2016 (3) TMI 697 - HC - Companies Law

Scheme of amalgamation - Held that - Having examined the Scheme of Amalgamation, this Court finds nothing prejudicial to the interest of creditors, members of both the Transferor and Transferee Company or to public interest. All required procedures had been followed. Consequently, the company petition is allowed. This Court does hereby sanction the scheme of amalgamation set forth in Annexure-1 appended to the Company Petition and does hereby declare the same to be binding on creditors and equity shareholders of the Divine Heritage Hotels Private Limited (Transferor Company) and Mahindra Holidays & Resorts India Limited (Transferee Company). The parties to the amalgamation or other persons interested shall be at liberty to apply to this Court for any directions that may be necessary in regard to the working of the amalgamation scheme sanctioned under this order. The order in prescribed Form No.42 be issued separately by the Registrar as per Rule 84 of Companies (Court) Rules, 1959.

Summary

Issues:
1. Sanction of the scheme of amalgamation and arrangement under Sections 391(2)-394 of the Companies Act, 1956.
2. Approval of the scheme by shareholders and creditors.
3. Objections raised by the Regional Director and Official Liquidator.
4. Liability for tax liabilities and employee status in the transferee company.
5. Scope of the Company Court in sanctioning a scheme of amalgamation.
6. Compliance with statutory rules and public interest.

Analysis:

1. The Company petition sought sanction of the scheme of amalgamation and arrangement under Sections 391(2)-394 of the Companies Act, 1956, between Divine Heritage Hotels Private Limited (Transferor Company) and Mahindra Holidays & Resorts India Limited (Transferee Company) to be binding on all shareholders and creditors.

2. The scheme was approved by the Board of Directors of both companies, and the meeting of equity shareholders and unsecured creditors had already approved the scheme, as confirmed in writing. No objections were raised during the court proceedings.

3. The Regional Director raised objections regarding outstanding income tax demands against the transferor company and the status of non-permanent employees in the transferee company. However, the Official Liquidator had no objections to the scheme of amalgamation.

4. The Court held that all liabilities, including tax liabilities, of the transferor company would accrue to the transferee company. The issue of non-permanent employees was deemed irrelevant as no employees had approached the court regarding the matter.

5. The Court clarified that its role in sanctioning a scheme of amalgamation is supervisory, ensuring no violation of statutory rules or public interest. The Court found no grounds to deny the scheme based on the objections raised.

6. After examining the Scheme of Amalgamation and finding no prejudice to the interests of creditors, members, or public interest, the Court sanctioned the scheme, declaring it binding on all creditors and equity shareholders of both companies.

In conclusion, the Court allowed the company petition, sanctioned the scheme of amalgamation, and directed the parties to comply with necessary procedures. The Registrar was instructed to issue the order, and the companies were required to file a certified copy of the order. The Official Liquidator was entitled to expenses from both companies.