2016 (6) TMI 856 - HC - Companies Law

Scheme of Amalgamation is in the interest of its Shareholders and Creditors as well as in the public interest and the same deserves to be sanctioned.

Summary

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

Analysis:
The petitions were filed by two companies, seeking approval for a Scheme of Amalgamation. Both companies are engaged in wholesale trading of paper and paper board and belong to the same management group. The rationale behind the amalgamation includes synergic advantages, reduction in common expenditures, better synchronization in operations, and overall improvement in profits. Meetings of shareholders and creditors were dispensed with as written consents were obtained, and no objections were received after due publication. The Regional Director made observations, which were addressed in affidavits. The Court heard submissions regarding these observations, including issues related to employees' absorption and compliance with Income Tax regulations.

The Official Liquidator opined that the affairs of the Transferor Company were not conducted prejudicially. The Court found that the Scheme of Amalgamation was in the interest of shareholders, creditors, and the public, and thus deserved sanction. Costs were quantified for the Central Government Standing Counsel and the Official Liquidator. The companies were directed to lodge necessary documents for stamp duty adjudication, file copies of the order with relevant authorities, and act on the authenticated copy of the order promptly. Filing and issuance of drawn-up order were dispensed with for efficiency.

In conclusion, the Court sanctioned the Scheme of Amalgamation, finding it beneficial for all stakeholders involved. The judgment detailed compliance requirements and directed the companies to fulfill necessary formalities within specified timelines.