2005 (8) TMI 393 - HC - Companies Law

Summary

Issues Involved:
1. Sanctioning of the scheme of amalgamation.
2. Objection by the Regional Director regarding the amendment of the memorandum of association.
3. Compliance with statutory procedures and public notice.
4. Approval and consent from creditors and shareholders.
5. Dissolution of the transferor company without winding up.

Issue-wise Detailed Analysis:

1. Sanctioning of the Scheme of Amalgamation:
The petition was filed under sections 391 to 394 of the Companies Act, 1956, seeking the court's sanction for the scheme of amalgamation between the transferor and transferee companies. The scheme, approved by the members and creditors of both companies, aimed to merge and amalgamate the transferor company with the transferee company under specified terms and conditions. The court noted that the scheme was designed to facilitate effective management and unified control of operations.

2. Objection by the Regional Director:
The Regional Director, Northern Region, Ministry of Company Affairs, Kanpur, raised an objection regarding the amendment of the memorandum of association of the transferee company. According to the Regional Director, the amendment could only be made following the procedures prescribed under the Companies Act, 1956, which included passing a special resolution in a general meeting and filing the relevant form with the Registrar of Companies. The court, however, rejected this objection, citing precedents from various High Courts, which held that section 391 of the Companies Act is a complete code that allows the court to sanction a scheme involving necessary alterations without requiring multiple applications under different provisions of the Act.

3. Compliance with Statutory Procedures and Public Notice:
The court observed that all requisite statutory procedures had been complied with. Notices were issued to the Regional Director and the official liquidator, and public notices were published in specified newspapers and the Haryana Government Gazette. The court verified the completion of publication through affidavits and authenticated copies of the publications.

4. Approval and Consent from Creditors and Shareholders:
The scheme of amalgamation received approval from all concerned parties. The unsecured creditors of the transferee company held a meeting as directed by the court, and the chairman filed a report confirming the approval. The transferor company had no secured creditors, while the transferee company had one secured creditor, Sundaram Finance Ltd., which also consented to the scheme. Both companies had two equity shareholders each, all of whom approved the scheme and gave their consent.

5. Dissolution of the Transferor Company Without Winding Up:
The court sanctioned the scheme of amalgamation and ordered that the transferor company be dissolved without the process of winding up. The court directed that the order be notified by public notice in specified newspapers and the Haryana Government Official Gazette within 30 days. The official liquidator was entitled to Rs. 1,000 as expenses from the transferee company.

Conclusion:
The court found that the scheme of amalgamation was not violative of any law or public policy and that the creditors and shareholders acted in good faith. The amalgamation was expected to improve the financial structure and cash flow management of the transferee company. The court sanctioned the scheme, ordered the dissolution of the transferor company without winding up, and allowed any interested person to approach the court for necessary directions. A formal order was to be drawn up, and copies provided to the petitioners' counsel and the official liquidator.