2017 (5) TMI 589 - HC - Companies Law

Scheme of Amalgamation - Held that - upon considering the approval accorded by the members and creditors of the Petitioner Companies to the proposed Scheme, and the affidavits filed by the Regional Director, Northern Region, Ministry of Corporate Affairs and the Official Liquidator attached to this Court, whereby no objections have been raised to the proposed Scheme by the OL, and in view of the circumstance that the objections rasied by the RD stand satisfied, there appears to be no impediment to the grant of sanction to the Scheme. Consequently, sanction is hereby granted to the Scheme under sections 391 and 394 of the Act. The Petitioner Companies will however, comply with the statutory requirements, in accordance with law. A certified copy of this order, sanctioning the Scheme, be filed with the ROC, within thirty (30) days of its receipt.

Issues Involved:
1. Condonation of delay in filing reports and affidavits.
2. Approval of the Scheme of Amalgamation under Sections 391(2) & 394 of the Companies Act, 1956.
3. Jurisdiction of the Court.
4. Share capital details of the Petitioner Companies.
5. Pending proceedings against the Petitioner Companies.
6. Approval of the Scheme by the Board of Directors.
7. Share Exchange Ratio for the Amalgamation.
8. Dispensation of meetings of shareholders and creditors.
9. Publication of notices and citations.
10. Reports and objections from the Official Liquidator and Regional Director.
11. Compliance with statutory requirements and undertakings.
12. Costs payable to the Official Liquidator.

Detailed Analysis:

1. Condonation of Delay:
The delay of 99 days by the Official Liquidator (OL) in filing his report and 102 days by the Regional Director (RD) in filing the affidavit was condoned. The court took the report and affidavit on record and disposed of the applications accordingly.

2. Approval of the Scheme of Amalgamation:
The petition was filed jointly by six Transferor Companies and one Transferee Company under Sections 391(2) & 394 of the Companies Act, 1956, seeking approval of the Scheme of Amalgamation. The Scheme aimed to pool resources for beneficial utilization, achieve economies of scale, and consolidate business operations for profitability and competitiveness.

3. Jurisdiction:
The registered offices of the Petitioner Companies were situated in the National Capital Territory of Delhi, granting the Delhi High Court jurisdiction over the petition.

4. Share Capital Details:
The judgment provided detailed information on the authorized, issued, subscribed, and paid-up share capital of each Transferor and Transferee Company as of 31.03.2015.

5. Pending Proceedings:
It was averred that no proceedings were pending against the Petitioner Companies under Sections 235 to 251 of the Companies Act, 1956, or their corresponding sections in the Companies Act, 2013.

6. Approval by Board of Directors:
The Scheme was approved by the respective Boards of Directors of the Petitioner Companies, and copies of the resolutions dated 14.01.2016 were filed on record.

7. Share Exchange Ratio:
The Share Exchange Ratio for the Amalgamation was specified as follows:
- 1 Equity Share of ?10 each of the Transferee Company for every 4 Equity Shares of ?10 each held in Transferor Company No. 1.
- 4 Equity Shares of ?10 each of the Transferee Company for every 5 Equity Shares of ?10 each held in Transferor Company No. 2.
- 4 Equity Shares of ?10 each of the Transferee Company for every 1 Equity Share of ?10 each held in Transferor Company No. 3.
- 1 Equity Share of ?10 each of the Transferee Company for every 8 Equity Shares of ?10 each held in Transferor Company No. 4.
- 1 Equity Share of ?10 each of the Transferee Company for every 2 Equity Shares of ?10 each held in Transferor Company No. 5.
- 1 Equity Share of ?10 each of the Transferee Company for every 40 Equity Shares of ?10 each held in Transferor Company No. 6.

8. Dispensation of Meetings:
The requirement of convening meetings of shareholders and creditors was dispensed with by an earlier order dated 10.02.2016, based on written consents/no objections from all concerned parties.

9. Publication of Notices and Citations:
Notices were issued, and citations were published in the Delhi editions of 'Business Standard' and 'Jansatta' on 14.05.2016. An affidavit confirming compliance with the publication requirement was filed.

10. Reports and Objections:
The OL's report stated no complaints were received against the Scheme, and the affairs of the Petitioner Companies were not prejudicial to members, creditors, or public interest. The RD's affidavit mentioned pending scrutiny and a small outstanding demand against Transferor Company No. 4, but stated no objection to the Scheme subject to these observations. The Transferee Company undertook to defray all liabilities, including pending income tax assessments.

11. Compliance and Undertakings:
The court directed the Petitioner Companies to comply with all statutory requirements and file an undertaking to take over all liabilities of the Transferor Companies. The Transferee Company was also required to file an undertaking within two weeks to defray all liabilities.

12. Costs to Official Liquidator:
The Petitioner Companies were directed to deposit ?2,00,000/- as costs in the Common Pool Fund maintained by the Official Liquidator, Delhi, considering the extensive examination of records and prioritised hearings.

Conclusion:
The Scheme of Amalgamation was sanctioned under sections 391 and 394 of the Companies Act, 1956. The Transferor Companies were dissolved without being wound up. The Transferee Company was directed to comply with all provisions of the Scheme and statutory requirements. The petition was allowed and disposed of accordingly.

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