2012 (3) TMI 170 - HC - Companies Law

Approval of the scheme of amalgamation - held that - it is not prejudicial to their interest, since they would be continuing in the Transferee-Company and the shareholders would be allotted shares of the Transferee-Company, the rates for which has been worked out by the experts. Thus, taking notice of the basic requirement of the scheme and also considering the fact that neither the Regional Director nor the official liquidator have raised any objections with regard to the scheme, the scheme as proposed requires to be approved. - scheme of amalgamation allowed

Summary

Issues: Approval of Scheme of Amalgamation under Sections 391 to 394 of the Companies Act

Detailed Analysis:

Issue 1: Background and Approval Process
The petition was filed under Sections 391 to 394 of the Companies Act by the Transferor-Company seeking approval of the scheme of amalgamation. The Transferor and Transferee-Companies, in a meeting of the Board of Directors, resolved to amalgamate the companies, and the scheme was proposed. Initially, the Transferor-Company sought to dispense with the meeting of equity shareholders and unsecured creditors, which was permitted by the Court. The notice of the petition was issued to the Registrar of Companies and the Official Liquidator, and public notices were published in newspapers. The Regional Director raised observations regarding non-filing of audited accounts, which were subsequently clarified by the petitioner-Company.

Issue 2: Scrutiny and Reports
M/s. Ramanuja and Company, Chartered Accountants, were appointed to scrutinize the books of account and records of the Transferor-Company. The report submitted by the Chartered Accountants indicated that the affairs of the Transferor-Company were not conducted in a prejudicial manner to the members or public interest. Competent authorities found no lacuna in the proposed scheme of arrangement between the Transferor and Transferee Companies, and it was not deemed against public interest.

Issue 3: Protection of Stakeholders' Interests
The scheme of arrangement provided for the interests of equity shareholders, staff, workmen, and employees. No objections were raised by the stakeholders in response to the public notice issued. The scheme ensured the continuation of staff and employees in the Transferee-Company, with shareholders being allotted shares based on expert evaluations. Considering that the Regional Director and official liquidator did not raise objections to the scheme, it was deemed necessary to approve the proposed scheme.

Conclusion
The Court allowed the petition and approved the scheme of amalgamation, subject to the petition of the Transferee-Company being allowed by the Jurisdictional Court. Upon sanction of the scheme and subject to the Transferee-Company's petition being allowed, the Transferor-Company would stand dissolved without the order of winding up. The order was required to be filed with the Registrar of Companies within thirty days from the date of receipt.