2016 (2) TMI 584 - HC - Companies Law

Scheme of Amalgamation - Held that - Considering the above facts and circumstance and taking into account the contentions raised by the affidavits and reply affidavits and the submissions advanced during the course of hearing, this Court is satisfied that the observations made by the Regional Director, Ministry of Corporate Affairs, have been suitably addressed. It can be concluded that the present Scheme of Arrangement is in the interest of the shareholders and creditors of all the companies, as well as in the public interest, therefore, the same deserves to be sanctioned.

Summary

Issues:
Petition for amalgamation of companies under Sections 391 to 394 of the Companies Act, 1956.

Analysis:
The judgment pertains to petitions filed by five companies seeking the High Court's sanction for a Scheme of Amalgamation involving four Transferor Companies and one Transferee Company, all part of the same group. The primary objective of the proposed amalgamation is the consolidation of activities to achieve operational synergies and provide a stronger financial base to the Transferee Company. The Scheme aims to streamline shareholding structures, avoid duplication of administrative costs, and ensure statutory compliance. Meetings of Equity Shareholders and Unsecured Creditors were dispensed with based on consent letters, with approval obtained from Secured Creditors of the Transferee Company. The petitions were admitted, and notices for the hearing were duly advertised, with no objections received post-publication.

The Official Liquidator's reports confirmed that the affairs of the Transferor Companies were conducted within the object clauses and not prejudicial to members or public interest, recommending dissolution without winding up. Directions were issued to preserve books of accounts and records post-sanction, with a reminder to comply with statutory liabilities. Observations by the Regional Director were addressed, including issues related to registration as NBFCs, working sheets for the exchange ratio, and responses from the Income Tax Department. The Court found the Scheme to be in the interest of shareholders, creditors, and public interest, leading to its sanction.

The Court granted the prayers in the petitions, disposed of the cases, quantified costs to be paid to the Central Government Standing Counsel and the Office of the Official Liquidator, and directed the lodging of necessary documents for stamp duty adjudication. Further instructions were given for filing copies of the order and the Scheme with relevant authorities and the Registrar of Companies. The issuance of the drawn-up order was dispensed with, and all concerned authorities were directed to act upon the authenticated copy of the order and Scheme promptly.