1998 (9) TMI 481 - HC - Companies Law

Summary

Issues Involved:
1. Sanction of the scheme of amalgamation under sections 391, 392, and 394 of the Companies Act, 1956.
2. Compliance with statutory procedures for the amalgamation.
3. Approval of the scheme by shareholders and creditors.
4. Transfer of assets, liabilities, and obligations from transferor companies to the transferee company.
5. Dissolution of transferor companies without winding up.

Issue-wise Detailed Analysis:

1. Sanction of the Scheme of Amalgamation:
The petitioners filed nine petitions seeking the sanction of a scheme of amalgamation under sections 391, 392, and 394 of the Companies Act, 1956. The transferor companies, namely Uma Sridhar Hire Finance (P.) Ltd., Soumya Vishnu Hire Finance (P.) Ltd., USL Exports (P.) Ltd., Sridhar Investments (P.) Ltd., Ganupati Investments (P.) Ltd., Uma Soumya Investments (P.) Ltd., Sri Ramachandra Investments (P.) Ltd., and Sri Ramachandra Securities (P.) Ltd., sought to amalgamate with Hyderabad Securities Ltd., the transferee company. The primary objective was to consolidate business operations, facilitate better growth prospects, and comply with Reserve Bank of India guidelines for non-banking financial companies.

2. Compliance with Statutory Procedures:
The court directed the transferor companies to convene meetings of their shareholders to approve the amalgamation scheme. The meetings were conducted as per the court's directions, with appointed advocates acting as chairpersons. Notices of the meetings were sent to all shareholders and advertised in newspapers. The reports submitted by the chairpersons indicated that the scheme was approved by the majority of shareholders. The Registrar of Companies and the Official Liquidator were notified, and neither raised any objections. The petitions were also advertised, and no objections were received.

3. Approval of the Scheme by Shareholders and Creditors:
The board of directors of all the companies approved the scheme of amalgamation on 23-3-1998. Shareholders' meetings were held, and the scheme was approved by the majority of shareholders. In some cases, meetings were dispensed with as all shareholders had filed affidavits agreeing to the amalgamation. There were no secured creditors, and the unsecured creditors provided written consent for the amalgamation.

4. Transfer of Assets, Liabilities, and Obligations:
As per the scheme, the transfer date was set as 1-4-1997. The transferee company was to issue and allot two equity shares of Rs. 10 each for every five equity shares of Rs. 10 each held by shareholders of the transferor companies. All debts, liabilities, duties, and obligations of the transferor companies would be transferred to the transferee company without any further act or instrument. The transferee company would also discharge the liability related to deposits received under section 58A of the Companies Act.

5. Dissolution of Transferor Companies without Winding Up:
The court found that the statutory procedures had been complied with, the scheme was approved by the majority of shareholders, and there were no objections from the Registrar of Companies or the Official Liquidator. The scheme was deemed just, fair, and reasonable. Consequently, the court ordered the transferor companies to be amalgamated with the transferee company with effect from 1-4-1997. The transferor companies would stand dissolved without winding up, and all their rights, liabilities, and duties would be transferred to the transferee company.

Conclusion:
The petitions were allowed, and the scheme of amalgamation was sanctioned. The transferor companies were directed to file a copy of the court's order with the Registrar of Companies within 60 days, and the Registrar was to treat the transferor companies as dissolved from 1-4-1997. The court also clarified that any interested person could apply for appropriate directions if necessary. The petitions were disposed of with costs as incurred.