2016 (3) TMI 383 - HC - Companies Law

Scheme of Amalgamation - Held that - The Official Liquidator has filed his report dated 09.06.2015 in respect of the Transferor Company making only one observation and that is with regard to the treatment of employees of the Transferor Company. In this regard, it is submitted that the petitioner company has already clarified this aspect in its response to report of the Regional Director. It is stated that the Transferor Company does not have any employee and therefore, no provision is made in that regard in the Scheme. The report however confirms that the affairs of the Transferor Company are not conducted in a manner prejudicial to the interest of its members or to the public interest. The Official Liquidator, however, has requested this Court to direct the petitioner-Transferor Company to preserve its books of accounts, papers and records and not to dispose of the records without the prior permission of Central Government under Section 396A of the Companies Act, 1956. Having heard Mr. Navin K. Pahwa, learned counsel for the petitioner companies, Mr. Kshitij Amin, learned Central Government Standing Counsel on behalf of Mr. Devang Vyas, learned Assistant Solicitor General of India for the Regional Director and upon perusal of the reports of the Official Liquidator and the Regional Director, the reply filed on behalf of the petitioner Transferee Company and having considered the Scheme of Amalgamation together with relevant documents on record, the Court finds it appropriate to grant sanction to the present Scheme of Amalgamation.

Summary

Issues:
1. Sanction of Scheme of Amalgamation under Sections 391 to 394 of the Companies Act, 1956.

Analysis:
The case involved petitions seeking the sanction of the Court for the Scheme of Amalgamation of two companies. The Transferee Company filed for dispensation of the meeting of Equity Shareholders, which was granted due to consent from all shareholders. No Secured Creditors were reported, and Unsecured Creditors were not affected by the proposed Scheme. Both companies then filed petitions seeking sanction of the Scheme. The Court admitted the petitions, directed notice issuance to relevant authorities, and publication in newspapers.

The Regional Director and Official Liquidator responded with observations. The Transferee Company addressed alleged violations and explanations for each observation, including compliance with Accounting Standards and Companies Act provisions. The Transferor Company also responded to alleged violations, clarifying issues related to AS18, AS28, and filing of statutory documents. The Official Liquidator raised concerns about employee treatment and preservation of records.

After considering all reports, responses, and relevant documents, the Court found it appropriate to grant sanction to the Scheme of Amalgamation. The Scheme was sanctioned with directions for the Transferor Company to preserve records. Costs were determined, and the Transferor Company was directed to pay the Official Liquidator. The companies were instructed to lodge necessary documents for stamp duty adjudication and file copies of the order with relevant authorities.

The Court dispensed with the filing and issuance of drawn-up orders, allowing authorities to act on authenticated copies. The petitions were disposed of accordingly, concluding the judgment.