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Issues Involved:
The judgment involves a petition u/s 391(2) read with section 394 of the Companies Act, 1956 for the sanction of a scheme of amalgamation between two companies. Details of the Judgment: Issue 1: Incorporation and Details of Companies - The transferee company was incorporated on 4-1-1999 and became a public limited company on 25-1-1999 with a share capital of Rs. 5,00,000. - The transferor company was also incorporated on 4-1-1999 and became a public limited company on 25-1-1999 with an identical share capital structure. Issue 2: Merger Rationale and Benefits - The merger was proposed to rationalize business activities and enhance management efficiency, growth, and financial stability. - All assets, properties, and liabilities of the transferor company were to be transferred to the transferee company at book values as of 31-7-2006. - The scheme was deemed beneficial for the companies, shareholders, creditors, and stakeholders. Issue 3: Legal Compliance and Objections - The Regional Director raised concerns regarding the increase in authorized share capital and the valuation method used for the merger. - The petitioner companies defended the valuation method based on book value and cited legal precedents supporting this approach. Issue 4: Court's Decision and Sanction - The Court upheld the valuation method based on book value as acceptable and not illusory. - The Court emphasized that the valuation of assets and shares is a technical matter within the expertise of chartered accountants. - Sanction was granted for the scheme of amalgamation u/s 391(2) read with section 394 of the Act, leading to the dissolution of the transferor company without winding up. Issue 5: Notification and Further Directions - The order of sanction was to be publicly notified in specified newspapers within 30 days. - Interested parties were given the liberty to seek necessary directions from the Court in the matter. Conclusion: The judgment approved the scheme of amalgamation between the two companies, emphasizing the validity of the valuation method and compliance with legal requirements, leading to the dissolution of the transferor company.
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