2007 (2) TMI 315 - HC - Companies Law

Summary

Issues:
Petition under sections 391 to 394 of the Companies Act, 1956 for sanctioning the Scheme of Amalgamation between petitioner Company and Transferor-company.

Analysis:
The petitioner company, Aksh Optifibre Limited, sought approval for the Scheme of Amalgamation with Aksh Broadband Limited under sections 391 to 394 of the Companies Act, 1956. The petitioner company was incorporated as a Public Limited Company and shifted its registered office to Rajasthan. The authorized capital, objects, and financial details of the petitioner company were presented in the petition. The Board of Directors approved the amalgamation scheme, and separate meetings were held for equity shareholders, unsecured creditors, and secured creditors to vote on the scheme. The majority of each class approved the scheme, and the transferor company was to file a petition before the Delhi High Court for sanctioning. Notices were issued, and responses from the Regional Director highlighted key aspects such as employee transfer, share capital increase, and pending winding-up petitions against the transferor company. The Bombay Stock Exchange's approval was also noted.

The court considered the principles laid down in Miheer H. Mafatlal v. Mafatlal Industries Ltd. and Hindustan Lever v. State of Maharashtra to assess the scheme. It emphasized compliance with statutory procedures, requisite majority vote, fairness, absence of coercion, and commercial reasonableness. The court reviewed the objections raised by the Regional Director regarding pending winding-up petitions against the transferor company. Photostat copies of orders disposing of two petitions were submitted. The court reiterated that it should ensure compliance with statutes, fair representation, absence of oppression, and reasonableness of the arrangement. The majority's bona fide actions and the scheme's fairness were crucial. The court lacked jurisdiction to review commercial wisdom once these criteria were met. The court found the scheme just, fair, and reasonable, not prejudicial to creditors, and in the shareholders' interest, leading to the sanctioning of the Scheme of Amalgamation.

The court scrutinized the Scheme of Amalgamation, finding it reasonable, lawful, and beneficial to shareholders. Consequently, the petition was allowed, and the Scheme of Amalgamation was sanctioned as per the prayer clauses. Costs were awarded to the Official Liquidator, to be paid by the petitioner within a specified timeframe.