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TMI Blog1991 (8) TMI 245X X X X Extracts X X X X X X X X Extracts X X X X ..... winding up. Suncarb Private Limited, Madras-6, the transferor-company, was incorporated on November 7, 1985, under the provisions of the Act, having its registered office at No. 8, Haddows Road, Madras-6. As stated above, the object of their Company Petition No. 60 of 1990 is to obtain sanction of this court for the scheme of amalgamation, where under the assets and liabilities of the transferor-company are to be transferred to Ucal Fuel Systems Limited, the transferee-company. The authorised capital of the transferee-company is Rs. 10,00,000 divided into 1,00,000 equity shares of Rs. 10 each. The amount credited as paid-up capital, as per the last balance-sheet ending March 31, 1990, consists of 30 equity shares of Rs. 10 each of which is fully paid. The authorised capital of the transferee-company is rupees six crores divided into 60,00,000 equity shares of Rs. 10 each. The amount credited as paid-up capital as per last balance-sheet ending March 31, 1990, is Rs. 5,19,00,000 consisting of 51,90,000 equity shares of Rs. 10 each of which is fully paid. The objects clause of the transferor company, as set out in the memorandum and articles of association, are as under: To carr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to the attainment of the above main objects have also been set out in the main company petitions. It also enables the transferee company to purchase or otherwise acquire any patents, invention licences, etc., directly or indirectly to benefit the company. It also provides for the transferee-company to enter into partnership or into any agreement for sharing profits union of interest, co-operation, joint adventure, or otherwise any person or company in India or abroad carrying on or engaged in, or about to carry on, or engaged in any business or transaction which the transferee company is authorised to carry on. Clause 9 also provides to amalgamate with any other company, having similar to those of the transferee company. The transferor company, when it was about to commence activity as manufacturers of two-wheeler carburettors, has entered into an agreement with Mikuni Corporation, Japan, for the manufacture of two-wheeler carburettors. The transferee company is in the field of manufacturing four-wheeler carburettors and the transferor company has obtained a letter of intent for the manufacture of 7,00,000 numbers of two-wheeler carburettors in Chingleput District, Tamil Nadu. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd powers of every description and industrial and other licences of SPL shall without any further act, deed or order be transferred to and vested in or deemed to be transferred to and vested in UFSL in accordance with section 394(2) of the Companies Act, 1956. 3.With effect from the appointed date, all debts, secured and unsecured liabilities including any tax liabilities, duties and obligations of SPL shall be transferred or deemed to be transferred without any further act or deed to UFSL and UFSL shall discharge all such debts and obligations of SPL including payment of all taxes, levies, duties, public charges, income-tax and dues to any Government or public authority. 4.With effect from the appointed date, SPL shall be deemed to have been carrying on and to be carrying on all business and activities, if any, for and on account of UFSL until the scheme of amalgamation is approved by the High Court. 5.On such amalgamation, the shareholders of SPL will be paid the money equivalent to the face value of the shares held by each shareholder of SPL. 6.On the scheme being approved by the respective boards of UFSL and SPL, the two companies will, with reasonable despatch apply to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... all such steps as may be necessary or desirable and do all such acts, deeds and things as are considered requisite or necessary to effectively implement the said scheme of amalgamation and this resolution and to accept such alterations, modifications and/or conditions, if any, which may be proposed, required or imposed by the Hon'ble High Court of Judicature at Madras while sanctioning the scheme". In the case of the transferor-company, directions were given by this court on May 4, 1990, in Company Application No. 420 of 1990. The company was directed to convene a meeting of the equity shareholders for the purpose of considering the scheme of amalgamation. This court appointed Mr. R. Veera-raghavan, failing him Mr. T. Sampathkumaran as chairman of the meeting and to report the results thereof. On July 5, 1990, a meeting of the equity shareholders of the transferor company was convened in accordance with the said order. The chairman of the meeting reported the results of the meeting to this court by his report, dated July 11, 1990. The scheme of amalgamation was read out and explained by its chairman and then it was put to vote and the resolution was passed unanimously. Hence, th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the transferor company, viz ., Suncarb Private Limited, will be paid the money equivalent to the face value of the shares held by each shareholder in the said company; 2.The proposal to pay back to the equity shareholders is an unusual one and not specifically in accordance with the provisions of the Act ; 3.The purpose of amalgamation is nothing but the sale or transfer of the letter of intent issued in favour of the transferor company. As under the provisions of the Industries (Development and Regulation) Act, the letter of intent cannot be transferred to another party without the specific approval of the authorities concerned in the said Act. Thus, it was argued by Mr. A.S. Venkatachalamoorthy that this court should not allow the scheme of amalgamation unless the petitioners first produce necessary permission authorising the transfer of the letter of intent issued by the Department of Industrial Development in the Ministry of Industry, Government of India and hence for this purpose this court may also consider impleading the Department of Industrial Development as a necessary party to the present proceedings. I shall now consider the objections of the Central Government ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ([1969] 39 Comp Cas (St.) 92). Replying to the argument of Mr. A.S. Venkatachalamoorthy, learned counsel for the petitioners, has cited the judgment of the Bombay High Court in M. G. Investment and Industrial Co. Ltd. v. New Shorrock Spinning and Manufacturing Co. Ltd. [1972] 42 Comp Cas 145 . That was a petition under sections 391 and 394 of the Act by the M. G. Investment and Industrial Co. Ltd. for sanctioning a scheme of amalgamation of the petitioner company with the respondent therein, viz ., New Shorrock Spinning and Manufacturing Co. Ltd. The respondent-company supported the petition. Notice of that petition was given, as required by section 394A of the Act, to the Central Government and the Central Government contended that the petition was not maintainable as approval of the Central Government under section 23 of the Monopolies and Restrictive Trade Practices Act, 1969 (Monopolies Act), was not obtained as required. Nain J. of the Bombay High Court held thus (headnote): " Held, that the Legislature had thought fit under the provisions of section 394A of the Companies Act to procure the presence of the Central Government by notice and not by its being added as a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ioning a scheme of amalgamation held as follows (at page 204): "The word 'amalgamation' has not been defined in the Act. The ordinary dictionary meaning of the expression is 'combination'. Judging from the context and from the marginal note of section 394 which appears in Chapter V relating to arbitration, compromise, arrangements and reconstructions, the primary object of amalgamation of one company with another is to facilitate reconstruction of the amalgamating company and this is a matter which is entirely left to the body of shareholders of the primary company which offers or intends to amalgamate with another. There is indeed an absorption by the company with which it is amalgamated, the latter being statutorily called the transferee-company and the former the transferor company. In fact, the company amalgamating and the company with which it is amalgamated are so statutorily defined under section 394(1)( b ) of the Companies Act, 1956. On a prima facie examination of the relevant provisions in Chapter V, it is abundantly clear that it is essentially an affair relating to the internal administration of the transferor company. Of course, there should be consensus ad idem bet ..... X X X X Extracts X X X X X X X X Extracts X X X X
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