2008 (5) TMI 404 - HC - Companies Law

Amalgamation - Held that - 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.

Summary

Issues:
1. Sanction of proposed scheme of amalgamation under sections 391(2) and 394 of the Companies Act, 1956.

Analysis:
The petition filed by 'M/s. Nishraj Traders (P.) Ltd.' and 'M/s Madhu Viniyog (P.) Ltd.' sought approval for the scheme of amalgamation. The transferor-company was engaged in investments and related activities, while the transferee-company was originally named 'Manu Viniyog (P.) Ltd.' before changing to 'Madhu Viniyog (P.) Ltd.' Both companies had their registered offices in Delhi. The proposed scheme included provisions for protecting employees and accounting treatment under the 'Pooling of interest' method. The share exchange ratio was determined based on a valuation report. The amalgamation aimed to consolidate assets and resources for operational efficiencies and synergies, leading to reduced administrative costs and effective management. The scheme also outlined the dissolution of the transferor-company without winding up upon approval.

The Official Liquidator and Regional Director (Northern Region) filed reports supporting the proposed scheme, with no objections raised. During arguments, it was confirmed that there were no objections to the scheme. The Court noted that the scheme provided for the protection of employees and the accounting treatment upon amalgamation. The share exchange ratio was deemed fair and reasonable, based on a valuation report. The scheme aimed to consolidate resources for operational efficiencies and synergies, leading to reduced administrative costs and effective management. The Court found no legal impediment to sanctioning the proposed scheme of amalgamation under sections 391 and 394 of the Companies Act, 1956.

The Court directed the transferee-company to deposit costs in the Common Pool Fund of the Official Liquidator. The order granted sanction to the proposed scheme of amalgamation, with a requirement to file a certified copy with the Registrar of Companies within five weeks. It was clarified that the order did not exempt from stamp duty payment if applicable. Upon sanction becoming effective, the transferor-company would stand dissolved without formal winding up. The petition was disposed of accordingly.