2016 (11) TMI 1191 - HC - Companies Law

Sanction of the Scheme in the nature of Amalgamation - Held that - It appears that the observation made by the Regional Director and Official Liquidator have been duly replied by the petitioner. Pursuant to the report of the Official Liquidator, it is ordered that, the petitioner Company shall preserve its books of accounts, papers and records and not dispose of the records without the prior permission of Central Government as per the provisions of Section 396(A) of the Companies Act, 1956. They shall not be absolved from any statutory liability. Further, permission to amend Company Petition No. 136 of 2016 filed by Progressive Invatrade Private Limited, be amended at paragraph 2 by replacing the correct company number is granted. Paragraph 4 in the Company Petition No. 138 of 2016 filed by the Charm Trading and Investment Private Limited is also permitted to be amended in order to incorporate the correct authorized share capital. The Scheme at Clause 2(g) shall consequently be amended. Permission to amend the Scheme at Clause No. 9(a) to (f) to incorporate the correct share exchange ratio is granted and considering the above, consequently, the Scheme with the above modifications, is hereby sanctioned. The prayers made in the petitions are granted.

Summary

Issues involved:
Sanction of Scheme for Amalgamation of multiple companies, discrepancies in share exchange ratios, correction of errors in Scheme including authorized capital and company numbers, compliance with Income Tax laws, preservation of records, approval from Central Government, amendments to Company Petitions, costs to be paid by petitioners.

Analysis:
1. Sanction of Scheme for Amalgamation: The petitions sought sanction for the Amalgamation of multiple companies. The Court allowed dispensation of meetings and directed publication of notice in newspapers. The petitions were admitted, and compliance with procedures was confirmed through affidavits and service to relevant authorities.

2. Discrepancies in Share Exchange Ratios: The Regional Director highlighted discrepancies in share exchange ratios and sought corrections. The petitioner acknowledged the need for modification and submitted new ratios for approval. The Court considered the observations and granted permission to amend the Scheme with the correct ratios.

3. Correction of Errors in Scheme: Errors related to authorized capital and company numbers were identified in the Scheme. The petitioner accepted the mistakes and proposed corrections. The Court allowed amendments to the Company Petitions to rectify these errors, ensuring accuracy in the documentation.

4. Compliance with Income Tax Laws: The Income Tax Department raised concerns regarding compliance with Income Tax laws. The petitioners assured compliance with the Income Tax Act and Rules, undertaking to meet any future demands and preserve records as required by law.

5. Preservation of Records and Approval from Central Government: The Official Liquidator emphasized the need for statutory compliance and preservation of records. The Court ordered the petitioners to preserve records and seek approval before disposal, in accordance with the Companies Act, 1956, ensuring compliance with statutory obligations.

6. Amendments to Company Petitions: The Court granted permission to amend specific paragraphs in the Company Petitions to rectify errors in company numbers and authorized capital. The Scheme was also amended to reflect the correct share exchange ratios, leading to the sanction of the Scheme with the approved modifications.

7. Costs and Disposition of Petitions: The petitioners were directed to pay costs to the Assistant Solicitor General and the Official Liquidator. Filing and issuance of orders were dispensed with, and all concerned authorities were instructed to act on the sanctioned Scheme. The Registrar was tasked with issuing authenticated copies of the order and Scheme within a specified timeframe, concluding the disposition of the petitions.