2015 (12) TMI 1723 - HC - Companies Law

Scheme of Amalgamation - Held that - Considering the entire facts and circumstances of the case and on perusal of the Scheme and the proceedings it appears that the requirements of the provisions of sections 391 to 394 of the Companies Act 1956 are satisfied. The Scheme appears to be genuine and bonafide and in the interest of the shareholders and creditors. This Court therefore accordingly allows the Company Petitions and approves the Scheme. The Scheme is sanctioned. The prayers made in the respective Company Petitions are hereby granted. The petitions are allowed accordingly. Fees of Mr. Devang Vyas are quantified at Rs. 7, 500/in each of the petitions. The said fees would be paid by the Transferee Company. The fees of the Official Liquidator are quantified at Rs. 7500/in respect of Company Petition No. 392 of 2015. The said fees to the Official Liquidator shall be paid by the Transferee Company/ Transferor Company. Filing and issuance of drawn up orders are dispensed with. All concerned authorities to act on a copy of this order along with the Scheme duly authenticated by the Registrar High Court Gujarat. The Registrar High Court of Gujarat shall issue the authenticated copy of this order alongwith Scheme within 15 days of passing of this order.

Summary

Issues:
1. Sanctioning of the Scheme of Amalgamation of two companies.
2. Dispensing with the convening and holding of meetings of various stakeholders.
3. Compliance with Accounting Standard 14 and the Income Tax Act.
4. Official Liquidator's report and statutory liabilities.

Analysis:

1. The petitions were filed for the sanctioning of the Scheme of Amalgamation of two companies. The Court had earlier dispensed with the meetings of Equity Shareholders, Preference Shareholders, Secured Creditors, and Unsecured Creditors of both companies based on consent affidavits to the Scheme received from all stakeholders.

2. The Regional Director requested an undertaking that reserves created post-Scheme sanctioning should not be distributed as dividends and compliance with Accounting Standard 14. The Court found the Director's observations regarding reserves utilization for dividends untenable based on previous judgments. The Petitioner Companies affirmed compliance with the Income Tax Act.

3. The Official Liquidator's report stated that the affairs of one company were not prejudicial to stakeholders' interests. The Court directed compliance with all applicable terms and clarified that statutory liabilities would not be absolved post-Scheme sanctioning.

4. After considering the facts, the Court found the Scheme to be genuine, bonafide, and in the interest of shareholders and creditors. The requirements of relevant sections of the Companies Act, 1956 were satisfied, leading to the approval and sanctioning of the Scheme. The Court granted the prayers made in the Company Petitions.

5. The Court quantified the fees of involved parties and directed the payment by the Transferee Company. Filing and issuance of drawn-up orders were dispensed with, instructing all concerned authorities to act on a copy of the order along with the authenticated Scheme within a specified timeframe.

This detailed analysis covers the issues of sanctioning the Scheme of Amalgamation, dispensing with meetings, compliance with regulations, Official Liquidator's report, and the final approval and directions given by the Court.