2016 (4) TMI 393 - HC - Companies Law

Scheme of Amalgamation - Held that - The amalgamation under the proposed Scheme appears to be in the interest of the companies and their members and creditors, this Court is of the view that the Scheme deserves to be sanctioned. The Arrangement otherwise seems to be appropriate and hence, it is required to be sanctioned with a specific observation that the sanctioning of the Scheme would not absolve anyone who is otherwise liable for any responsibility or liability, only on account of this sanctioning. In view of the above, the Scheme of Amalgamation is sanctioned. It is, however, directed that the petitioner shall preserve its books of accounts, papers and records and shall not dispose of the records without the prior permission of the Central Government under Section 396A of the Companies Act,1956.

Summary

Issues:
Petition for Scheme of Arrangement - Amalgamation of Companies

Analysis:
The petitions were filed by three companies for the sanction of a Scheme of Arrangement under Sections 391 to 394 of the Companies Act, 1956, aiming to merge two Transferor Companies with a Transferee Company for operational consolidation and commercial synergies in Real Estate activities. The Equity Shareholders and Unsecured Creditors of the Transferor Companies approved the Scheme, leading to the dispensation of meetings. The petitions were admitted, and notices were advertised in newspapers without objections. The Official Liquidator reported no prejudicial conduct, but sought preservation of records. The Appointed Date in the Scheme was amended based on observations, and the Central Government's concerns were addressed through affidavits and submissions.

The Regional Director's observations were considered, including the share exchange ratio calculation, fractional entitlements, and compliance with Income Tax provisions. The Court found the Scheme to be in the interest of stakeholders and public interest, sanctioning the Modified Scheme with the amended Appointed Date. The prayers in the Company Petitions were granted, and costs to Central Government Standing Counsel and Official Liquidator were quantified. The petitioner Companies were directed to lodge assets and Scheme details for stamp duty adjudication, file with Registrar of Companies, and act on the order without drawn-up order issuance.

In conclusion, the petitions for the Scheme of Arrangement were disposed of, with necessary directions for compliance and implementation provided to the petitioner Companies and concerned authorities for stamp duty, Registrar filings, and expeditious action on the order and Scheme authentication.