2015 (5) TMI 877 - HC - Companies Law

Application for Scheme of Amalgamation under Sections 391 to 394 of the Companies Act, 1956 - Official Liquidator s observations regarding issuance of shares at a premium of ₹ 9370/-, disputed sales tax & Excise duty liabilities, Default in payment of TDS duly addressed - Held that - In reply to the first observation made by the Official Liquidator, the petitioner companies in their reply dated 11th March, 2015 have submitted that the valuation report prepared by SMC Capitals Limited has recommended the share swap ratio of 8 100 based on the value per share of the transferor company and the transferee company i.e. ₹ 748.20 per share and ₹ 9,380/- per share for the transferor company and the transferee company respectively, thus, reflecting the fair price per share of the transferee company i.e. ₹ 9,380/- per share (including a premium of ₹ 9,370/- per share over the face value of ₹ 10/- per share). In reply to the second observation made by the Official Liquidator in para 14 of his report, the petitioners, while referring to Para 9 of the Scheme, have undertaken that post the Scheme becoming effective, all the pending proceedings of the transferor company shall not abate or be discontinued and instead the same shall continue in the name of the transferee company. The aforesaid undertaking is accepted and the petitioner shall remain bound by the same. In view of the aforesaid, the observations made by the Official Liquidator stand satisfied. No objection has been received to the Scheme of Amalgamation from any other party. The petitioner companies, in the affidavits dated 11th March, 2015 of Mr. Rajesh Bansal and Mr. Saurabh Bansal, authorized signatory of the transferor and transferee companies respectively, have submitted that neither the petitioner companies nor their counsel have received any objection pursuant to the citations published in the newspapers on 16th January, 2015. Considering the approval accorded by the equity shareholders and creditors of the petitioner companies to the proposed Scheme of Amalgamation and the affidavits filed by the Regional Director, Northern Region, and the Official Liquidator not raising any objection 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. - Application for Scheme of Amalgamation approved.

Summary

Issues:
Petition filed under Sections 391 to 394 of the Companies Act, 1956 for sanction of Scheme of Amalgamation.

Analysis:
The judgment involved a petition filed under Sections 391 to 394 of the Companies Act, 1956 by the petitioner companies seeking sanction of the Scheme of Amalgamation of two companies. The transferor company and transferee company were both incorporated under the Companies Act, 1956, with their registered offices in New Delhi. The Scheme of Amalgamation aimed to leverage synergies between the entities, providing economies of scale, sourcing benefits, and operational efficiencies. The share exchange ratio was detailed in the Scheme, with specific provisions for issuing and allotting equity shares to the shareholders of the transferor company. The Board of Directors of both companies had unanimously approved the proposed Scheme. A previous application had been filed to dispense with the requirement of convening meetings of equity shareholders and creditors, which was allowed by the court.

The Official Liquidator raised concerns regarding the premium on issued shares, tax liabilities, and pending proceedings. The petitioners responded, justifying the share swap ratio based on valuation reports and addressing the continuation of pending proceedings post-amalgamation. The Regional Director's report highlighted the treatment of employees, assets, and liabilities post-sanction of the Scheme. No objections were received from any party, and approval was granted based on the equity shareholders' and creditors' consent, along with no objections from the Regional Director and Official Liquidator. Sanction was granted to the Scheme of Amalgamation under Sections 391 and 394 of the Companies Act, 1956, with a directive to comply with statutory requirements. The order clarified that it did not grant exemption from stamp duty and specified the dissolution of the transferor company post-amalgamation. Costs were imposed on the petitioners, who agreed to deposit the specified amount in the Common Pool Fund of the Official Liquidator. The petition was allowed in the stated terms.