2013 (7) TMI 1196 - HC - Companies Law

Summary

Issues involved:
The judgment involves seeking sanction from the court under Sections 391 to 394 read with Sections 78, 100 to 104 of the Companies Act, 1956 for the Scheme of Arrangement and Amalgamation of two companies along with issues related to reduction of share capital and utilization of Securities Premium Account.

Details of the Judgment:

Issue 1: Scheme of Arrangement and Amalgamation
- The petitioners are engaged in the business of manufacturing and sale of turbochargers and components, import of turbochargers, and provision of various services.
- The proposed amalgamation aims to enhance capital utilization, create operational efficiencies, reduce overheads, and optimize resource utilization.
- The amalgamation is expected to increase operational efficiency, integrate business functions, and reduce managerial overlaps.

Issue 2: Reduction of Share Capital and Utilization of Securities Premium Account
- The Scheme includes the reduction of share capital and utilization of the Securities Premium Account of the Transferee Company.
- The reduction of share capital involves adjusting the deficit in the profit and loss account against the Securities Premium Account.
- The proposed reduction and utilization do not involve compromising with creditors or payment to shareholders, and necessary approvals have been obtained.

Issue 3: Compliance and Reports
- The petitioners have complied with all directions and statutory requirements, as per the Companies Act, 1956.
- The Official Liquidator has reported that the affairs of the Transferor Company have been conducted properly.
- The Regional Director has filed an affidavit stating that the Scheme is not prejudicial to the interests of shareholders and the public.

Issue 4: Amendments and Rectifications
- The Regional Director highlighted certain corrections required in the Scheme, which were subsequently acknowledged and rectified by the petitioners.
- The Court granted leave to amend the specified clauses and directed the necessary amendments to be made within two weeks.

Issue 5: Court Decision and Directions
- The Court found the Scheme fair, reasonable, and compliant with the law and public policy.
- As all statutory compliances were fulfilled, the Company Scheme Petitions were made absolute with specific prayer clauses.
- The petitioners were directed to lodge a copy of the Order and Amended Scheme for stamp duty adjudication and filing with the Registrar of Companies.
- Costs were imposed on the petitioners to be paid to the Regional Director and Official Liquidator within a specified timeframe.

Conclusion:
The judgment approved the Scheme of Arrangement and Amalgamation, addressing issues related to reduction of share capital and Securities Premium Account utilization, ensuring compliance with statutory requirements, making necessary amendments, and directing the petitioners to fulfill specific obligations within stipulated timelines.