2013 (10) TMI 1198 - HC - Companies Law

Sanction of scheme of amalgamation - Dispensation from the requirement of convening the meetings of the equity shareholders, secured and the unsecured creditors of the Applicant companies - Held that - net worth certificate dated 28th May 2013 issued by Sunita Maheshwari and Co., Chartered Accountants. The certificate shows that the pre- amalgamation net worth of the Transferor company is Rs.1,71,81,593/- and the pre and post amalgamation net worth of the Transferee company is Rs.209,09,81,096/- and will be Rs.509,92,22,034/- respectively. Further, post-amalgamation, the value of debt (secured and unsecured creditors) of the Transferee company is Rs.930,04,69,599/- against the value of the assets of Rs.1536,14,90,021/- (at their respective fair values), therefore, the interests of the creditors of either of the Applicant companies will not be adversely affected and in fact will be placed in a better position viz. a viz. their security post amalgamation - Application allowed.

Summary

Issues:
Application under Sections 391 and 394 of the Companies Act, 1956 for Scheme of Amalgamation.

Analysis:
The judgment pertains to a first motion application under Sections 391 and 394 of the Companies Act, 1956, regarding the Scheme of Amalgamation of two companies. The Applicant companies, Transferor and Transferee, are seeking approval for their merger. The application includes details such as the incorporation dates, capital structure, and financial accounts of the companies. The Boards of Directors of both companies have approved the proposed Scheme. The application also confirms the absence of pending proceedings under Sections 235 to 251 of the Act against the Applicant companies. Additionally, the application provides a table showing the status of equity shareholders and creditors of both companies, along with consents obtained for the Scheme.

The application includes a prayer for dispensation from convening meetings of equity shareholders and creditors, as a significant majority have already given their consents. Notably, 99.99% of equity shareholders of the Transferor company and 96.79% of the Transferee company have provided their consents. The Transferor company has no secured creditors but 101 unsecured creditors, while the Transferee company has secured and unsecured creditors. The net worth of both companies is positive, and it is argued that post-amalgamation, the creditors' rights and interests will not be adversely affected but rather improved.

The Learned counsel for the Applicant companies cited previous judgments of the Court where similar circumstances led to the dispensation of convening meetings of creditors. The net worth certificate issued by Chartered Accountants supports the claim that the creditors' positions will be strengthened post-amalgamation. Based on the submissions and established legal precedents, the Court dispensed with the requirement of convening and holding meetings of secured and unsecured creditors of the Applicant companies. Consequently, the application was allowed in the terms mentioned, and the order was to be given dasti.