2016 (1) TMI 505 - HC - Companies Law

Sanction of Amalgamation and Arrangement - Scheme of Amalgamation and Arrangement is hereby sanctioned with the direction to follow all the procedural formalities.

Summary

Issues:
Sanctioning of Scheme of Amalgamation involving two companies.

Analysis:
The petition seeks approval for the merger of two companies, with the registered office in Haryana. The Board of Directors of both companies approved the Scheme of Amalgamation in meetings held on 5.2.2015. Earlier orders dispensed with certain meetings and directed convening of others for approval. Reports from the Regional Director and the Official Liquidator were positive, with no objections against the scheme. However, an issue was raised by the Official Liquidator regarding a clerical error in a valuation report addendum and lack of approval for it in a board meeting. The petitioner clarified that the error was rectified in a subsequent meeting, and there was no requirement to approve the valuation report in the board meeting.

The objection raised by the Official Liquidator was addressed by the petitioner through a detailed reply, explaining the clerical mistake and subsequent rectification. It was clarified that the Companies Act does not mandate approval of the valuation report in the board meeting, only the scheme itself requires approval. Consequently, the issues raised by the Official Liquidator were resolved, and the objections no longer persisted.

The judgment sanctioned the Scheme of Amalgamation, transferring assets and liabilities to the Transferee Company, which would then dissolve the Transferor Company without winding it up. The Transferee Company was directed to comply with procedural requirements under the Income Tax Act and Accounting Standards. The Scheme was declared binding on both companies, their shareholders, creditors, and all concerned parties. A formal order of sanction was to be drawn and filed with the Registrar of Companies within 30 days. Notice of the order was to be published in designated newspapers and the official Gazette. Interested parties were given liberty to apply for directions as per law. Additionally, the Transferee Company agreed to deposit a sum in the Common Pool Fund Account of the Official Liquidator, which was accepted, leading to the disposal of the matter.