2013 (2) TMI 946 - HC - Companies Law

Summary

ISSUES PRESENTED and CONSIDERED

The core legal issues considered by the Court pertain to the approval of a Scheme of Amalgamation between KDJ Holidayscapes Limited and Two-Up Financial Services Limited under Sections 391 to 394 of the Companies Act, 1956. The specific issues include:

1. Whether the Scheme of Amalgamation is fair, reasonable, and not prejudicial to the interests of shareholders and the public.

2. Compliance with statutory requirements, including the change of name and alteration of the object clause of the Memorandum of Association, under the Companies Act, 1956.

3. Confirmation of the dissolution of the Transferor Company following the amalgamation.

ISSUE-WISE DETAILED ANALYSIS

1. Fairness and Reasonableness of the Scheme

The Court examined whether the Scheme was fair and reasonable and not contrary to public policy. The legal framework under Sections 391 to 394 of the Companies Act, 1956, governs the amalgamation of companies, requiring the Court's sanction for such schemes. The Court noted that no objections were raised against the Scheme, and the Regional Director's affidavit confirmed that the Scheme was not prejudicial to the shareholders or the public interest. The Official Liquidator's report further supported that the Transferor Company's affairs were conducted properly. Thus, the Court concluded that the Scheme was fair and reasonable.

2. Compliance with Statutory Requirements

The Court considered the statutory compliance related to the change of name and alteration of the object clause:

- Change of Name: Clause 19 of the Scheme proposed changing the name of the Amalgamated Company to 'KDJ Holidayscapes & Resorts Limited.' The Court required compliance with Sections 21/23 of the Companies Act, 1956, regarding filing necessary forms with the Registrar of Companies. The Petitioners undertook to comply with these provisions, and the Court accepted this undertaking.

- Alteration of Object Clause: Clause 20 of the Scheme involved changes to the object clause of the Memorandum of Association. Compliance with Section 40 read with Section 18 of the Companies Act, 1956, was necessary. The Petitioners agreed to file the amended Memorandum of Association along with Form No. 21 with the Registrar of Companies, and the Court accepted this undertaking.

The Regional Director and the Official Liquidator were satisfied with these undertakings, ensuring compliance with the statutory requirements.

3. Dissolution of the Transferor Company

The Official Liquidator's report confirmed that the Transferor Company's affairs were conducted appropriately, and there were no objections to its dissolution. Consequently, the Court ordered the dissolution of the Transferor Company as part of the Scheme's implementation.

SIGNIFICANT HOLDINGS

The Court made several significant determinations:

- The Scheme of Amalgamation is fair, reasonable, and not contrary to public policy, satisfying the requirements under Sections 391 to 394 of the Companies Act, 1956.

- The Petitioners' undertakings to comply with statutory requirements concerning the change of name and alteration of the object clause were accepted, ensuring compliance with the Companies Act, 1956.

- The dissolution of the Transferor Company was confirmed, as the Official Liquidator's report indicated proper conduct of the company's affairs.

- The Court directed the Petitioners to lodge a copy of the order and the Scheme with the concerned authorities for stamp duty adjudication and to file the necessary documents with the Registrar of Companies electronically and physically.

- Costs were imposed on the Petitioners to be paid to the Regional Director and the Official Liquidator within a specified timeframe.