2016 (2) TMI 133 - HC - Companies Law

Scheme of amalgamation - Having examined the Scheme of Amalgamation, this Court finds nothing prejudicial to the interest of creditors, members of both the Transferor and Transferee Company or to public interest. All required procedures had been followed.

Summary

Issues involved:
- Petition filed under Sections 391 to 394 of the Companies Act, 1956 for sanctioning a scheme of amalgamation.
- Consideration of objections, if any, raised by Regional Director, Ministry of Corporate Affairs, and the Official Liquidator.
- Examination of Income Tax clearance and its relevance to the scheme of amalgamation.
- Assessment of whether the scheme is prejudicial to the interests of creditors, members, or public interest.
- Sanctioning of the scheme of amalgamation and its binding effect on creditors and equity shareholders.

Analysis:
The petition before the Rajasthan High Court sought sanction for a scheme of amalgamation under Sections 391 to 394 of the Companies Act, 1956. The scheme involved the merger of the petitioner company with another company for efficient management and synergies. The Court had previously dispensed with the requirement for a meeting of shareholders and unsecured creditors, granting liberty to seek approval after due process. Notice was duly issued to relevant authorities, including the Regional Director and the Official Liquidator, with no objections raised against the scheme.

The Regional Director's affidavit highlighted the lack of response from the Income Tax Department regarding the proposed scheme. The Court noted that Income Tax liability is distinct from the amalgamation process and does not directly impact the scheme's approval under the Act. Non-response from the Income Tax Department was considered as no objection, as per a circular annexed to the Regional Director's affidavit.

After considering submissions and reports from concerned parties, the Court found no prejudice to the interests of stakeholders or public interest in the scheme of amalgamation. It was observed that all necessary procedures had been followed, leading to the conclusion that the scheme was suitable for approval. Consequently, the Court sanctioned the scheme of amalgamation, declaring it binding on creditors and equity shareholders of both companies involved.

The Court granted liberty to parties or interested persons to seek necessary directions related to the amalgamation's implementation. It directed the issuance of the order in the prescribed format and instructed the companies to file a certified copy of the order with the Registrar of Companies within fourteen days. Additionally, the Official Liquidator was entitled to expenses from both companies towards miscellaneous expenses.