2006 (7) TMI 340 - HC - Companies Law

Summary

Issues:
Application under sections 391 and 394 of the Companies Act, 1956 seeking sanction for a scheme of arrangement for amalgamation.

Detailed Analysis:

Issue 1: Objection by Regional Director regarding the increase in authorized share capital
The Regional Director raised objections to the scheme of amalgamation, specifically regarding the increase in the authorized share capital of the transferee-company. The petitioner argued that the objection was not valid as both the transferor and transferee companies had paid the prescribed fees for their authorized share capitals. The petitioner relied on previous court decisions to support their argument, emphasizing that no further fee or stamp duty was payable due to the amalgamation process.

Issue 2: Legal perspective on amalgamation
The judgment discussed the legal perspective on amalgamation, citing the Delhi High Court's decision that amalgamation involves the absorption of one company into another or the merger of both to form a third entity. It highlighted that amalgamation is not merely a bilateral arrangement but has a statutory basis and character. The judgment also referenced the Allahabad High Court's decision, which rejected a similar objection by the Regional Director based on previous Bombay High Court judgments.

Issue 3: Court's decision and confirmation of the scheme of amalgamation
Considering the legal positions and precedents cited, the court found the objection of the Regional Director untenable and allowed the scheme of amalgamation. The court confirmed the scheme, directing the dissolution of the transferor-company without the need for a winding-up order. The assets and liabilities were to be transferred to the transferee company as per the scheme. The court ordered the transferor company to deliver a certified copy of the order to the Registrar of Companies for registration within thirty days, after which the transferor company would stand dissolved.

Conclusion
The court disposed of the application, confirming the scheme of amalgamation and detailing the necessary steps for the transferor company's dissolution and the transfer of assets and liabilities to the transferee company. Interested parties were granted the liberty to apply to the court for any necessary directions in the matter.