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2017 (1) TMI 961 - HC - Companies LawScheme of Amalgamation - Requirement of convening meetings - nature of scheme - Held that:- In the present case, by virtue of the proposed scheme, the entire business and undertaking of the Transferor Company is being taken over and transferred to the Transferee Company. Further, upon the proposed scheme coming into effect, as consideration, there will be no issuance of new shares by the Transferee Company to the shareholders of the Transferor Company in view of the circumstance that the latter is the wholly owned subsidiary of the former. Therefore in the instant case, on the proposed scheme coming into effect, no variation in the rights of the equity shareholders of the Transferee Company shall be caused. Resultantly, judicial discretion can be exercised to dispense with the requirement of convening the meetings of the equity shareholders of the Transferee Company, in the case of a wholly owned subsidiary being amalgamated into the Transferee Company, on the ground that no variation in rights thereof is contemplated by way of the proposed scheme. In so far as the creditors of the Transferee Company are concerned, no variation in their rights is being proposed by way of the proposed scheme. Thus rights of the creditors of the Transferee Company, pre and post amalgamation, as against the Transferee Company would not stand varied. In so far as the requirement of convening a meeting of the unsecured creditors of the Transferor Company is concerned, by lifting the corporate veil, in the present case, of wholly owned subsidiary being amalgamated with its holding company, it would be established that the creditors of the Transferor Company are, and have always been, dealing with the Transferee Company de-facto though they are the creditors of the Transferor Company de-jure. Further, it has been noted that, upon the proposed scheme coming into effect, all the existing liability, debts, duties, obligations, inter alia, of the Transferor Company shall in any event stand transferred to the Transferee Company. Therefore, no variation in the rights of the unsecured creditors of the Transferor Company is proposed. Hence, in effect, it could not be said that any ‘compromise or arrangement’ is being offered by way of the proposed scheme to the creditors or shareholders of the Transferee Company; or the unsecured creditors of the Transferor Company. Therefore, in view of this circumstance and the foregoing discussion, the requirement of convening a meeting of the creditors and equity shareholders of the Transferee Company; and the unsecured creditors of the Transferor Company, to consider, and if thought fit, approve, with or without modifications, the proposed scheme can be dispensed with. Directed accordingly. Since the Transferor Company has no secured creditors, therefore the question of convening a meeting thereof does not arise. Ordered accordingly.
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