2013 (1) TMI 388 - HC - Companies Law

Scheme of amalgamation - Held that - There being unanimity amongst the shareholders and unsecured creditors of the Transferee Company that the amalgamation be directed to take place and there being nothing adverse in the report of the Chairman which may occasion this Court to deny the relief which is being sought in this company petition, and having regard to the entirety of the record, this Court considers it expedient, appropriate and in the interest of justice that subject to some conditions the relief sought in effect on amalgamation be granted and the scheme of amalgamation as specified be accepted subject to orders passed on a similar application/petition filed by the Transferee Company before the High Court of Delhi. Consequently this petition stands allowed and the Scheme of Amalgamation hereby sanctioned with effect from 01.01.2012, provided the transferor and transferee companies give an undertaking that they shall comply with all the requirements of the Reserve Bank of India as required under the Foreign Exchange Management Act, 1999 (FEMA) for the transactions involving foreign banks / entities - meet all requirements / conditions as laid down by the Regional Director, Northern Region, Ministry of Corporate Affairs in its representation, and give the undertaking to that effect as required by the Regional Director in its report with certified copy of this order filed before the ROC within 30 days of the receipt of the certified copy.

Summary

Issues:
1. Amalgamation of two companies under Sections 391 and 394 of the Companies Act, 1956.
2. Compliance with meeting and notice requirements for shareholders and unsecured creditors.
3. Approval of the scheme of amalgamation by shareholders and unsecured creditors.
4. Delay condonation for filing the second motion petition.
5. Report of the Official Liquidator and representation by the Ministry of Corporate Affairs.
6. Sanctioning of the scheme of amalgamation subject to conditions.

Analysis:

1. The judgment pertains to the amalgamation of two companies under Sections 391 and 394 of the Companies Act, 1956. The Court ordered a meeting to be convened for shareholders and unsecured creditors to consider the proposed scheme of amalgamation and approve it if deemed fit.

2. The Court ensured compliance with meeting and notice requirements by publishing notices in newspapers, sending separate notices to shareholders and unsecured creditors, and filing an affidavit of service as per the Company (Court) Rules, 1959.

3. The approval process involved the meeting of unsecured creditors and shareholders, where they were asked about any queries regarding the scheme of amalgamation. Both unsecured creditors and shareholders unanimously approved the scheme by casting their votes in favor of the motion.

4. A second motion petition was filed with a delay condonation application, which the Court granted after issuing notices to the Official Liquidator and the Union of India, published in newspapers as per the Company Court Rules, 1959.

5. The Official Liquidator reported no complaints against the proposed scheme of amalgamation. Additionally, a representation by the Ministry of Corporate Affairs affirmed that all employees of the transferor company would seamlessly become employees of the transferee company post-amalgamation.

6. Finally, the Court sanctioned the scheme of amalgamation subject to conditions, including compliance with Reserve Bank of India requirements under the Foreign Exchange Management Act, 1999. The companies were directed to file a certified copy of the order before the Registrar of Companies within 30 days for further processing, emphasizing adherence to the conditions laid down by the Regional Director, Ministry of Corporate Affairs.