2007 (12) TMI 292 - HC - Companies Law

Amalgamation - Held that - Considering the submission of Assistant Solicitor General of India appearing for the Central Government explaining the issues raised by the office of the Regional Director along with affidavit placed on record, it is satisfying that the observations made by the RoC do not survive and the scheme of arrangement would be in the interest of the companies, their members and creditors. The prayers in terms of paragraphs 31(a), 21( a), 21(a) and 21(a) made in Company Petition Nos. 167, 168, 169 and 170 of 2007, respectively, are hereby granted.

Summary

Issues:
Petitions for sanction of scheme of arrangement for amalgamation of companies under sections 391 and 394 of the Companies Act, 1956.

Analysis:
1. Amalgamation Rationale: The petitioner-companies sought approval for the amalgamation of transferor-companies with the transferee-company due to similar and complementary business activities. The consolidation aimed to achieve synergic advantages, economies of scale, easier administration, cost efficiency, enhanced financial strength, and a competitive edge in the market. The Board of Directors believed that merging operations under one company would optimize resource utilization and minimize costs, benefiting both transferor and transferee-companies.

2. Meeting Dispensation: Meetings of equity shareholders and unsecured creditors for all companies were dispensed with based on written consent letters and absence of secured creditors. Certificates from chartered accountants confirmed this dispensation for each company, streamlining the process.

3. Public Notices and Objections: Public notices for the petitions were duly advertised in newspapers, and no objections were raised post-publication. Affidavits confirmed the publication details, ensuring transparency and compliance with legal requirements.

4. Official Liquidator Reports: Reports from the official liquidator indicated that the companies' affairs were not conducted prejudicially, further supporting the amalgamation process.

5. Central Government Representation: The Central Government was served notices, and representations were made by the Assistant Solicitor General. Affidavits from the Registrar of Companies and other officials addressed observations raised by the Regional Director, ensuring regulatory compliance.

6. Share Capital and Stamp Duty: The scheme addressed issues related to share capital transfer and stamp duty payment, emphasizing that the merger did not necessitate additional fees as the requisite payments were made previously. Legal precedents and provisions of the Companies Act were cited to support this stance, ensuring adherence to regulatory frameworks.

7. Approval and Disposal of Petitions: After considering submissions from the petitioner-companies and the Central Government, the Court found the scheme of arrangement to be in the interest of the companies, members, and creditors. The prayers in the petitions were granted, and costs to the Assistant Solicitor General were quantified and directed to be paid. The petitions were disposed of, concluding the legal process.