2009 (1) TMI 477 - HC - Companies Law

Amalgamation - Held that - The broad terms of the scheme as per clause 3 are that the entire business of amalgamating companies, viz., transferor company No. 1 and transferor company No. 2 shall be transferred and vested with the transferee company, i.e., the petitioner herein. By virtue of which the share capital of the petitioner-company would be enhanced and the interest of all the shareholders is fully taken care of. There has also not been any opposition to the proposed scheme from the side of the employees. The scheme does not contravene any of the provisions of law and the affairs of the transferee company has not been conducted in any manner detrimental to the interest of the shareholders and creditors of the company. Under these circumstances, a case for according sanction for the scheme of amalgamation proposed by the petitioner is hereby made out. Company petition is accordingly allowed.

Summary

Issues Involved:
1. Sanction of the scheme of amalgamation.
2. Compliance with the Companies Act, 1956.
3. Objections raised by the Regional Director, Ministry of Corporate Affairs.
4. Payment of registration fee and stamp duty.

Detailed Analysis:

1. Sanction of the Scheme of Amalgamation:
The petitioner, M/s. Mysore Cements Ltd. (transferee company), sought the sanction of a scheme of amalgamation with M/s. Indo Rama Cement Ltd. (transferor company No. 1) and M/s. Heidelberg Cement India (P.) Ltd. (transferor company No. 2). The scheme was approved by the boards of directors of all three companies on 9-5-2008. The scheme aimed to consolidate the cement business, enhance financial resources, increase managerial efficiencies, and pool technical, distribution, and marketing skills. The scheme was to take effect from the appointed date of 1-4-2008, subject to approval by the High Courts of Karnataka, Bombay, and Punjab and Haryana.

2. Compliance with the Companies Act, 1956:
The petitioner argued that the scheme's approval by the shareholders was sufficient for effecting amendments under sections 16, 81, and 94 to 97 of the Companies Act, 1956, without further resolutions. The court noted that the scheme was a "single window clearance" system under sections 391 and 394, which are complete codes in themselves. Therefore, separate compliance under section 21 for the change of name was unnecessary. The petitioner was directed to file necessary forms with the Registrar of Companies to place on record the changes.

3. Objections Raised by the Regional Director, Ministry of Corporate Affairs:
The Regional Director raised objections regarding the clubbing of authorised capital and the necessity of paying registration fees and stamp duty. The objections included:
- The authorised capital of different companies cannot be clubbed.
- The authorised capital is not a liability and cannot be transferred.
- The transferee company must comply with sections 94 and 97 by filing returns and paying fees.
- The Companies Act does not exempt the transferee company from paying registration fees upon amalgamation.

The court addressed these objections by referencing several decisions, including PMP Auto Industries Ltd., In re and Mphasis Ltd., In re, which supported the view that sections 391 to 394 provide a comprehensive clearance system. The court held that the petitioner need not pay registration fees immediately but must undertake to pay if the Division Bench reverses the decision in Mphasis Ltd.'s case.

4. Payment of Registration Fee and Stamp Duty:
The petitioner argued that the scheme's sanction should exempt them from paying additional registration fees and stamp duty. The court noted that the petitioner undertook to pay the requisite fees if the Division Bench's decision in Mphasis Ltd.'s case was reversed. The court recorded this undertaking and held that no immediate payment was required. The Regional Director was granted liberty to issue notice and collect fees if the appeal succeeded.

Conclusion:
The court sanctioned the scheme of amalgamation, directing the petitioner to file the certified copy of the order with the Registrar of Companies within 30 days. The petitioner was also directed to file necessary forms to record changes in the company's name. The court held that the petitioner need not pay registration fees and stamp duty immediately but must undertake to pay if the Division Bench's decision in Mphasis Ltd.'s case was reversed. The scheme was found to be beneficial to the shareholders, creditors, and employees, and no opposition was raised. The petition was allowed, and the scheme was sanctioned.