2008 (2) TMI 636 - HC - Companies Law

Amalgamation - Held that - The Board of Directors of the Applicant/Transferee-company has passed a resolution approving the Scheme of Arrangement on 17-1-2008 and the Board of Directors of all the Transferor-companies have passed separate resolutions approving the Scheme of Arrangement for amalgamation of Transferor-companies with the Transferee-company on 15-1-2008, copies of which have been filed on record. Direction to commence meetings of Shareholders, Secured and unsecured creditors

Summary

Issues Involved:

1. Jurisdiction of the Court.
2. Approval of the Scheme of Arrangement by the Board of Directors.
3. Filing of Memorandums and Articles of Association.
4. Pending proceedings under sections 235 to 251 of the Companies Act, 1956.
5. Details of authorized and paid-up share capital of the companies.
6. Holding of meetings of equity shareholders and creditors.
7. Appointment of Chairpersons and Alternate Chairpersons for the meetings.
8. Dispensation of meetings for secured creditors.
9. Voting by proxy.
10. Fees for Chairpersons and Alternate Chairpersons.
11. Directions for conducting meetings.

Issue-Wise Detailed Analysis:

1. Jurisdiction of the Court:
The registered offices of the applicant/Transferee-company and Transferor-companies Nos. 1 and 4 are situated within the jurisdiction of this Court. The Transferor-company No. 2 does not fall within the jurisdiction of this Court.

2. Approval of the Scheme of Arrangement by the Board of Directors:
The Board of Directors of the Applicant/Transferee-company approved the Scheme of Arrangement on 17-1-2008, and the Board of Directors of all the Transferor-companies approved the Scheme on 15-1-2008. Copies of these resolutions have been filed on record.

3. Filing of Memorandums and Articles of Association:
All the Transferor-companies and the Transferee-company have filed their respective Memorandums and Articles of Association along with the application. The audited balance sheets as on 31-3-2007 have also been filed on record.

4. Pending Proceedings under Sections 235 to 251 of the Companies Act, 1956:
The applicant companies have stated that no proceedings under sections 235 to 251 of the Act are pending against any of the Transferor-company and Transferee-company.

5. Details of Authorized and Paid-Up Share Capital of the Companies:
The judgment details the incorporation dates and authorized share capital of the Transferee-company and Transferor-companies. For example, the authorized share capital of the Transferee-company is Rs. 1,250,000,000, and the issued, subscribed, and paid-up share capital is Rs. 5,02,799,000.

6. Holding of Meetings of Equity Shareholders and Creditors:
The Court directed the holding of separate meetings of the equity shareholders and unsecured creditors of the Transferee-company and Transferor-companies on 11-4-2008 at Mumtaj Mahal, Hotel Taj Palace, Sardar Patel Marg, New Delhi. Specific times and details for each company's meetings are provided.

7. Appointment of Chairpersons and Alternate Chairpersons for the Meetings:
The Court appointed specific advocates as Chairpersons and Alternate Chairpersons for the meetings of equity shareholders and unsecured creditors. For example, N. Waziri, Advocate, was appointed as the Chairperson for the meeting of the equity shareholders of the Transferee-company.

8. Dispensation of Meetings for Secured Creditors:
The Court noted that the Transferor-companies Nos. 1 and 4 have filed the consent of their secured creditors/lease financiers on record. It was deemed just and equitable to dispense with the holding of meetings of the secured creditors of these companies. Similarly, the Transferee-company and Transferor-company No. 3 have no secured creditors, and thus, meetings were dispensed with.

9. Voting by Proxy:
Voting by proxy is permitted if the prescribed form, duly signed by the person entitled to attend and vote, is filed with the registered office of the applicant-companies at least forty-eight hours before the meetings. The Chairpersons and Alternate Chairpersons are to ensure proper maintenance and inspection of proxy registers.

10. Fees for Chairpersons and Alternate Chairpersons:
The fees for each Chairperson for the meetings shall be Rs. 35,000, and the fees for each Alternate Chairperson shall be Rs. 25,000, in addition to meeting their incidental expenses. The Chairpersons are required to file their reports within two weeks from the date of holding the respective meetings.

11. Directions for Conducting Meetings:
The Chairpersons and Alternate Chairpersons are at liberty to issue directions to the management of the Transferee-company and all applicant Transferor-companies to ensure that the meetings of equity shareholders and unsecured creditors are conducted in a just, free, and fair manner.

Conclusion:
The application was allowed in terms of the above order, ensuring that the process for the scheme of arrangement for amalgamation is conducted in compliance with legal requirements and in a transparent manner.