies Act, 1956:
The court reviewed sections 391 and 394, which outline the requirements for sanctioning a scheme of amalgamation. The court emphasized that the scheme must be consented to by the members and creditors and should not be prejudicial to their interests or public interest. The court also referred to the parameters laid down by the Apex Court in Miheer H. Mafatlal v. Mafatlal Industries Ltd., which include ensuring statutory compliance, majority approval, and fairness of the scheme.

4. Jurisdictional Considerations for Sanctioning the Scheme of Amalgamation:
The court discussed the jurisdictional issue of whether separate applications are required when the companies involved are situated within the territorial limits of different High Courts. The court noted that the Act is silent on this aspect and that the practice has been to file separate applications. However, the court opined that a single application before one of the two Courts with territorial jurisdiction could avoid conflicting decisions and facilitate smooth administration. The court concluded that in cases where the scheme does not involve reorganization of the share capital or affect the rights of the members or creditors of the transferee company, a single application by the transferor company is sufficient.

Conclusion:
The court found that the proposed scheme of amalgamation does not involve any reorganization of the share capital or affect the rights of the members or creditors of the transferee company. Therefore, there is no need for the transferee company to file a separate application for sanction. The Company Petition is ordered, and a certified copy of the order shall be filed with the Registrar of Companies within thirty days for registration.