2013 (1) TMI 7 - HC - Companies Law

Scheme of Amalgamation - Held that - Board of Director of both the companies approving the Scheme of Amalgamation has been placed on record. No proceedings under Sections 235 to 251 of the Companies Act 1956 is pending against the Applicant/Transferor Companies and the Applicant/Transferee Company - the requirement of convening meetings of Applicant/ Transferee company s equity Shareholders and unsecured creditors is dispensed with. Affidavit of Service and Publication filed by the Applicant / Transferee Company showing compliance regarding service of the Petition on the Regional Director Northern Region and the Official Liquidator and also regarding publication of citations in the defined newspaper. All the staff/employees of all the transferor Companies shall become the employees of the Transferee Company without any break or interruption in their services upon sanctioning of the scheme of the Amalgamation by this Court the transferee Company undertakes to comply Accounting Standard 14 issued by the ICAI and further undertakes that any amendment in the MOA & AOA for adopting the object of the transferor Companies by the Transferee Company shall be carried out after complying the provision prescribed under the Companies Act 1956. Justification for issuance of shares on premium @ Rs. 490 per share to the Transferor Companies - There is no bar under the Companies Act 1956 for the issuance of the share capital on premium by the Company. Even the Government of India has only latest recognized the issuance of the share capital on premium by issuing a proviso in the Financial Bill 2012 by making an amendment in Section 56(2) of the Income Tax Act. In view of the said section now if any Private Limited Company issue shares on premium the same shall be subject to tax under the head Income from other sources . Report of Official Liquidator with no complaint against the proposed Scheme from any person / party interested in the Scheme in any manner and that the affairs of the Applicant / Transferor Companies and the Applicant / Transferee Company do not appear to have been conducted in a manner prejudicial to the interest of its members creditors or to public interest. There appears to be no impediment to the grant of sanction to the Scheme of Amalgamation. The petitioner companies will comply with the statutory requirements in accordance with law with filing certified copy of the formal order with the ROC within 30 days - the whole or part of the undertaking the property rights and powers with all the liabilities and duties of the Transferor Company be transferred to and vest in the Transferee Company without any further act or deed - this order will not be construed as an order granting exemption from payment of stamp duty or any other charges - Petitioner Companies would voluntarily deposit a sum of Rs. 1 Lac in the Common Pool fund of the Official Liquidator within three weeks from today.

Summary

Issues:
1. Sanction of Scheme of Amalgamation under Sections 391(2) & 394 of the Companies Act, 1956.
2. Share exchange ratio for amalgamation.
3. Compliance with statutory requirements.
4. Objections raised by Regional Director and responses.
5. Official Liquidator's report and objections.
6. Approval by Equity Shareholders and unsecured creditors.
7. Transfer of undertaking, property, rights, powers, liabilities, and duties.
8. Dissolution of Transferor Companies without winding up.
9. Compliance with stamp duty, taxes, and other charges.
10. Deposit in Common Pool fund of Official Liquidator.

Analysis:
1. The judgment pertains to a second motion joint petition filed under Sections 391(2) & 394 of the Companies Act, 1956 seeking sanction of the Scheme of Amalgamation of multiple Transferor Companies with a Transferee Company. The petition includes details of the Registered Office, date of Incorporation, and financial information of the companies involved.

2. The Scheme outlines the share exchange ratio for amalgamation, specifying the number of shares of the Transferee Company to be issued for each share of the Transferor Companies. The Court reviewed the Resolution passed by the Board of Directors approving the Scheme and confirmed that no pending proceedings under relevant sections of the Companies Act, 1956 exist.

3. Compliance with statutory requirements was ensured through the publication of citations in newspapers and the official Gazette, along with responses to objections raised by the Regional Director and the Official Liquidator. The Court considered the objections and justifications provided by the parties involved.

4. The Official Liquidator's report confirmed no objections to the proposed Scheme of Amalgamation, and no objections were received from any other party. The Equity Shareholders and unsecured creditors approved the Scheme, leading to the grant of sanction by the Court.

5. The judgment directed the transfer of undertaking, property, rights, powers, liabilities, and duties from the Transferor Companies to the Transferee Company without further formalities. Upon the Scheme coming into effect, the Transferor Companies would stand dissolved without winding up.

6. It was clarified that the order did not exempt the parties from payment of stamp duty, taxes, or other charges as per the law. The judgment also required compliance with any specific requirements under other laws.

7. The Petitioners agreed to deposit a sum in the Common Pool fund of the Official Liquidator, which was accepted by the Court, leading to the allowance of the Petition in the specified terms. The judgment concluded with an order for immediate action.