2016 (12) TMI 1301 - HC - Companies Law

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. The Scheme is, therefore, sanctioned.

Summary

Issues:
1. Sanction of a Scheme of Amalgamation of five companies under Sections 391 to 394 of the Companies Act, 1956.
2. Dispensing with meetings of Equity Shareholders and Unsecured Creditors.
3. Official Liquidator's report and directions for preservation of books of accounts.
4. Observations and submissions regarding discrepancies in share capital and business activities of Transferor Companies.
5. Compliance with RBI guidelines and Income Tax Act.
6. Sanction of the Scheme by the High Court.

Analysis:
1. The petitions were filed by five companies seeking approval for a Scheme of Amalgamation under Sections 391 to 394 of the Companies Act, 1956. The purpose was to merge four Transferor Companies with a Transferee Company for consolidation of activities and achieving synergic benefits for rapid growth of operations. Details of the benefits were provided in the petitions.

2. Meetings of Equity Shareholders and Unsecured Creditors were dispensed with as written consent letters from all parties were obtained, and no objections were raised by any Secured Creditors. The petitions were admitted, and notices for the hearing were advertised in newspapers. No objections were received even after publication.

3. The Official Liquidator's report confirmed that the Transferor Companies operated within their object clauses and were not prejudicial to members or public interest. Directions were issued to preserve books of accounts, papers, and records without disposal, even after the Scheme's sanction, to comply with statutory liabilities.

4. Submissions addressed discrepancies in share capital and business activities of Transferor Companies. The court was satisfied that changes in share capital did not affect the proposed Scheme significantly. Compliance with RBI guidelines for Core Investment Companies and no objection from the Income Tax Department were confirmed.

5. The High Court, after considering all facts, affidavits, and submissions, found the Scheme of Amalgamation to be in the interest of shareholders, creditors, and the public. The Scheme was sanctioned, and prayers of the Petitioner Companies were granted.

6. Costs to the Central Govt. Standing Counsel and the Official Liquidator were quantified. The Petitioner companies were directed to lodge a copy of the order, schedule of immovable assets, and the Scheme for stamp duty adjudication. They were also instructed to file the order and Scheme with the Registrar of Companies electronically and physically. The drawn-up order was dispensed with, and concerned authorities were directed to act promptly on the authenticated copy of the order and Scheme issued by the High Court of Gujarat.