2016 (10) TMI 1102 - HC - Companies Law

Scheme of Amalgamation - dispense with the requirement of convening and holding a meeting of the equity shareholders and unsecured creditors of the Transferor company - Held that - In view of the written consent/NOC given by all the Equity Shareholders of the Transferor Company, the requirement of convening meeting of the Equity Shareholders of the Transferor Company is dispensed with. The transferor Company has no secured creditors. Hence the requirement of convening their meeting does not arise. The requirement of convening and holding the meeting of unsecured creditors of the Transferor Company which includes the customers of the Prepaid Payment Instrument is dispensed with.

Summary

Issues:
Application under Sections 391 and 394 of the Companies Act, 1956 seeking directions to dispense with the requirement of convening meetings of equity shareholders and unsecured creditors for Scheme of Amalgamation.

Detailed Analysis:

1. Background and Incorporation Details:
The application involves a first motion application under Sections 391 and 394 of the Companies Act, 1956 for a Scheme of Amalgamation between the Transferor and Transferee companies. The Transferor company, originally named Carlos Towers Limited, was later changed to Idea Mobile Commerce Services Limited. The Transferee company is Aditya Birla Idea Payments Bank Limited.

2. Share Capital and Incorporation Dates:
The Transferor company has an authorized share capital of &8377; 1,00,00,00,000 divided into 10,00,00,000 equity shares of &8377; 10 each. The Transferee company was incorporated on 19th February 2016 under the name Aditya Birla Idea Payments Bank Limited.

3. Submission of Documents and Scheme Details:
The application includes the Memorandum and Articles of Association of both companies, audited balance sheets, and a copy of the Scheme of Amalgamation. The share exchange ratio is detailed in the valuation report.

4. Consent and Board Approval:
All Equity Shareholders of the Transferor Company have given their written consent, and the Board of Directors unanimously approved the proposed Scheme of Amalgamation.

5. Unsecured Creditors and Liabilities:
The Transferor Company has 345 Unsecured Creditors with outstanding balances. The liabilities include amounts collected from customers for Prepaid Payment Instruments. The outstanding balances are secured in an escrow account with Kotak Mahindra Bank Limited.

6. No Compromise to Creditors:
The Scheme does not offer any compromise to creditors, and there is an excess of assets over liabilities for both companies. The submission argues that creditors will not be prejudiced by the Scheme.

7. Precedents and Legal Submissions:
Legal counsel cites judgments where Courts dispensed with the requirement of convening meetings of unsecured creditors in similar cases. The Court, considering the submissions and documents, dispenses with the meeting of unsecured creditors.

8. Final Disposition:
The Court disposes of the application in terms of dispensing with the requirement of convening and holding the meeting of unsecured creditors, including customers of Prepaid Payment Instruments, based on the submissions and precedents cited.

This detailed analysis covers the key aspects of the judgment regarding the Scheme of Amalgamation and the dispensation of the requirement for meetings of equity shareholders and unsecured creditors.