Whether both transferor company and transferee company should move High Court for direction where companies involved in amalgamation are incorporated in different States - Companies Law - No. 14 of 1973,

Circular : No. 14 of 1973, dated 5 ‑ 6 ‑ 1973. Subject:- Whether both transferor company and transferee company should move High Court for direction where companies involved in amalgamation are incorporated in different States The matter has been examined in the light of the reported cases, viz., Carrn Tea Co. Ltd. [1966] 11 Comp. LJ. 278 and Bank of India Ltd. v. Ahmedabad Manufacturing, Weaving Calico Printing Co. Ltd. Petition No. 61 of 1971, and In re W.A. Beardsell Co. (P.) Ltd. and Mettur Industries Ltd. [1968] 38 Comp. Cas. 197 which indicate that where, in a case of amalgamation, there is identity of interests between the transferor company and the transferee company, approval of the shareholders to the scheme should be accorded by the shareholders of both the companies. Though clauses (i) and (iii) of section 394(1) refer to a transferee company, it has been held that both the transferor and the transferee companies should make an application under section 394. In Bank of India Ltd. v. Ahmedabad Manufacturing Weaving Calico Printing Co. Ltd. (supra), the matter was argued at length and Mr. Justice Vimadalal held that : In my opinion, having regard to the fact that the said sections make no distinction between a transferor company and transferee company, the test for determining whether the provisions of those sections are attracted or not must be the same both in the case of the transferor company as well as in the case of transferee company, viz., whether as between the company and its members or creditors the proposed arrangement or compromise affects the right of those members or creditors or any class of them. In view of the position indicated above where two companies involved in a scheme of amalgamation are incorporated in two different States, each company should move the respective High Court for its directions in the manner laid down under rules 82, 83 and 84 of the Companies (Court) Rules, 1959. Where both the companies are situated in the same State and only one company moves the Court under section 391, the company may be advised to make the other company a party to the petition, as in the scheme of amalgamation there is an identity of interests between the transferor company and the transferee company as observed by the Madras High Court in the matter of W.A. Beardsell Co. (P.) Ltd. and Mettur Industries Ltd. (supra).