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TMI Blog1993 (1) TMI 216X X X X Extracts X X X X X X X X Extracts X X X X ..... of both the meetings. He submitted his report which was accepted and the order dated October 11, 1991, was accordingly passed. He reported that all formalities contemplated under the order dated June 29, 1991, were complied with in holding the meetings and that the requisite number of members present in each case of each of the companies, had unanimously approved the proposal of amalgamation. However, on the same date, directions were also made for notice of the petitions to go to the Central Government as contemplated under section 394A of the Act ; the hearing date of the petitions, November 23, 1991, was fixed and it was directed that in two newspapers (English and Hindi) the notice in that regard shall be published. On January 31, 1992, objections came from the Registrar of Companies that the official liquidator is to be noticed and heard and that the transferor company had to obtain the requisite environmental clearance. The official liquidator, Shri S.C. Gupta, appeared in person on March 25, 1992, when he was heard. At his suggestion, M/s. T.N. Unni and Co., chartered accountants, Indore, were appointed to prepare a report on the affairs of the petitioner, M/s. Spring Stee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ots, steel and steel billets and all kinds and sizes of re-rolled sections. The facts undisputed are that the factories of the two companies are situated in adjacent premises at Malanpur in District Bhind within the jurisdiction of this court. The transferor company is allotted land by Madhya Pradesh Audyogik Vikas Nigam Limited, for short, "the MPAKVN" and machinery has been installed thereon ; though the trial run of production is over, commercial production is yet to begin for which the requisite permission is awaited and steps are being taken in that regard. On the other hand, the transferee company is an established industrial undertaking in commercial production of cold rolled strips since 1985. It is submitted that the transferor company is supposed to provide the transferee company the use of the raw material produced by it. The transferee company, it is submitted, requires large premises and a land area of a minimum of 3 acres and, therefore, amalgamation and merger of the two companies will be beneficial to all concerned because the transferor company has land measuring 5.3 acres. The transferee company has already got from the Government of India approval for expansion ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s also stated that instructions were awaited by him from the Central Government and at para 3 of the affidavit, the following instructions which he has lately received from the Central Government are extracted and consideration thereof by the court in dealing with these matters is prayed for. "That with regard to the refund of application money to the non-allottees the specified amount should be kept apart in a separate bank account out of the assets of the transferor company and subject to these provision only all the assets and liabilities of the transferor company should vest in the transferee company. The transferor company should make an advertisement in local newspapers where the registered office of the company is situated as well as in one national newspaper providing that non-allottees of shares of Spring Steels Ltd., who have not yet got their refund may apply to the advertiser for the refund of their money within such period as may be specified by the Hon'ble High Court. That as regards the alleged violation of sections 67 and 68 of the Companies Act, 1956, the transferor company may not be dissolved without winding up at least for a period of one year by the time th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sustainable in law. The true effect and character of the amalgamation largely depends on the terms of the scheme of merger. But there cannot be any doubt that when two companies amalgamate and merge into one, the transferor company loses its entity as it ceased to have its business. However, their respective rights and liabilities are determined under the scheme of amalgamation but the corporate entity of the transferor company ceases to exist with effect from the date the amalgamation is made effective." (emphasis added). Reliance was also placed on the decision in the case of Cetex Petrochemicals Ltd., In re [1992] 73 Comp Cas 298 (Mad). Shri Gupta relied on General Radio and Appliances Co. Ltd. v. M.A. Khader [1986] 60 Comp Cas 1013 (SC). In my view, the pith and substance of law bearing on amalgamation of companies, as pointed out in the case of Saraswati Industrial Syndicate [1990] 70 Comp Cas 184 , is that the scheme proposed may be sanctioned in such terms as the court may decide and the amalgamation may be made effective under the order from such date or subject to such contingency as may be specified but in all cases the discretionary jurisdiction is to be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... I have seen no oblique motive in the scheme of amalgamation. On the other hand, I am satisfied that it is a bona fide scheme to advance some of the common objects of the two companies floated by a group of common promoters. The terms and conditions of the proposed amalgamation are reasonable and the interest of the shareholders of both the companies is adequately protected. I have seen no legal obstacle in sanctioning the scheme conditionally, giving due weight to the representation of the Central Government and to the objections of the official liquidator. Indeed, due regard must be had to the fact that during pendency of these two petitions for more than last 21 months despite the shareholders of the two companies being apprised adequately by public notice and communication addressed to them by the chairman individually no objection by them is preferred to the approval of the scheme and the Central Government had also favoured the amalgamation even if conditionally. In the result, the petitions are allowed and the proposed scheme of amalgamation is sanctioned conditionally as follows : ( a )Within three months, from the State Pollution Board the requisite clearance shall be o ..... X X X X Extracts X X X X X X X X Extracts X X X X
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