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2014 (1) TMI 1166 - HC - Companies LawAmalgamation of Indian company with foreign company - Dissolution of transferee company - Held that - if the transferor company is a body corporate as contemplated under Section 394 (4)(b) then though the transferor company is not incorporated and registered in India, it can be amalgamated with the transferee company so long as the transferee company is incorporated and registered in India. However, it would be subject to the condition that such amalgamation must not be in violation of the provision contained under Reserve Bank of India Act, 1934 and / or Foreign Exchange Management Act, 1999 and also the provision of the Act or any other law. Such amalgamation also should not be in violation of any provision applicable to the transferor company i.e. should not be in violation of the laws applicable to the companies in the Country where the transferor company is formed and registered and situate. Transferor company is incorporated, registered and situated outside India i.e. in Mauritius and under the provisions of the laws prevailing and applicable in Mauritius. From the proposed scheme and the details mentioned in present petition it comes out that the said transferor company fall within the purview of the terms body corporate which is defined under Section 2(7) read with Section 394(4)(b) of the Act and the petitioner transferee company is incorporated, registered and situated in India. In light of the provisions in the scheme, it would be necessary for the transferor company to fulfill all requirements under the laws applicable in Mauritius and it would be obligatory for the transferor as well as the petitioner - transferee company to obtain, before the scheme can be implemented from all concerned and appropriate authorities, all types and categories of permission, approval, consent etc. as may be necessary under the relevant and applicable laws, for implementation of the scheme - subject to diligent and strict compliance of the conditions mentioned hereinabove there is no objection against proposed scheme and it does not appear to be prejudicial to the interest of the shareholders of the petitioner company, and therefore it transpires that there is no reason or justification to not sanction the proposed scheme of amalgamation, but of course on the condition that the petitioner company shall strictly and diligently address all the objection raised by the Regional Director and abide by the declaration, stipulation and undertaking contained in the affidavit dated 21.6.2011 read with the scheme - scheme of arrangement would not be prejudicial to the interest of the companies and their members - Decided in favour of petitioner.
Issues Involved:
1. Validity of the proposed scheme of amalgamation under Sections 391 and 394 of the Companies Act, 1956. 2. Compliance with the laws of Mauritius for the transferor company. 3. Objections raised by the Regional Director regarding the dissolution process of the transferor company. 4. Compliance with Reserve Bank of India (RBI) Act and Foreign Exchange Management Act (FEMA). Detailed Analysis: 1. Validity of the Proposed Scheme of Amalgamation: The petitioner, a transferee company, filed a petition under Section 391 read with Section 394 of the Companies Act, 1956, seeking sanction for a scheme of amalgamation with a Mauritius-based transferor company. The scheme was approved by the Board of Directors of both companies. The petition was admitted, and notices were duly advertised without any objections from the public or shareholders. 2. Compliance with the Laws of Mauritius: The scheme required compliance with the laws of Mauritius, including the appointment of the Registrar of Companies (ROC) in Mauritius as the agent to accept service of process. The petitioner company undertook to file the order of the Gujarat High Court with the ROC Mauritius to facilitate the dissolution of the transferor company without winding up, as per the Mauritius Act. 3. Objections Raised by the Regional Director: The Regional Director raised objections on the grounds that the transferor company, being registered under the laws of Mauritius, could not be dissolved without a winding-up order by the Court. The Court referenced previous cases, such as Adani Enterprises Limited and Essar Shipping Port and Logistic Limited, to conclude that a foreign "body corporate" could be amalgamated with an Indian company, provided it did not violate any statutory restrictions under Indian or foreign laws. 4. Compliance with RBI Act and FEMA: The petitioner company declared that the scheme did not violate any provisions of the RBI Act or FEMA. The Court emphasized that the scheme's implementation must comply with all applicable laws, including obtaining necessary permissions and approvals from relevant authorities in both India and Mauritius. Conclusion: The Court sanctioned the scheme of amalgamation, subject to the following conditions: - The transferor company must obtain appropriate orders from competent authorities in Mauritius, if necessary. - The petitioner company must file an affidavit undertaking compliance with all applicable laws, including RBI Act and FEMA. - All required permissions, sanctions, and approvals must be obtained before the scheme becomes effective. - The petitioner company must ensure the removal of the transferor company's name from the register in Mauritius upon sanctioning the scheme. The Court granted the prayers made in the petition, concluding that the scheme was not prejudicial to the interests of the shareholders or the public, and directed the petitioner to pay costs to the Central Government Standing Counsel.
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