2009 (5) TMI 538 - HC - Companies Law

Scheme of Amalgamation and Arrangement - Held that - No objection is raised by the Regional Director with regard to affairs of the petitioner s company. It is also seen from the records that no proceedings are pending under sections 235 to 251 of the Act either against the Companies and no individual has objected to sanction of this Scheme in spite of notice issued by wide publication in three newspapers. That being so, it seems that there is no impediment or objection in the matter of approving the Scheme. On due consideration of the reports and other material available on record, this Court is of the view that the Scheme cannot be termed as unfair or unjust, warranting any interference. Thus scheme accordingly, sanctioned.

Issues Involved:
1. Sanction of the Scheme of Amalgamation and Arrangement.
2. Compliance with statutory requirements and procedural mandates.
3. Consent of shareholders and creditors.
4. Examination of the Scheme's fairness and impact on stakeholders.
5. Compliance with regulatory directions and notifications.

Issue-Wise Detailed Analysis:

1. Sanction of the Scheme of Amalgamation and Arrangement:
The application was filed under sections 391, 392, 393, and 394 of the Companies Act, read with rules 9 and 79 of the Companies (Court) Rules, 1959. The prayer was to sanction the proposed Scheme of Amalgamation and Arrangement from the effective date and with effect from the appointed day as notified in the Scheme. The Scheme aimed to amalgamate M/s. VA Tech Hydro India Private Limited (transferee-company) and VA Tech Escher Wyss Flovel Private Limited (transferor-company) as a going concern.

2. Compliance with statutory requirements and procedural mandates:
The transferee-company was originally incorporated as CG Elin Power Systems Private Limited and later renamed M/s. VA Tech Hydro India Private Limited. The authorized Share Capital was Rs. 200,000,000, and the Issued, Subscribed, and Paid-up Share Capital was Rs. 185,000,000. The transferor-company, originally Flovel Limited, was renamed multiple times, with the final name being VA Tech Escher Wyss Flovel Private Limited. The authorized Share Capital was Rs. 150,000,000, and the Issued, Subscribed, and Paid-up Share Capital was Rs. 21,205,640. Both companies complied with the statutory requirements, including filing necessary certificates and resolutions.

3. Consent of shareholders and creditors:
Both companies obtained unanimous consent from their shareholders for the Scheme without any modifications. The transferee-company had two Equity Shareholders, while the transferor-company had seven Equity Shareholders. Regarding creditors, the transferee-company had one Secured Creditor, four banks providing working capital limits, and 181 Unsecured Creditors. The transferor-company had five Secured Creditors, four banks for working capital limits, and 307 Unsecured Creditors. All creditors provided their consent for the Scheme.

4. Examination of the Scheme's fairness and impact on stakeholders:
The Scheme was approved by the Board of Directors of both companies and was based on a fair and reasonable exchange ratio of shares, as determined by independent valuers, M/s. Tarun Jaggi & Associates. The aggregate assets of the transferee-company post-amalgamation were expected to be sufficient to meet all liabilities. The Scheme was deemed not to adversely affect the rights of any creditors and was considered fair and just.

5. Compliance with regulatory directions and notifications:
The Court dispensed with the meeting of shareholders and secured creditors and directed the meeting of unsecured creditors, which was held on 28-3-2009. Notices were dispatched, and public notices were published as directed. The Regional Director, Department of Company Affairs, and the Official Liquidator submitted their reports. The Regional Director recommended notifying the Reserve Bank of India regarding the sanction of the Scheme. Both reports indicated that the Scheme was not prejudicial to the interests of shareholders and the public.

Conclusion:
The Court, having considered the entire material, reports, and affidavits, found no objections to the Scheme. The Scheme was not deemed unfair or unjust, and no proceedings were pending against the companies under sections 235 to 251 of the Act. The Court sanctioned the Scheme, which would come into operation from the appointed day, 1-1-2009, and directed the necessary formalities to be completed. The order was to be filed with the Registrar of Companies within 30 days, and the transferor-company was to be wound up without any winding-up order. The Company Petition was finally decided and disposed of in these terms.

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