2015 (4) TMI 64 - HC - Companies Law

Proposed Scheme of Amalgamation under section 391 & 394 of the Companies Act, 1956 - Regional Director observe that none of the company doing any significant business activity, better option to go into liquidation - Held that - In view of the law as laid down by the Supreme Court in Mafatlal Industries Ltd. 1996 (9) TMI 488 - SUPREME COURT OF INDIA , I find no merit in the contentions of the Regional Director that it is a better option for the company to go into liquidation to wind up its operation and company. With regard to the objection raised by the Regional Director about the selection of cut off date as 22.10.2013, learned counsel for petitioner has contended that similar petition has been filed in respect of two companies, which are identically situated and whose promoters and directors are same and in one of the companies a secured creditor being a foreign company had given its No Objection Certificate on 25.10.2013 and since there had to be a cut off date so the date 22.10.2013 was selected. In my view the explanation provided is reasonable and is accepted. Hence the objection raised by the Regional Director is rejected. In view of the approval accorded by the Shareholders and Creditors of the Petitioner Companies; representation/reports filed by the Regional Director, Northern Region and the Official Liquidator, attached with this Court to the proposed Scheme of Amalgamation, there appears to be no impediment to the grant of sanction to the Scheme of Amalgamation. Consequently, sanction is hereby granted to the Scheme of Amalgamation under sections 391 and 394 of the Companies Act, 1956. The Petitioner Companies will comply with the statutory requirements in accordance with law. - Scheme of Amalgamation approved.

Summary

Issues:
Petition filed under sections 391 & 394 of the Companies Act, 1956 for the Scheme of Amalgamation of two companies.

Analysis:
1. The petition was filed seeking sanction for the Scheme of Amalgamation of two companies under sections 391 & 394 of the Companies Act, 1956. The registered offices of both companies were located in New Delhi. Details regarding their capital, Memorandum, Articles of Association, and audited accounts were provided in the petition.

2. Resolutions approving the Scheme of Amalgamation were passed by the Board of Directors of both companies. It was confirmed that no proceedings under Sections 235 to 251 of the Companies Act, 1956 were pending against the Petitioner Companies.

3. The shareholding pattern and the transfer of shares as per the Scheme were outlined. Previous court directions for dispensing meetings of creditors and shareholders were mentioned, and compliance with those directions was confirmed.

4. Reports from the Official Liquidator and the Regional Director were submitted. The Official Liquidator reported no complaints against the Scheme, and the Regional Director raised concerns about the selection of the cut-off date and the business activities of the companies.

5. The judgment referred to the case law of Miheer H. Mafatlal v Mafatlal Industries Limited to emphasize that once the statutory requirements for a scheme are met, the court cannot interfere based on commercial wisdom. The objections raised by the Regional Director were dismissed.

6. The Chief Commissioner of Income Tax raised concerns about tax liabilities in the scheme. However, it was clarified that the transferee company would be liable for any tax liabilities arising from the merger, and no liabilities were being written off.

7. Affidavits confirming the publication of notices and the absence of objections were filed. With approval from shareholders and creditors, and positive reports from regulatory authorities, the court granted sanction to the Scheme of Amalgamation.

8. The order directed compliance with statutory requirements, filing with the Registrar of Companies, and transfer of liabilities to the transferee company. It clarified that the order did not exempt from stamp duty or taxes. The petitioners agreed to deposit a sum in the Common Pool fund of the Official Liquidator.

9. The judgment concluded by allowing the petition in the stated terms, facilitating the amalgamation of the companies without further action.

This detailed analysis covers the various aspects of the judgment, including legal provisions, compliance, objections raised, court directions, and final orders issued by the court.