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TMI Blog2007 (1) TMI 263X X X X Extracts X X X X X X X X Extracts X X X X ..... 391 and 394 of the Companies Act, 1956 (for short the Act ), seeking sanction of scheme of arrangement for amalgamation of the transferor Company M/s. Hetero Drugs Limited. The transferor Company was 100 per cent subsidiary Company of the transferee Company. It was incorporated with the main objects of carrying on the business of research, design, manufacture, production and marketing of all kinds of organic and inorganic chemicals, pharmaceuticals and to carry on the business of stockists and commission agents. As per its Memorandum of Association, the authorized share capital of the transferor Company was rupees seven crores divided into seventy thousand equity shares of rupees one thousand. 3. The transferee Company, which is a hol ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Regional Director of the Department of Company Affairs, certain objections were raised. One of the objections raised was with regard to Clause 10 of the Scheme. Clause 10 of the Scheme contemplated the clubbing of the authorised share capital of the transferor Company with the authorised share capital of the transferee Company. This was not acceptable to the Regional Director of the Department of Company Affairs on the ground that the transferee Company had to comply with the provisions of sections 94 and 97 of the Act if it intends to increase its authorised share capital. It raised some other objections also, but the Company Court accepted the Scheme of Amalgamation for the merger of M/s. Kemira Laboratories Limited with M/s. Hetero Dr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tration fee." 7. Now, the question is whether an amalgamation require that the transferee Company, under sections 94 to 97 of the Act, should increase its authorized share capital ? 8. In accordance with section 94 of the Act, there is a power with the Limited Company to alter its share capital. Under section 94A of the Act, the share capital stands increased where an order is made under section 81(4) and under section 95 of the Act, it is obligatory to give a notice to Registrar of consolidation of share capital in cases of conversion of shares into stock, and under section 97 of the Act, notice of increase of share capital or of members has to be given to the Registrar. 9. The contention of the learned Counsel for appellants i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . 926 . On merger, the two Companies seize to exist i.e., to say that neither the transferee Company remains nor the transferor Company remains, but a third Company comes into existence on the basis of the scheme sanctioned by the Court. In such a situation, it is hard to accept that there would be an increase in the share capital of one of the Companies. The same question was before Delhi High Court. In this case, the Delhi High Court held "Amalgamation of a company with another or an amalgamation of two companies to form a third is brought about by two parallel schemes of arrangements entered into between one company and its members and the other company and its members and the two separate arrangements bind all the members of the co ..... X X X X Extracts X X X X X X X X Extracts X X X X
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