2005 (7) TMI 360 - HC - Companies Law

Summary

Issues Involved:
1. Sanction of a Scheme of Amalgamation under sections 391 and 394 of the Companies Act, 1956.
2. Approval and consent from shareholders and creditors.
3. Compliance with statutory advertisement and notification requirements.
4. Observations and objections from the Official Liquidator and Regional Director.
5. Payment of fees and stamp duty on increased authorized capital.
6. Handling of complaints against the Transferee Company.

Issue-wise Detailed Analysis:

1. Sanction of a Scheme of Amalgamation under sections 391 and 394 of the Companies Act, 1956:
The petitions were filed by three petitioner-companies for the sanction of a Scheme of Amalgamation with Sun Pharmaceutical Industries Limited (the Transferee Company). Since all Transferor Companies are wholly owned subsidiaries of the Transferee Company, separate proceedings for the Transferee Company were dispensed with by previous orders of the Court.

2. Approval and consent from shareholders and creditors:
The proposed Scheme was unanimously approved by the Equity Shareholders, who are nominees of the Transferee Company. There were no Secured Creditors for any of the Transferor Companies, and the only Unsecured Creditor, the Transferee Company, also approved the Scheme. The consent letters from the Equity Shareholders and the Unsecured Creditor were submitted, leading to the dispensation of meetings of Shareholders and Creditors.

3. Compliance with statutory advertisement and notification requirements:
After the petitions were admitted, they were duly advertised in the Indian Express and Loksatta-Jansatta, Vadodara editions. The publication in the Government gazette was dispensed with as directed. No objections were received following the advertisement.

4. Observations and objections from the Official Liquidator and Regional Director:
The Official Liquidator reported that the affairs of the Transferor Companies were not conducted prejudicially to the interests of their members or the public. The Regional Director raised certain observations, including the need for filing Form No. 5 with the RoC and payment of necessary fees and stamp duty for the increase in authorized capital.

5. Payment of fees and stamp duty on increased authorized capital:
The petitioner's counsel argued that section 391 is a complete code in itself, allowing for the sanction of the Scheme without separate procedures or additional payments. Various High Court decisions were cited to support that no additional fees or stamp duty are required when the authorized capital of the Transferor Companies is added to that of the Transferee Company. The Court agreed, noting that the objections raised by the Regional Director were not sustainable and had been settled by various High Courts.

6. Handling of complaints against the Transferee Company:
A complaint was received against the Transferee Company, but the petitioner's counsel stated that necessary replies had been sent to the complainants. The Court found that the complaint was not relevant to the proposed Scheme as it did not affect the rights of the shareholders.

Conclusion:
The Court concluded that the objections raised by the Regional Director were not sustainable and that the amalgamation would benefit the Companies, their members, and creditors. The petitions were granted as per the prayers in paragraph 16(A). The costs to be paid to the Assistant Solicitor General were quantified at Rs. 3,500 per petition.