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2015 (2) TMI 1358 - HC - Companies LawSanction of Scheme of Amalgamation - Sections 391 to 394 of the Companies Act 1956 - HELD THAT - The Scheme states that there is no objectionable feature in the Scheme of Amalgamation detrimental either to the employees of the Transferor Company or of the Transferee Company. The said Scheme is not violative of any statutory provisions. The Scheme is fair just sound and is not against any public policy or pubic interest. No proceedings are pending under Sections 231 to 237 of the Companies Act 1956. All the statutory provisions are complied with. It is apt and appropriate to point out that the Court is given wide powers under Section 391 of the Companies Act 1956 to frame a Scheme for the revival of a Company. Section 391 is a complete Code under which the Court can sanction a Scheme containing all the alterations required in the structure of the Company for the purpose of carrying out the Scheme. In considering a Scheme under Section 391 the Court should be satisfied (1) that the statutory provisions are complied with (ii) that the class affected by the Scheme has been properly represented and (iii) that the arrangement is such that a man of business would reasonably approve - the Scheme is passed through the procedure laid down under Section 391 of the Companies Act and approved by the majority of the shareholders there do not exist any necessity to have a repeated compliance of the same in terms of Section 21 of the Companies Act as amended as Section 13 of the 2013 Act. Application allowed.
Issues Involved:
1. Sanctioning of the Scheme of Amalgamation. 2. Compliance with statutory procedures. 3. Objection by the Regional Director regarding the change of name. 4. Powers of the Court under Section 391 of the Companies Act. 5. Report by the Official Liquidator. Issue-wise Detailed Analysis: 1. Sanctioning of the Scheme of Amalgamation: The Company Petitions were filed under Sections 391 to 394 of the Companies Act, 1956, seeking the sanction of the Scheme of Amalgamation between the Transferor Company and the Transferee Company, effective from 1st April 2014. The Scheme was approved by the respective Boards of Directors and equity shareholders of both companies, and the requisite documents were annexed to the petitions. 2. Compliance with statutory procedures: The petitioners complied with the prescribed procedures, including filing Chartered Accountant Certificates confirming no secured creditors for both companies. The Court had previously dispensed with the convening of meetings for the equity shareholders for considering the Scheme of Amalgamation. The assets of both companies were sufficient to meet their liabilities, and the Scheme was beneficial to both parties. 3. Objection by the Regional Director regarding the change of name: The Regional Director raised an objection based on a circular from the Ministry of Corporate Affairs, stating that the proposed name change of the Transferee Company to "Michelin India Private Limited" could be undesirable as it resembles an existing company's name. The petitioners argued that this objection was not applicable since the Transferor Company would cease to exist post-amalgamation, and the Transferee Company would be the only entity. The Court referred to previous judgments, stating that Section 391 of the Companies Act provides the Court with wide powers to approve a Scheme of Amalgamation, including the change of name, without needing to comply with the usual procedures under Section 21 of the Companies Act. 4. Powers of the Court under Section 391 of the Companies Act: The Court emphasized that Section 391 is a complete code that allows the Court to sanction a Scheme of Amalgamation, including necessary alterations in the company's structure, except for the reduction of share capital. The Court must ensure statutory compliance, proper representation of affected classes, and reasonable approval by business standards. The Court cited various judgments supporting its wide powers under Section 391 to approve schemes that include name changes. 5. Report by the Official Liquidator: The Official Liquidator, along with a Chartered Accountant's report, stated that the Transferor Company's affairs were not conducted prejudicially to the interest of its members, and there were no acts of misfeasance by the Directors. The Scheme did not contain any objectionable features detrimental to employees or violate statutory provisions. The Scheme was fair, just, sound, and not against public policy or interest. Conclusion: The Court found no impediment in approving the Scheme of Amalgamation as all statutory provisions were duly complied with. The Scheme was approved with effect from 1st April 2014, and the Transferor Company was ordered to be dissolved without winding up. The Additional Central Government Standing Counsel was entitled to a fee from the Transferee Company.
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