2011 (10) TMI 718 - HC - Companies Law

Summary

Issues Involved:
1. Sanction of the Scheme of Amalgamation u/s 391(2) and 394 of the Companies Act, 1956.
2. Share Exchange Ratio.
3. Valuation of Shares.
4. Compliance with statutory requirements and objections.

Summary:

1. Sanction of the Scheme of Amalgamation u/s 391(2) and 394 of the Companies Act, 1956:

The second motion joint Petitions were filed seeking sanction of the Scheme of Amalgamation of SANJOG TECHNOLOGIES PRIVATE LIMITED (Transferor Company) with PREET MACHINES LIMITED (Transferee Company). The registered offices of both companies are situated in New Delhi, within the jurisdiction of this court. Details regarding the incorporation, capital structure, and latest audited Annual Accounts of both companies were provided. The Board of Directors of both companies approved the Scheme, and no proceedings u/s 235 to 251 of the Act were pending against the Petitioner Companies.

2. Share Exchange Ratio:

The Scheme provides that upon its final effect, the Transferee Company shall issue one Equity Share of Rs. 10 each, credited as fully paid-up, for every ten Equity Shares of Rs. 10 each held in the Transferor Company. The court had earlier dispensed with the requirement of convening meetings of Shareholders and Unsecured creditors of both companies, as there were no Secured Creditors.

3. Valuation of Shares:

The Official Liquidator's report raised concerns about the basis of the Share Valuation Report prepared by M.K. Arora and Co., Chartered Accountants. The valuer had taken Fair Value for the Transferee Company at Rs. 100 per share and for the Transferor Company at Rs. 10 per share, without considering other values per share. However, the court opined that valuation of shares is a technical and complex problem best left to experts in the field of accountancy. The court referenced judgments from the Supreme Court, emphasizing that it is not for the court to substitute its exchange ratio if the valuation has been accepted unanimously by all shareholders.

4. Compliance with statutory requirements and objections:

Notices were issued to the Regional Director, Northern Region, and the Official Liquidator, and citations were published in newspapers. The Regional Director confirmed that all employees of the Transferor Company would become employees of the Transferee Company without any break or interruption in their services. The Official Liquidator confirmed that the affairs of the Transferor Company were not conducted in a manner prejudicial to its members, creditors, or public interest. No objections were received from any party. The court found no merit in the observations made by the Official Liquidator regarding the exchange ratio and did not order any modification or amendment in the Scheme.

Conclusion:

In view of the approval by shareholders and creditors, and the reports filed by the Regional Director and the Official Liquidator, the court granted sanction to the Scheme u/s 391 and 394 of the Act. The properties, rights, and liabilities of the Transferor Company will be transferred to the Transferee Company without any further act or deed, and the Transferor Company shall stand dissolved without winding up. The order does not grant exemption from payment of stamp duty, taxes, or any other charges. The Petitioner Companies will voluntarily deposit Rs. 1.50 lacs with the Common Pool fund of the Official Liquidator within three weeks. The Petitions are allowed in the above terms.