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Issues: Modification of court order under sections 392 and 394 of the Companies Act, 1956 regarding scheme of arrangement.
Analysis: The High Court of Rajasthan addressed the applications filed by Vast Textiles Limited and Associated Stone Industries (Kota) Limited under sections 392 and 394 of the Companies Act, 1956, seeking modification of the court's order dated 19-12-2006 related to the scheme of arrangement. The court had previously approved the scheme but rejected objections regarding obtaining no objection from the stock exchange and allowed an objection concerning the omission of para 19(c) of section 4 of the scheme. The applicants argued that para 19(c) does not imply non-compliance with the Companies Act, asserting that the Act's provisions must be followed post-sanctioning of the scheme. Citing legal precedents like Juggilal Kamlapat Holding Ltd. and Hotline Hol Celdings (P.) Ltd., the applicants sought modification of the court's order. The court referred to the case of Hotline Hol Celdings (P.) Ltd., which highlighted that in mergers where the transferor-companies' share capital became the authorized capital of the transferee company, no fees or stamp duty were payable. Additionally, in the case of Juggilal Kamlapat Holding Ltd., it was held that if the combined authorized capital of the transferee company did not exceed the total authorized capital of all companies involved, no further fees or stamp duty were required. Relying on these precedents, the court concluded that the previous order needed modification. Consequently, the court found merit in the applicants' submissions and decided to modify the order. The Scheme of Arrangements was sanctioned, subject to the condition of enhancing the authorized capital following the procedure under the Companies Act. The court recalled and deleted the omission of para 19(c) of section 4 from its previous order dated 19-12-2006. It also directed the applicant companies to pay costs of Rs. 2,500 to the Official Liquidator within two weeks and instructed the filing of a certified copy of the order with the Registrar of Companies within 14 days.
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