2008 (4) TMI 507 - HC - Companies Law

Amalgamation - Held that - Having regard to the facts and circumstances of the case there does not appear to be any legal impediment in sanctioning the proposed scheme of amalgamation. Consequently sanction is hereby granted to the proposed scheme of amalgamation under sections 391 and 394 of the Companies Act 1956 for amalgamation of the transferor company with the transferee company. The certified copy of this order shall be filed with the Registrar of Companies within five weeks. It is clarified that this order should not be construed as an order granting exemption from payment of stamp duty if payable in accordance with law in regard to increase in the share capital of the transferee company. Upon sanction becoming effective and from the appointed date the transferor company shall stand dissolved without its formal winding up.

Issues involved:
1. Approval sought for the scheme of amalgamation under sections 391(2) and 394 of the Companies Act, 1956.
2. Exemption from convening statutory meetings for equity shareholders.
3. Opposition by ex-workman regarding alleged dues.
4. Benefits of proposed amalgamation in terms of efficiency and resource utilization.
5. Details of the proposed scheme of amalgamation and its implications.
6. Legal sanction and directions regarding the proposed scheme.

Detailed Analysis:

1. Approval sought for amalgamation:
The petition was filed by the transferor company seeking approval for the scheme of amalgamation with the transferee company under sections 391(2) and 394 of the Companies Act, 1956. The High Court of Andhra Pradesh had already approved the scheme subject to the jurisdiction of the High Court where the transferor company was located.

2. Exemption from statutory meetings:
The transferor company was previously granted exemption from convening statutory meetings for equity shareholders as they had already consented to the proposed scheme of amalgamation.

3. Opposition by ex-workman:
An ex-workman opposed the amalgamation due to alleged unpaid dues. However, the transferor company demonstrated a bona fide dispute regarding the dues and deposited the disputed amount with the Court to ensure no prejudice to the ex-workman.

4. Benefits of amalgamation:
The proposed amalgamation aimed to eliminate duplicate companies engaged in similar activities, reduce overhead expenses, improve efficiency, and benefit shareholders, employees, and the public. Both companies had approved the scheme at their respective Board meetings.

5. Details of the proposed scheme:
Upon approval, all assets, claims, and liabilities of the transferor company would vest in the transferee company. Employees would transition to the transferee company without changes to their terms. The transferor company would dissolve without winding up, and shareholders would receive new equity shares.

6. Legal sanction and directions:
The Court found no legal impediment to sanctioning the proposed scheme of amalgamation. Sanction was granted under sections 391 and 394 of the Companies Act, 1956. The transferor company was directed to deposit costs in the Common Pool Fund of the Official Liquidator. The order clarified that it did not exempt payment of stamp duty if applicable.

In conclusion, the Court approved the scheme of amalgamation, emphasizing its benefits and legal compliance, and provided specific directions for implementation and compliance.

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