2014 (4) TMI 1318 - HC - Companies Law

Seeking sanction to the arrangement embodied in the Scheme of Amalgamation - sections 391 to 394 of the Companies Act 1956 - HELD THAT - Having considered the submissions made in this regard and being satisfied that amalgamation under the proposed Scheme would be in the interest of the companies and their members and creditors the 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 sanctioning of this Scheme would not absolve anyone who is otherwise liable for any responsibility or liability only on account of this sanctioning. Petition disposed off.

Summary

Issues:
Petition under sections 391 to 394 of the Companies Act, 1956 seeking sanction for the arrangement of amalgamation between three companies; Dispensing with meetings of shareholders and creditors; Publication of public notices; Common appointed date for transfer of assets and liabilities; Compliance with Income Tax Act and rules; Sanctioning of the Scheme of Amalgamation; Approval pending in Company Petitions before the High Court of Judicature at Bombay; Costs to be paid to Central Government Counsel; Adjudication of stamp duty; Filing of order and Scheme with concerned authorities.

Analysis:
The Petitioner Company filed a petition under sections 391 to 394 of the Companies Act, 1956 seeking sanction for the amalgamation between Welspun Developers & Infrastructure Limited, Kalyan Reality & Developers Private Limited, and Welspun Fintrade Private Limited. The purpose of the amalgamation was to achieve synergic benefits, consolidation of activities, and simplification of the group structure, benefiting shareholders and creditors. Meetings of shareholders and creditors were dispensed with, and public notices were duly advertised in newspapers. No objections were raised post-publication. The appointed dates for transfer of assets and liabilities were a point of contention, with the Regional Director suggesting a common appointed date to avoid confusion. Compliance with the Income Tax Act and rules was emphasized.

The Petitioner Company responded, stating that the Income Tax Department had no objections to the proposed Scheme after the statutory period. The choice of two appointed dates was defended as a prerogative of the Board of Directors, complying with shareholder approval. The Regional Director confirmed no objections to the Scheme, deeming it non-prejudicial to stakeholders. After hearing submissions, the court found the amalgamation to be in the interest of the companies, members, and creditors, sanctioning the Scheme with a caveat that it wouldn't absolve liabilities. Approval was subject to pending Company Petitions before the High Court of Judicature at Bombay.

The court granted the prayer subject to approval by the Transferor Companies in the pending Company Petitions. Costs to the Central Government Counsel were quantified, and directions were given for stamp duty adjudication, filing of the order and Scheme with authorities, and maintenance of a copy of the order in the company petition. The filing and issuance of the drawn-up order were dispensed with, and concerned authorities were directed to act on the order promptly.

In conclusion, the petition was disposed of with various directions regarding compliance, approval, costs, and filings, ensuring the smooth execution of the amalgamation process.