2016 (2) TMI 1318 - HC - Companies Law

Sanction of the Scheme of Amalgamation - Section 391 and 394 of the Companies Act 1956 - HELD THAT - In terms of the provisions of Section 391 and 394 of the Act, and in terms of the scheme the entire undertaking, properties, rights and powers of the transferor companies, will stand transferred to and/or vest in transferee company, without any further act or deed. Similarly, in terms of the scheme, all liabilities and duties of the transferor companies shall stand transferred to transferee company, without any further act or deed - as per clause 4.12 of the scheme, the transferor companies shall stand dissolved without being wound up. The petitioners will comply with the all provisions of the scheme. In view of the approval accorded to the scheme by the shareholders and unsecured creditors of the petitioners and, given the fact, that the there are no objections by the RD and the OL, there appears to be no impediment in the grant of sanction to the scheme. Consequently, sanction is granted to the scheme in terms of Section 391 and 394 of the Act - Petition allowed.

Issues Involved:
Petition for sanction of Scheme of Amalgamation under Sections 391 and 394 of the Companies Act 1956.

Detailed Analysis:

1. Objective of the Scheme:
The petitioners, consisting of transferor and transferee companies, aim to consolidate shareholdings, finances, and management through the scheme. The scheme intends to achieve cost reduction, enhance competitiveness, and promote overall financial growth and business development.

2. Share Exchange Ratio:
The scheme outlines a specific share exchange ratio for the transferor companies with the transferee company, detailing the number of fully paid-up equity shares to be exchanged for each transferor company.

3. Jurisdiction and Compliance:
The registered offices of all petitioners fall within the jurisdiction of the court, allowing it to entertain and adjudicate on the petition. Details of authorized, issued, subscribed, and paid-up capital of the petitioners have been provided, along with relevant financial documents.

4. Previous Motion and Consent:
A previous application for dispensing with the requirement of convening meetings of shareholders, preference shareholders, and unsecured creditors had been approved. Consent details of various classes of persons were presented, and no objections were raised by secured creditors.

5. Publication and Responses:
After the second motion petition was filed, notices were issued, and citations were published in newspapers. Affidavits confirmed the absence of objections or complaints to the scheme. The Regional Director and Official Liquidator submitted responses supporting the scheme.

6. Transfer and Dissolution:
The scheme entails the transfer of all assets, liabilities, rights, and powers of the transferor companies to the transferee company without further formalities. The transferor companies are to be dissolved without winding up as per the scheme.

7. Sanction and Compliance:
Considering shareholder and creditor approval, along with the absence of objections from regulatory authorities, the court granted sanction to the scheme. The petitioners are directed to comply with all statutory requirements and file a certified copy of the order with the Registrar of Companies.

8. Liabilities and Undertakings:
The transferee company must undertake to assume and discharge all liabilities of the transferor companies. Any deficiencies or violations of laws by the petitioners will not be excused by the scheme's sanction.

9. Exemption and Clarifications:
The court clarified that the order does not exempt the parties from stamp duty, taxes, charges, permissions, or compliance with laws. The petition was allowed and disposed of accordingly.

This detailed analysis covers the key aspects and implications of the judgment regarding the petition for the sanction of the Scheme of Amalgamation under Sections 391 and 394 of the Companies Act 1956.

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