2016 (3) TMI 1467 - HC - Companies Law

Seeking sanction of scheme of amalgamation with Virchow Drugs Limited. - Sections 391 and 394 of the Companies Act, 1956 - HELD THAT - This Court is of the opinion that the proposed scheme of amalgamation is in conformity with the provisions of the Act. The scheme does not affect the interest of stakeholders and the public or public interest and is intended to further the business interests of transferor and transferee companies for more profit and maximum utilization of available resources. Therefore, the scheme of amalgamation approved in the meeting of Board of Directors of transferor company on 04.01.2016 is sanctioned with effect from the date appointed i.e., 01.04.2015. The transferor company viz., Siri Drugs India Private Limited is ordered to be dissolved without going through the process of winding up. Petition disposed off.

Summary

Issues:
1. Scheme of amalgamation under Sections 391 and 394 of the Companies Act, 1956.
2. Compliance with statutory procedures and requisite meetings.
3. Approval of scheme by stakeholders and statutory authorities.
4. Conformity of the proposed scheme with the provisions of the Act.
5. Dissolution of the transferor company and communication of the order to the Registrar of Companies.

Analysis:

1. The petition was filed for the sanction of a scheme of amalgamation under Sections 391 and 394 of the Companies Act, 1956, between the transferor company and the transferee company. The transferor company was engaged in pharmaceutical business activities, and the transferee company had similar business objectives. The audited balance sheets and Memorandum and Articles of Association of both companies were submitted along with the scheme.

2. The Board of Directors of both companies approved the scheme of amalgamation, and the Court dispensed with the requirement of convening meetings of shareholders, unsecured secured creditors, and creditors of the transferor company. The statutory authorities were notified through publication in newspapers, and reports were filed by the Regional Director and Official Liquidator, indicating no objections to the proposed scheme.

3. The jurisdiction of the Court, as per legal precedents, required compliance with statutory procedures, requisite majority votes, informed decision-making by stakeholders, and ensuring the scheme was just, fair, and not violative of any law. The Court also had to ascertain the bona fides of the parties involved and ensure the scheme was beneficial to the stakeholders.

4. After considering the material on record, legal principles, and reports of statutory authorities, the Court concluded that the proposed scheme of amalgamation was in conformity with the provisions of the Act. It was determined that the scheme would further the business interests of both companies without adversely affecting stakeholders or public interest. Therefore, the scheme was approved, and the transferor company was ordered to be dissolved without winding up.

5. The Court directed the transferor and transferee companies to communicate the order to the Registrar of Companies and take all necessary steps in accordance with the approved scheme of amalgamation and the Act. The company petition was ordered accordingly, bringing the legal process to a conclusion.