2016 (12) TMI 126 - HC - Companies Law

Scheme of Arrangement in the nature of amalgamation - Held that - Pursuant to the report of the Official Liquidator, it is ordered that, the petitioner company shall preserve its books of accounts, papers and records and not dispose of the records without the prior permission of the Central Government as per the provisions of Section 396(A) of the Companies Act, 1956, and shall not be absolved from any statutory liability. Considering the above, it is ordered that, the Scheme at Exhibit C to the petitions, is hereby sanctioned and the prayers made in all the Company Petitions are granted. The petitioners are directed to pay the professional charges of ₹ 7,500/for each petitions to Mr.Devang Vyas, learned Assistant Solicitor General of India and the petitioners of the Transferor Companies are directed to pay the the professional charges of ₹ 7,500/each to the Official Liquidator.Filing and issuance of drawn up orders are dispensed with.

Summary

Issues:
1. Sanctioning of the Scheme of Arrangement for amalgamation of companies.
2. Dispensation of meetings of members.
3. Compliance with Accounting Standard 14 and Income Tax Act.
4. Preservation of books of accounts and records.
5. Payment of professional charges to legal representatives.

Analysis:

1. The petitions were filed by the Transferee Company and the Transferor companies seeking sanction for the Scheme of Arrangement involving the amalgamation of two companies with another. The Court had earlier dispensed with the requirement of holding meetings under Section 391(1) of the Companies Act, 1956. The petitions sought approval for the amalgamation of the companies, and the Court admitted the petitions for further consideration.

2. Notices were served on the Regional Director and Official Liquidator, and publication was made in newspapers as ordered by the Court. Affidavits confirming compliance with the publication and service orders were filed. The Regional Director and Official Liquidator submitted reports and observations regarding compliance with Accounting Standard 14. The Transferee Company undertook to comply with the standard and other legal requirements.

3. The Transferee Company assured compliance with Accounting Standard 14 and the Income Tax Act, pledging to handle any excess assets or liabilities appropriately. They also committed to maintaining proper books of accounts and obtaining approval before disposing of them. The Court, considering the reports and undertakings, ordered the preservation of records and sanctioned the Scheme of Arrangement as presented in the petitions.

4. In light of the Official Liquidator's report, the Court directed the petitioner company to preserve its books and records as per the Companies Act, 1956, without absolving them from any statutory liability. Professional charges were directed to be paid to legal representatives as specified. Filing and issuance of orders were dispensed with, and authorities were instructed to act on the authenticated copy of the order along with the Scheme and schedule of assets.

5. The Court disposed of the petitions after granting the prayers for the Scheme of Arrangement, payment of professional charges, and issuance of authenticated orders. The judgment concluded with the disposal of the petitions, ensuring compliance with legal procedures and standards in the amalgamation process.