2016 (12) TMI 1251 - HC - Companies Law

Scheme of Amalgamation - Held that - This Court is of the view that the observations made by the Regional Director, Ministry of Corporate Affairs, no longer survive. After perusal of the material on record, it appears that the present Scheme of Amalgamation is in the interest of its shareholders and creditors as well as in the public interest and the same deserves to be sanctioned. It is hereby sanctioned.

Summary

Issues:
Petitions for sanction of Scheme of Amalgamation under Companies Act, 1956.

Analysis:
1. Background: Two companies, Diamond Infrastructure Private Limited and Radiant Urja Limited, filed petitions for the sanction of a Scheme of Amalgamation under sections 391 to 394 of the Companies Act, 1956. The companies belonged to the same management group, with the Transferor Company engaged in real estate construction and investments, while the Transferee Company focused on electrical energy generation, transmission, and distribution.

2. Approval Process: The Equity Shareholders and Unsecured Creditors of the Transferor Company provided written consent approving the proposed Scheme, eliminating the need for meetings. Similarly, the Equity Shareholders of the Transferee Company approved the Scheme through written consent. The petitions for sanction were admitted, and notices for the hearing were advertised in newspapers.

3. Official Liquidator's Report: The Official Liquidator reported that the Transferor Company's affairs were conducted within its object clauses and not prejudicial to members or public interest. The Transferor Company was directed to preserve books of accounts, papers, and records, and comply with statutory liabilities even after the amalgamation.

4. Central Government's Involvement: The Central Government was served notice, and observations were made by the Regional Director, Ministry of Corporate Affairs. The Director's observations were addressed by the Petitioner companies, ensuring compliance with regulatory requirements and confirming no objections from the Income Tax Department.

5. Court Decision: After considering all submissions, undertakings, and affidavits, the Court found the Scheme of Amalgamation to be in the interest of shareholders, creditors, and the public. The Scheme was sanctioned, and prayers in the petitions were granted. Costs to the Central Government Standing Counsel and the Official Liquidator were quantified.

6. Post-Approval Directions: The Petitioner companies were directed to lodge the order, immovable assets schedule, and authenticated Scheme for stamp duty adjudication. They were also instructed to file the order and Scheme with the Registrar of Companies electronically and physically. Filing and issuance of the drawn-up order were dispensed with, and concerned authorities were to act on the authenticated copy of the order promptly.