2016 (3) TMI 603 - HC - Companies Law

Scheme of Amalgamation - Held that - The report confirms that the affairs of the Transferor Company are not conducted in a manner prejudicial to the interest of its members or to the public interest. The Official Liquidator, however, has requested this Court to direct the petitioner to preserve its books of accounts, papers and records and not to dispose of the records without the prior permission of the Central Government under Section 396A of the Companies Act,1956. Having heard Mr. Navin K Pahwa, learned Counsel for the petitioner company, Mr. Kshitij Amin, learned Central Government Standing Counsel for Mr. Devang Vyas, learned Assistant Solicitor General of India for the Regional Director and upon perusal of the report of the Official Liquidator and the Regional Director and having considered the Scheme of Amalgamation together with relevant documents on record, this Court finds it appropriate to grant sanction to the present Scheme of Amalgamation.

Summary

Issues:
1. Sanction of Scheme of Amalgamation under Sections 391 to 394 of the Companies Act, 1956.
2. Dispensation of meetings of Equity Shareholders and Unsecured Creditors.
3. Compliance with Income Tax Act and Rules.
4. Preservation of books of accounts, papers, and records.
5. Costs determination and compliance with stamp duty adjudication.

Analysis:
1. The petition was filed seeking the sanction of the Scheme of Amalgamation of two companies. The Transferee Company had earlier filed an application for no separate proceedings, which was allowed. The Transferor Company sought dispensation of meetings of Equity Shareholders and Unsecured Creditors, which was granted. The Court admitted the petition and directed notice issuance to the Regional Director and Official Liquidator, along with publication in local newspapers.

2. The Regional Director's affidavit raised an observation regarding Income Tax Department comments, which were not adverse. As per Ministry of Corporate Affairs circular, lack of response within a specified period implies no objection. The petitioner agreed to comply with Income Tax Act and Rules. The Official Liquidator confirmed no prejudicial conduct by the Transferor Company but requested preservation of records.

3. After hearing counsels and reviewing reports, the Court granted sanction to the Scheme of Amalgamation. The petitioner was directed to preserve records and obtain prior permission for disposal. The costs were determined, and compliance with stamp duty adjudication was mandated within 60 days. Filing with the Registrar of Companies electronically and physically was also ordered.

4. Drawn-up order issuance was dispensed with, and authorities were instructed to act on an authenticated copy of the order. The Registrar was directed to issue the authenticated copy promptly. The petition was disposed of accordingly, concluding the legal proceedings related to the Scheme of Amalgamation.