2010 (10) TMI 1127 - HC - Companies Law

Summary

Issues involved: Application for Scheme of Amalgamation u/s Company Application No.287/2010 - Whether separate proceedings required for Transferee Company being the holding company?

The judgment by the Gujarat High Court pertained to an application for a Scheme of Amalgamation u/s Company Application No.287/2010. The applicant, M.S. Khurana Engineering Limited, sought to amalgamate with its wholly owned subsidiary, M.S. Khurana Infrastructure and Toll Road Private Limited. The applicant company was the Transferee company in this arrangement, holding the entire share capital of the Transferor company. Both companies belonged to the same group of management, and the proposed scheme had been approved by the Board of Directors of both entities.

The applicant argued that as the Transferee company, it held the entire share capital of the Transferor company and, pursuant to the Scheme, the Equity Shares of the applicant company held by the Transferee Company and/or its nominees would be automatically cancelled without new shares being issued. It was contended that the Capital Structure of the Transferee Company would not change, and the rights of existing shareholders would remain unaffected. Citing legal precedents such as Sharat Hardware Industries P. Ld. and Mahaamba Investments Limited v. IDI Limited, the applicant asserted that separate proceedings for the Transferee Company were not necessary as per settled legal position.

The Court, in light of the legal position supported by various judgments, including those referenced in the affidavit, concluded that separate proceedings were not required for the Transferee Company, considering it was the holding company. Therefore, the Court held that separate proceedings were not necessary in the present case, and the application for the Scheme of Amalgamation was disposed of accordingly.