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TMI Blog2008 (5) TMI 428X X X X Extracts X X X X X X X X Extracts X X X X ..... sfied that the amalgamation would be in the interest of the Companies and their Members and Creditors and, hence, prayer in terms of para 24(a) is hereby granted. The petition is disposal of accordingly. So far as the cost to be paid to the learned Assistant Solicitor General of India is concerned, the same is quantified ₹ 3,500. The same may be paid directly to the learned advocate Shri Harin P. Raval. - C.P. NO. 54 OF 2008 - - - Dated:- 6-5-2008 - K.A. PUJ, J. Swati Soparkar for the Petitioner. Harin P. Raval for the Respondent. ORDER 1. The petitioner-company, namely, Mekaster Valves Engineering Services Private Limited has filed this petition under sections 391 to 394 of the Companies Act, 1956 for sanctioning the Scheme of Arrangement in the nature of amalgamation of Mekaster Engineering Equipments Private Limited ( Transferor Company ) with the petitioner-company ( Transferee Company ). 2. The petitioner Company is a Private Limited Company. It was started as Joint Venture Company with French collaboration. It is engaged in manufacturing of "Safety Relief Valves". The products of the Company command good reputation and comply with t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... efits to the petitioner Company and to the Shareholders and Creditors of both the Companies and shall provide good opportunity for the growth and competitive edge over others. Accordingly, the Board of Directors of the petitioner Company resolved that subject to such approvals of the Equity Shareholders and subject to such sanctions and directions of the appropriate Courts as may be required in law, and subject to such consents and permissions of the Central Government and other authorities as may be necessary, the scheme of Amalgamation was made between the Transferor Company and the Transferee Company on the broad basis referred to in the Scheme of Amalgamation which is produced at Exh. E to the petition. 5. This Court vide order dated 1-11-2007 directed the petitioner Company to convene a meeting of the Equity Shareholders of the Company for the purpose of considering and if thought fit approving with or without modifications in the said Scheme of Amalgamation and the said order directed Shri A. V. Krishnan, Vice-Chairman of the petitioner Company and failing him Shri B. K. Singhal, Director of the Company be appointed as Chairman of the meeting and to report the result th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 008 written by the Joint Director (Legal) to the Registrar of Companies. In the said affidavit, following points are brought to the notice of this Court: (1)The petitioner Companies may be directed to submit their latest Financial Statement before this Court at the time of hearing. (2)As per Clause 12.1 of the Scheme, Transferee Company may be directed to comply with provisions of section 94/97 read with Schedule X of the Companies Act, 1956. (3)As per Clause 12.2 of the Scheme, Transferee Company may be directed to comply with the provisions of section 17 of the Companies Act, 1956. (4)As per Clause 12.3 of the Scheme, Transferee Company may be directed to comply with the provisions of section 21 of the Companies Act, 1956. 9. In response to this affidavit of the Deputy Registrar, Mr. Anshuman M. Shah, Vice President (Finance Commerce) of the petitioner Company has filed an additional affidavit. It is stated therein that the first issue pertains to the latest financial statement of the petitioner Company to be furnished before this Court. The petitioner Company has submitted the provisional balance sheet of the Company as at 29-2-2008 as Annexure 1 to the additional ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ubmission that the principle of Single Window Clearance cannot be pressed into service as the Companies Act, 1956 and the Rules framed thereunder cannot permit either the Transferor or Transferee Company to give go-bye to the relevant statutory provisions and the compliance required for giving effect to the provisions contained under other relevant statutes. He has extensively referred to certain passages from the decisions of this Court in the case of Maneckchowk Ahmedabad Mfg. Co. Ltd., In re [1970] 40 Comp. Cas. 819 and decision of Bombay High Court in the case of PMP Auto Industries Ltd., In re [1994] 80 Comp. Cas. 289 and decision of Andhra Pradesh High Court in the case of Novopan India Ltd., In re [1997] 14 SCL 233 and strongly urged that for the purpose of reduction of share capital, change of name, change of registered office or increase in the authorised share capital of the Transferee Company, the provisions contained in the Companies Act are required to be followed and necessary applications to this effect are to be moved before the appropriate authorities. Simply because a Scheme of Amalgamation or arrangement is proposed between the Transferor Company or Trans ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... emorandum thereby usurping the powers of the Company Law Board, an independent quasi-judicial authority. While allowing the petitions, the Bombay High Court held that section 391 of the Companies Act, 1956 invests the Court with powers to approve or sanction a Scheme of Amalgamation/arrangement which is for the benefit of the Company. In doing so, if there are any other things which, for effectuation, require a special procedure to be followed, except reduction of capital, then the Court has power to sanction them while sanctioning the Scheme itself. It would not be necessary for the Company to resort to other provisions of the Companies Act or to follow other procedures prescribed for bringing about changes requisite for effectively implementing the Scheme which is sanctioned by the Court. Not only is section 391 a complete Code, but it is intended to be in the nature of a "single window clearance" system to ensure that the parties are not put to avoidable, unnecessary and cumbersome procedure of making repeated applications in the Court for various other alterations or changes which might be needed effectively to implement the sanctioned Scheme whose overall fairness and feasibil ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ment in the nature of demerger and transfer of manufacturing division of the Transferor Company to the Transferee Company under section 391 read with section 394 of the Companies Act, 1956. The Central Government raised three objections with regard to clauses of the Scheme pertaining to the change in the name of the companies, change in the objects clause of the Transferee Company and the pending prosecution against the demerged Company. While dealing with all these objections, this Court has held that the proceedings under sections 391 to 394 give a "single window clearance" and there was no reason to insist on a separate formality to be followed for change in the name or the objects clause of the Memorandum of Association of the resulting Company. However, the petitioner Companies were to file necessary forms as prescribed under law in the Office of the Registrar of Companies to place on record the changes. The Court further held that in view of the fact that the demerged Company would continue to subsist the pending proceedings would continue in accordance with law. The Court, therefore, sanctioned the Scheme and held that the proposed arrangement would be in the interest of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... und of amalgamation and that the alteration of the Memorandum of Association of the Transferee Company had to be simultaneous and coterminus with the Scheme of amalgamation upon sanction by the Court. While considering this objection of the Central Government, the Court held that the procedure for alteration of the Memorandum need not be followed in an amalgamation and the court granted its sanction to the scheme of amalgamation. 20. In the case of Telecom India Private Limited, In re decided on 11-4-2007, while dealing with several objections raised by the Regional Director, the Bombay High Court held that the objection of the Regional Director that the name of the Transferee Company is to be changed and, therefore, a separate compliance with section 21 in respect of the filing of necessary forms with the Registrar of Companies is mandatory, will not survive in view of the law laid down in Vasant Investment Corpn. Ltd. s case ( supra ) and PMP Auto Industries case ( supra ). The furnishing of a notice to the Registrar of the Scheme as sanctioned will in any case constitute substantial compliance with the provisions of section 21. The objection in respect of the filing o ..... X X X X Extracts X X X X X X X X Extracts X X X X
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