2016 (3) TMI 293 - HC - Companies Law

Scheme of Amalgamation - Held that - the observations made by the Regional Director and the Official Liquidator stand substantially addressed and hence, there does not appear to be any impediment to the grant of sanction to the Scheme of Amalgamation, inasmuch as from the material on record and on a perusal of the Scheme, the Scheme appears to be fair and reasonable and does not appear to be violative of any provisions of law, nor contrary to the public policy. As noticed earlier, none has come forward to oppose the Scheme. All requisite statutory compliances have also been substantially fulfilled. This Court is, therefore, satisfied that the Scheme of Arrangement in the nature of Amalgamation amongst the petitionerCompanies and their respective shareholders and creditors deserves to be granted. The Scheme of Amalgamation is hereby sanctioned. The same shall be binding upon all the Equity Shareholders, Secured Creditors, Unsecured Creditors of the petitionerCompanies and all other agencies, departments and authorities of the Central, State and any other local authorities. It is ordered that as required under Section 396A of the Companies Act, 1956, the Transferor Company shall not dispose of or destroy their books of accounts and other connected papers without the prior consent of the Central Government and shall preserve the same.The petitionerCompanies are directed to file a copy of this order along with a copy of the Scheme with the concerned Registrar of Companies, electronically, along with EForm INC 28 as per the relevant provisions of the Companies Act.

Summary

Issues:
1. Scheme of Arrangement for amalgamation under Sections 391 and 394 of the Companies Act, 1956.
2. Dispensation of meetings of Equity Shareholders and Creditors.
3. Sanction of the Scheme of Amalgamation.
4. Observations by Regional Director and Official Liquidator.
5. Compliance with statutory requirements and preservation of books of accounts.

Analysis:

1. The judgment pertains to the presentation of a Scheme of Arrangement for amalgamation between two companies, referred to as the Transferor Company and the Transferee Company, under Sections 391 and 394 of the Companies Act, 1956. The petitions seek sanction for the proposed amalgamation by the court.

2. Both companies filed separate petitions seeking dispensation of meetings of Equity Shareholders and Creditors. The court dispensed with the requirement of holding these meetings after receiving due consent from the concerned parties. Directions were given for convening meetings of Secured and Unsecured Creditors of the Transferee Company due to its creditor composition.

3. The court admitted the petitions and published public notices as required. No objections were raised post-publication. The Regional Director and Official Liquidator made observations supporting the Scheme, stating no adverse findings. The court found the Scheme fair, reasonable, compliant with the law, and not against public policy. Sanction for the Scheme of Amalgamation was granted, binding all stakeholders.

4. The Regional Director's affidavit highlighted no objections to the Scheme, except for non-response from the Income Tax Department, which was addressed as per relevant circulars. The Official Liquidator's report confirmed no prejudicial conduct by the companies, recommending dissolution without winding up.

5. The court directed compliance with Section 396A of the Companies Act, 1956, regarding the preservation of books of accounts. Professional charges and costs were awarded to the counsels and Official Liquidator. The companies were instructed to lodge necessary documents, pay stamp duty, file orders with the Registrar of Companies, and preserve authenticated copies for compliance.

In conclusion, the judgment approved the Scheme of Amalgamation, ensuring statutory compliance, stakeholder interests, and preservation of records, thereby allowing the companies to proceed with the amalgamation process as per the court's directives.