2016 (1) TMI 585 - HC - Companies Law

Sanction of Amalgamation and Arrangement - Scheme of Amalgamation and Arrangement is hereby sanctioned with the direction to follow all the procedural formalities.

Summary

Issues:
- Sanctioning of Scheme of Amalgamation and Arrangement between two companies
- Procedural violations raised by Regional Director
- Compliance with statutory authorities and liabilities transfer
- Confirmation of no pending investigations or proceedings
- Binding effect of the Scheme on shareholders, creditors, and concerned parties

Analysis:
The High Court was approached for the sanctioning of a Scheme of Amalgamation and Arrangement between a Transferor Company and a Transferee Company. The petition detailed the approval of the Scheme by the Board of Directors of both companies and the previous orders dispensing with certain meetings and convening others for approval. The second motion petition was filed, and all necessary notices were issued and published as directed by the Court. The Regional Director raised concerns about procedural violations by the petitioner company, which were addressed by the petitioner's counsel by stating that the violations were either compounded or covered in the Scheme itself.

Regarding the issue of procedural violations, the Scheme explicitly stated that the Transferee Company would be bound by all liabilities of the Transferor Company even before the effective date. Clauses 4.4 and 4.7 of the Scheme specifically addressed the transfer of debts, liabilities, taxes, and obligations from the Transferor to the Transferee Company. The petitioner company undertook to comply with all directions of the Court and statutory authorities, as mentioned in an affidavit filed by the Director of the petitioner company. The Official Liquidator did not raise any objections to the Scheme.

The Court considered all relevant facts, procedural requirements, reports of the Regional Director and the Official Liquidator, and the absence of pending investigations or proceedings against the petitioner company. Consequently, the Scheme of Amalgamation and Arrangement was sanctioned, subject to similar approval by the High Court of Kolkata for the Transferee Company. The assets and liabilities of the Transferor Company would vest in the Transferee Company, leading to the dissolution of the Transferor Company without winding up. The Scheme was deemed binding on the respective companies, shareholders, creditors, and all concerned parties.

To conclude, the Court ordered the formal sanction of the Scheme, with a provision for the petitioner company to deposit a specified amount in the Common Pool Fund Account of the Official Liquidator. The order was to be published in designated newspapers and the official Gazette, allowing interested parties to seek further directions from the Court as per the law. The matter was disposed of accordingly.