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2012 (7) TMI 1001 - HC - Companies LawApproval of a scheme of arrangement - reserve utilized for the purpose of declaring dividends - Held that:- The reserve can be utilized for the purpose of declaring dividends. Since, aforesaid aspect was not pointed out to the learned Counsel for the appellant, either at the time of hearing of the petition or when the matter was kept for dictating the order, in our view, there was no justification in imposing such a condition, while sanctioning the Scheme in connection with nonutilization of amalgamation reserve for the purpose of declaring dividend. Here, it is required to be noted that no objection was taken by the Regional Director to the said clause and even the shareholders have unanimously approved the Scheme with the original Clause-10.5. Considering the same, it cannot be said that incorporation of the said clause is in violation of public policy and as held by various Courts, such amalgamation reserve can be utilized for the purpose of declaring dividends. Even, the learned Single Judge of this Court has, earlier, taken the similar view. In view of the same, the direction given by the learned Single Judge that such amalgamated reserve shall not be used, in any manner, for declaring dividend, requires to be set aside and the Scheme is held to have been sanctioned as a whole, including the original Clause-10.5 of the Scheme. In view of the above discussion, all the appeals are ALLOWED. The Scheme is SANCTIONED as a whole, including the original CLAUSE-10.5 of the Scheme.
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