2012 (10) TMI 460 - HC - Companies Law

Scheme of Amalgamation - contravention of the Provisions of Section 295 of the Companies Act, 1956, as the Company has given loans & advances to M/s Prayaga Constructions (India) Pvt. Ltd., a private limited Company in which directors are interested in terms of Provisions of Section 295 of the Companies Act, 1956 - Held that - Mr. Ashwani Kapoor, Director of the Petitioner Transferee Company filed his affidavit that all the Transferor Companies and the Transferee Company are group Companies and are controlled by same set of shareholders and Directors. Also the Transferee Company has given inter corporate loans to the Transferor Company No. 2 and the said loans were given on good faith. The alleged violation of Section 295 of the Companies Act, by the Transferee and Transferor Company no. 2 was unintentional and without any malafide. Further the said inter corporate loans have not caused any loss to any of the shareholders, Government or others. Moreover the said inter corporate loans have already been repaid in full by the Transferor Company No. 2 to the Transferee Company. However the Transferor Company no. 2 & Transferee Company along with its Directors, have already filed an Application to the Ld. Company Law Board, New Delhi Bench, New Delhi through Registrar of Companies, NCT of Delhi & Haryana U/s 621A of the Companies Act, 1956 for compounding of the alleged offence vide Form 61 through SRN B57238628 dated 10th September 2012. In view of the submissions made at the bar and the settled law on the subject, the objection raised by the Regional Director is rejected and the Scheme is sanctioned subject to and without prejudice to the liability, if any, in the civil and criminal proceedings in respect of past transactions. It is further clarified that the proceedings pending before the ACMM, Tis Hazari, Delhi against the transferor company and/or its Board, Directors and management etc. shall continue and the liability, if any, of the Board, Directors, Management etc., in the said proceedings would continue as if the Scheme has not been made. Thus sanction is hereby granted to the Scheme of Amalgamation under sections 391 and 394 of the Companies Act, 1956.

Summary

Issues:
Petition filed under sections 391(2) & 394 of the Companies Act, 1956 for Scheme of Amalgamation approval.

Analysis:
The petition sought sanction for the Scheme of Amalgamation involving three companies. The registered offices of all companies were in New Delhi. Details of incorporation, capital, and accounts were provided. Resolutions approving the scheme were submitted. No pending proceedings under Sections 235 to 251 of the Companies Act were reported. Share exchange ratios were detailed in the scheme.

Analysis:
Earlier, directions were sought and granted for dispensation of shareholder and creditor meetings. No objections were raised during the process. Notices were issued to the Regional Director and Official Liquidator, with publications in newspapers. The Official Liquidator's report confirmed no complaints against the scheme and no prejudicial conduct by the companies. The Regional Director raised concerns regarding Section 295 violations by the companies.

Analysis:
In response to the Regional Director's observations, the Director of the Transferee Company clarified the inter-corporate loans as unintentional, with compounding applications filed. Legal proceedings clause in the scheme ensured continuity of pending cases. Reference to past judgments supported the stance that civil and criminal liabilities would persist post-amalgamation. The objection by the Regional Director was overruled.

Analysis:
No objections were received from any party. Shareholders and creditors approved the scheme. The Court granted sanction to the Scheme of Amalgamation under sections 391 and 394 of the Companies Act, 1956. Compliance with statutory requirements was mandated. The order needed to be filed with the Registrar of Companies within 30 days. Transfer of undertakings, property, rights, and liabilities to the Transferee Company was approved. No exemption from stamp duty or taxes was granted. The Petitioners agreed to deposit a sum in the Official Liquidator's fund voluntarily. The petition was allowed as per the terms mentioned.