2008 (8) TMI 560 - HC - Companies Law

Amalgamation - Compromise and arrangement - Held that - The scheme states that there is no objectionable feature in the scheme of amalgamation which is detrimental either to the employees of the transferor company or of the transferee company. The said scheme is not violative of any statutory provisions. The scheme is fair, just, sound and is not against any public policy or pubic interest. No proceedings are pending under sections 231 to 237 of the Company Act, 1956. All the statutory provisions are complied with. Consequently, there shall be an order approving the scheme of amalgamation. Taking note of the report by the chartered accountant as enclosed by the official liquidator, the transferor company shall stand dissolved without winding up.

Summary

Issues:
1. Scheme of amalgamation under sections 391 to 394 of the Companies Act, 1956.
2. Valuation of shares and objections raised by the Regional Director.
3. Dissolution of the transferor company without winding up.
4. Report by the official liquidator and compliance with statutory provisions.

Analysis:

1. The judgment pertains to company petitions filed for sanctioning the scheme of amalgamation under sections 391 to 394 of the Companies Act, 1956. The petitions involved a transferor company and a transferee company, with compliance to prescribed procedures and submission of necessary documents such as consent letters from secured creditors and resolutions of the board of directors. The court dispensed with the requirement of convening a shareholders' meeting based on an earlier order.

2. The Regional Director raised objections regarding the valuation of shares and the proposed exchange ratio, dissolution clause in the scheme, and combining of authorized capital. The court addressed these objections by considering the valuation done by chartered accountants, which was agreed upon by common shareholders of both companies. The court found the valuation to be acceptable as it did not adversely affect the shareholders' interests. Additionally, the objection regarding the dissolution clause was dismissed as the transferor company ceases to exist post-amalgamation.

3. The official liquidator's report confirmed that the affairs of the transferor company were not conducted in a prejudicial manner, and no misfeasance was found. The court reviewed the scheme of amalgamation and found it compliant with statutory provisions, fair, just, and not against public policy or interest. Consequently, the court approved the scheme of amalgamation between the transferor and transferee companies, ordering the dissolution of the transferor company without winding up.

4. In conclusion, the court approved the scheme of amalgamation, ensuring compliance with the Companies Act, 1956. The official liquidator's report supported the approval, confirming the fair and lawful nature of the scheme. The judgment also awarded a fee to the Central Government standing counsel.