2007 (8) TMI 464 - HC - Companies Law

Amalgamation - Compromise and arrangement - Held that - This Court doth hereby sanction the compromise or arrangement set forth in para 31 of the petition at page 35 herein and in the schedule hereto, and doth hereby declare the same to be binding on the members of the above named companies. That the Scheme of merger/amalgamation of the above named companies shall be effective from 1-4-2007. That the parties to the compromise or arrangement or other persons interested shall be at liberty to apply to this Court for any directions that may be necessary in regard to the working of the compromise or arrangement, and that the said companies will file affidavit in proof of service of certified copies with the Registrar of companies within 14 days from this date.

Issues:
1. Company petition for amalgamation/merger under sections 391(1) and 393 of the Companies Act, 1956.
2. Approval of the scheme of amalgamation by the shareholders.
3. Sanctioning of the compromise or arrangement and its binding effect on the companies.
4. Effective date and transfer of undertakings, assets, liabilities, and employees.
5. Cancellation of investments, issuance of new shares, and continuation of business operations.
6. Disposal of the Company Petition.

Detailed Analysis:

1. The company petition was filed jointly for the amalgamation/merger of three companies under sections 391(1) and 393 of the Companies Act, 1956. The petition detailed a scheme of amalgamation, which was presented for approval by the shareholders of all the involved companies. The Regional Director, Ministry of Company Affairs, Kolkata, and other relevant authorities had no objections to the proposed amalgamation.

2. The shareholders unanimously approved the proposed compromise or arrangement during the meeting convened as per the order dated 7-12-2006. The court, after considering the reports and submissions, sanctioned the compromise set forth in the petition, declaring it binding on the members of the companies involved.

3. The court ordered that the scheme of merger/amalgamation would be effective from a specified date. It further allowed the parties involved to seek necessary directions for the implementation of the compromise or arrangement. Additionally, the companies were directed to file an affidavit proving the service of certified copies with the Registrar of Companies within a specified timeframe.

4. The schedule outlined various aspects of the merger, including the effective date, transfer of undertakings, treatment of assets, liabilities, and employees. It specified that all employees of the transferor companies would become employees of the transferee company without any interruption in service, with their previous service considered for benefits calculation.

5. The schedule also addressed the cancellation of investments, issuance of new shares to shareholders of the transferor companies, and the continuation of business operations until the completion of the transfer process. It emphasized the need for written consent for any dealings with the transferred undertakings and the continuity of existing contracts and agreements post-merger.

6. Finally, the Company Petition was disposed of by the court, and a copy of the order was provided to the concerned party as requested. The judgment effectively concluded the legal process related to the amalgamation/merger of the companies as per the provisions of the Companies Act, 1956.

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