2008 (5) TMI 424 - HC - Companies Law

Amalgamation - Compromise and arrangement - 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 subject to the transferee company s filing the necessary forms as prescribed under law in the ogee of the Registrar of Companies to place on record the change in its name. 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 stands dissolved without its formal winding up. The transferee company is directed to deposit ₹ 20,000 towards costs in the common pool fund of the official liquidator within a period of three weeks from today.

Issues Involved:
1. Sanction of the scheme of amalgamation under sections 391 to 394 of the Companies Act, 1956.
2. Compliance with procedural requirements for the amalgamation.
3. Protection of employees' rights post-amalgamation.
4. Change of name of the transferee company.
5. Filing of necessary forms with the Registrar of Companies.
6. Payment of stamp duty and costs.

Detailed Analysis:

1. Sanction of the Scheme of Amalgamation:
The petitions filed by the transferor company, M/s. UFO Moviez Ltd., and the transferee company, M/s. UFO India Ltd., sought the sanction of a scheme of amalgamation under sections 391 to 394 of the Companies Act, 1956. The court noted that the proposed scheme aimed to consolidate the companies into one large entity, enhancing operational efficiencies and synergies. The scheme was recommended by the boards of both companies and was expected to result in benefits such as economies of scale, reduced operational costs, enhanced profitability, and a unified management structure.

2. Compliance with Procedural Requirements:
The court observed that the transferor and transferee companies had previously filed applications, which were allowed, and the meetings of shareholders and creditors were dispensed with as all had given their consent to the scheme by affidavit. The court issued notices to the Regional Director (Northern Region) and the official liquidator, who filed their respective reports. The official liquidator had no objections to the scheme, and the Regional Director raised no significant objections during the arguments.

3. Protection of Employees' Rights:
The scheme provided protection to all employees of the transferor company, ensuring that they would become employees of the transferee company without any break or interruption of service and on the same terms and conditions. Paragraph 4.12 of the proposed scheme specifically dealt with the protection of employees' rights.

4. Change of Name of the Transferee Company:
The proposed scheme included a change of name for the transferee company from M/s. UFO India Ltd. to M/s. UFO Moviez India Ltd. to reflect the combined names of the existing companies. The Regional Director initially raised concerns about the consequences of this change but later had no objections, citing relevant judgments. The court held that the proceedings under sections 391 to 394 provided a "single window clearance" and did not require separate formalities for the name change, though necessary forms must be filed with the Registrar of Companies.

5. Filing of Necessary Forms with the Registrar of Companies:
The court mandated that the transferee company must file the necessary forms to record the change in its name with the Registrar of Companies. A certified copy of the court's order was to be filed within five weeks.

6. Payment of Stamp Duty and Costs:
The court clarified that the order should not be construed as an exemption from payment of stamp duty if applicable for the increase in the share capital of the transferee company. Additionally, the transferee company was directed to deposit Rs. 20,000 towards costs in the common pool fund of the official liquidator within three weeks.

Conclusion:
The court found no legal impediments to sanctioning the proposed scheme of amalgamation. Consequently, the scheme was sanctioned, subject to compliance with the filing requirements and payment of costs. The transferor company would stand dissolved without winding up upon the scheme's effectiveness. Both petitions were disposed of accordingly.

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