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TMI Blog2007 (12) TMI 289X X X X Extracts X X X X X X X X Extracts X X X X ..... nt submitted that the only question that arises in this appeal is whether in a scheme of amalgamation the authorised capital of the transferor-companies can be combined with the authorised capital of the transferee-company thereby increasing the authorised capital of the transferee-company without payment of any fee. He relied upon the following decisions reported in Saboo Leasing P. Ltd., In re [2003] 117 Comp Cas 728 (AP) ; Jaypee Cement Ltd., In re [2004] 122 Comp Cas 854 (All) ; Hotline Hol Celdings P. Ltd., In re [2005] 127 Comp Cas 165 (Delhi); Cavin Plitstics and Chemicals P. Ltd., In re [2006] 129 Comp Cas 915 (Mad) ; Juggilal Kamlapat Holding Ltd., In re [2006] 132 Comp Cas 237 (All); Bysani Consumer Electronics Ltd., In re [2006] 134 Comp Cas 99 (Mad) and Jaypee Greens Ltd., In re [2006] 134 Comp Cas 542 (All). He submitted that all these decisions dealt with the said question have been answered in the affirmative and in favour of the appellant. Mr. Mukherjee further pointed out that the Allahabad High Court, Delhi High Court, Madras High Court and the Andhra Pradesh High Court have consistently taken the view that such combination of authorised capital of transferor and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ansferee-company of the whole or any part of the properties of the transferor-companies. He drew attention to section 394(1) (i) of the Companies Act, 1956. Section 394(4) of the said Act provides that property includes property rights and powers of every description. The transferor-companies having paid the requisite fee for their authorised capital had every right to exhaust its authorised capital and utilise the same. Therefore, this right stands transferred. It is only the paid up capital of the transferor-companies which does not stand transferred. In such circumstances the authorised capital of the transferor-companies stands transferred to the transferee-company by operation of law. He further pointed out that the objection raised to clause 11.7 of the scheme having been decided against the Central Government by other High Courts from which no appeal has been preferred by the Central Government it was not open to the Central Government to raise the selfsame objection. In such circumstances clause 11.7 of the scheme could not have been deleted, modified or substituted at the instance of the Central Government. In support of such submission he relied on Union of India v. Ka ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fter hearing the learned advocates appearing for the parties, and after analysing the facts and the authorities cited before us, we find no substance in the submissions made by the learned advocate appearing for the respondent. In the case reported in Saboo Leasing P. Ltd., In re [2003] 117 Comp Cas 728 (AP), the court relied upon a passage from the judgment of the Delhi High Court in Telesound India Ltd., In re [1983] 53 Comp Cas 926, which is reproduced hereunder (page 942) : "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 companies and the companies when sanctioned by the court. Amalgamation is, there fore, an absorption of one company into another or merger of both to form a third, which is not a mere act of the two companies or their members but is brought about by virtue of a statutory instrument and to that extent has statutory genesis and character, and to that extent it is distinguishable from a mere bilateral arrangement to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of merger where it was provided that the share capital of the transferor-companies became the authorised capital of the transferee-company, no fee to the Registrar of Companies or stamp duty to the State Government was payable. The sanction was granted and consequent on the amalgamation, the transferor-companies would stand dissolved without the process of being wound up. In the case reported in Bysani Consumer Electronics Ltd., In re [2006] 134 Comp Cas 99 (Mad), the Regional Director, Ministry of Company Affairs, Chennai raised objection as under (page 101) : "(i)The transferor-companies and the transferee-company are two legal entities, and on amalgamation, only the transferee-companies exist ; thereby, if the transferee-company increases its authorised capital, it has to comply with the provisions of sections 94 and 97 of the Companies Act by riling relevant returns with the Registrar of Companies ; (ii)As per clause 11 of the scheme, the authorised capital of the transferor-companies would be combined with the authorised capital of the transferee-company, which is not tenable since both are notional limits up to which a company can increase its paid-up capital. It is stated ..... X X X X Extracts X X X X X X X X Extracts X X X X
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