2008 (10) TMI 354 - HC - Companies Law

Amalgamation - Held that - Having gone through the petitions and being satisfied that the amalgam- ation would be in the interest of the companies and their members and creditors, prayers in terms of paragraph 15(a) of the respective petitions are hereby granted. It is, however, made clear that right, if any, available to the objector Mr. Ajay Bhatia in the pending proceedings either before the Company Law Board or before the civil court challenging his removal as director from M/s. Vikram Silk Mills or challenging the transfer and/or alienation of the property by M/s. Vikram Silk Mills in favour of Shree Kapil Yarn Ltd., shall not be frustrated by virtue of the present scheme of amalgamation.

Summary

Issues:
1. Sanction of a scheme of amalgamation under sections 391 and 394 of the Companies Act, 1956.
2. Objection raised by a party regarding the transfer of property and its impact on pending legal proceedings.
3. Compliance with public notice requirements and objections raised by objector.
4. Reports of the official liquidator and the Central Government on the financial reports of the companies.
5. Granting of prayers for amalgamation and clarification regarding the objector's rights in pending proceedings.

Detailed Analysis:
1. The petitions were filed for the sanction of a scheme of amalgamation of three transferor-companies with a transferee-company under sections 391 and 394 of the Companies Act, 1956. Meetings of shareholders and creditors were dispensed with based on written consent letters. Public notices were duly advertised in newspapers, and the petitions were admitted. The petitions sought sanction for the scheme of amalgamation, and all requisite compliances were made by the petitioner companies.

2. An objection was raised by a party claiming to be a director of a company regarding the transfer of property to one of the transferor companies. The objector filed a suit and challenged the transfer of property, alleging that his rights would be affected by the scheme of amalgamation. The petitioner responded, stating that the objector had no right or interest in the petitioner-company, and the objections were irrelevant and made with a mala fide intention to delay the proceedings.

3. Apart from the objection raised by the aforementioned party, no other objections were raised to the petitions even after public advertisement. The official liquidator's reports confirmed that the affairs of the transferor companies were not conducted prejudicially. The Central Government's observations on the financial reports were addressed by filing additional affidavits with the provisional balance-sheets of the companies.

4. After hearing the arguments, the court granted the prayers for amalgamation, stating that it would be in the interest of the companies, members, and creditors. However, a clarification was made to ensure that the objector's rights in pending proceedings would not be frustrated by the scheme of amalgamation. The petitions were disposed of, and costs to be paid to the Central Government counsel were quantified and directed to be paid accordingly.