2016 (12) TMI 1018 - HC - Companies Law

Scheme of Amalgamation is sanctioned. It is, however, directed that the petitioner Transferor Company shall preserve its books of accounts, papers and record and shall not dispose of the records without the prior permission of the Central Government under Section 396 A of the Companies Act, 1956. It is further observed that the sanction of this Scheme shall not absolve the Transferor Company from statutory liabilities, if any.

Issues:
1. Sanction of Scheme of Amalgamation under Sections 391 to 394 of the Companies Act, 1956.
2. Dispensation of meetings of Equity Shareholders, Preference Shareholders, and Creditors.
3. Observations by the Regional Director regarding various aspects of the Scheme.
4. Responses to the observations by the Regional Director.
5. Report by the Official Liquidator and directions regarding preservation of records.
6. Granting sanction to the Scheme of Amalgamation and associated directions.
7. Determination of costs and compliance requirements post-sanction.

Issue 1: Sanction of Scheme of Amalgamation
The petitions were filed seeking sanction of the Scheme of Amalgamation under Sections 391 to 394 of the Companies Act, 1956, involving the merger of two companies. The Court admitted the petitions and directed the issuance of notices to relevant authorities, including the Regional Director and the Official Liquidator. The petitions were published in local newspapers as per the Court's directions.

Issue 2: Dispensation of Meetings
The Transferee Company sought dispensation of meetings of Equity Shareholders and Creditors, which was granted by the Court. The Court found that meetings of Equity Shareholders and Unsecured Creditors were not necessary for the Scheme of Amalgamation.

Issue 3: Observations by Regional Director
The Regional Director made observations regarding various aspects of the Scheme, including shareholding, compliance with FEMA and RBI guidelines, approvals for power generation business, contingent liabilities, and comments from the Income Tax Department.

Issue 4: Responses to Regional Director's Observations
In response to the Regional Director's observations, the Transferee Company provided detailed explanations addressing each point raised. Explanations were given regarding shareholding, compliance with regulations, approvals for business operations, impact of contingent liabilities, and commitments to comply with Income Tax regulations.

Issue 5: Report by Official Liquidator
The Official Liquidator confirmed that the Transferor Company's affairs were not prejudicial and requested directions to preserve records and comply with statutory liabilities. The Court considered reports by the Official Liquidator and the Regional Director before granting sanction to the Scheme of Amalgamation.

Issue 6: Granting Sanction and Directions
The Court granted sanction to the Scheme of Amalgamation, emphasizing the preservation of records by the Transferor Company and the continued adherence to statutory liabilities post-sanction. Costs were determined, compliance requirements were specified, and directions were given for filing necessary documents with relevant authorities.

In conclusion, the Court approved the Scheme of Amalgamation, subject to specified conditions, and directed compliance with preservation of records and statutory obligations. Compliance requirements and filing procedures were outlined for the petitioners post-sanction, ensuring the legal validity and implementation of the amalgamation process.

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