2011 (3) TMI 1767 - HC - Companies Law

Summary

Issues involved: Petition for sanction of a Scheme of Arrangement under sections 391 to 394 of the Companies Act, 1956 involving amalgamation of two companies.

Details of the Judgment:

1. The petition was filed for sanction of a Scheme of Arrangement for amalgamation under sections 391 to 394 of the Companies Act, 1956. The Transferee Company's registered office is in Mumbai, and proceedings were initiated in the Bombay High Court. The meeting of Equity Shareholders was dispensed with due to written consent letters. No objections were raised after public notices were published. The Official Liquidator requested the Transferor Company to maintain books and records for 8 years post the scheme's sanction. The Central Govt. was also notified.

2. The Regional Director of the Ministry of Corporate Affairs raised concerns regarding compliance with Accounting Standard 14 and the financial position of the petitioner company. The petitioner assured compliance with necessary disclosures. The petitioner's advocate and the Central Govt.'s counsel were heard.

3. The court considered the compliance with accounting standards in the scheme of amalgamation. The court referred to a judgment by the Bombay High Court regarding deviations from accounting standards, emphasizing the importance of necessary disclosures. The court concluded that deviations from Accounting Standard 14 may be allowed with proper disclosures.

4. The selection of the Appointed Date for the amalgamation was discussed, with the court noting that companies have the freedom to choose the date based on commercial needs. The court approved the chosen Appointed Date and financial statements submitted by the petitioner company.

5. After reviewing the petition, relevant documents, and submissions, the court found that the observations made by the Regional Director were addressed, and the scheme of arrangement was deemed to be in the interest of the companies, their members, and creditors. The prayers in the petition were granted, and costs were awarded to the Central Govt. Standing Counsel and the Office of the Official Liquidator.