2008 (3) TMI 484 - HC - Companies Law

Amalgamation - Held that - The scheme is neither prejudicial to the interests of members and creditors nor to the public at large. The legal issue raised by the Registrar of Companies is concluded by earlier judgment of this court which is already referred to hereinabove. The court therefore sanctions the scheme of amalgamation at annexure C to the petitioner. The cost of Central Government standing counsel is quantified at 3, 500 per petition. Liberty is given to the transferee company to pay the amount of cost directly by drawing a cheque in favour of Central Government standing counsel Mr. Iqbal Sheikh.

Summary

Issues:
Sanctioning scheme of amalgamation of four transferor companies with one transferee company.

Analysis:
The High Court of Gujarat dealt with petitions seeking the sanction of a scheme of amalgamation involving four transferor companies and one transferee company. The petitions were disposed of collectively due to a common issue. The transferor companies, namely Bharatsinh Chudasama Film P. Ltd., Chander Exhibitors P. Ltd., Dharam Cinema P. Ltd., and Rajshri Wood Fields P. Ltd., were to be merged with R World Leisure Ltd., the transferee company, under the proposed scheme.

The transferee company filed a petition seeking approval of the scheme, along with applications to dispense with meetings of shareholders. The court granted dispensation of these meetings for the transferee company and the transferor companies, including equity shareholders, secured creditors, and unsecured creditors. Subsequently, all the company petitions were admitted, and notices were published in newspapers for the hearing.

Reports from the official liquidator confirmed that the affairs of the companies were not conducted prejudicially. The Regional Director of the Department of Company Affairs raised concerns regarding financial statements and the utilization of authorized capital by the transferee company. However, the court noted that the scheme did not address the utilization of authorized capital, citing precedents where such utilization was not prohibited.

After considering submissions from the parties and reviewing the scheme of amalgamation, reports from authorities, and previous judgments, the court found the scheme to be non-prejudicial to the interests of stakeholders and the public. The court sanctioned the scheme of amalgamation and directed the transferee company to pay costs to the Central Government standing counsel.

In conclusion, the High Court of Gujarat approved the scheme of amalgamation, ensuring compliance with legal requirements and addressing concerns raised by relevant authorities, thereby facilitating the merger of the transferor companies with the transferee company.