2011 (3) TMI 1480 - HC - Companies Law

Compromise and arrangement - Held that - There is no objection to the sanctioning of the scheme from the creditors or shareholders. After going through the scheme of amalgamation, this court does not find any objectionable features, in sanctioning the scheme. Accordingly, the scheme of amalgamation is sanctioned.

Summary

Issues:
Company petitions for sanctioning the scheme of amalgamation involving transferor and transferee companies.

Analysis:

Issue 1: Scheme of Amalgamation
The company petitions involve the transferor company and the transferee company seeking approval for the scheme of amalgamation, aiming to bind all equity shareholders and creditors of the transferee company and dissolve the transferor company without winding up. Both companies were incorporated in Chennai, with the transferee company taking over the assets and liabilities of the transferor company as per the scheme. Shareholders and debenture holders of both companies have consented to the scheme, complying with the Income-tax Act provisions. The court dispensed with the need for shareholder meetings, considering the scheme's approval. The Regional Director's report highlighted the transfer of authorized capital and protection of employees' interests post-amalgamation.

Issue 2: Regional Director's Objection
The Regional Director raised objections concerning the scheme's details, including the transfer of authorized capital and the dissolution of the transferor company. However, the court cited precedent where objections from the Regional Director were not deemed a hindrance to amalgamation, emphasizing the comprehensive nature of section 391 of the Companies Act. Given the absence of objections from creditors or shareholders and the lack of objectionable features in the scheme, the court sanctioned the amalgamation scheme, ordering the company petitions accordingly.

Issue 3: Sanction of Amalgamation Scheme
The court found no valid objections to the scheme of amalgamation from relevant stakeholders and determined that the scheme was appropriate for approval. Consequently, the court sanctioned the scheme of amalgamation, allowing for the dissolution of the transferor company without winding up. Additionally, the court fixed the remuneration for the Additional Central Government Standing Counsel at Rs. 2,500 for each petition, to be paid by the petitioner-companies.

In conclusion, the High Court of Madras approved the scheme of amalgamation between the transferor and transferee companies, ensuring compliance with legal provisions and stakeholder consent, thus facilitating the dissolution of the transferor company without winding up.