Amalgamation scheme notice requirement: no fresh Central Government notice is needed at dissolution after sanction, if liquidator reports no prejudice.

After a scheme of amalgamation is sanctioned, no fresh notice to the Central Government is required at the stage of dissolution of the transferor company without winding up, because section 394A contemplates notice when the scheme is first placed before the court for sanction. Dissolution is only a consequential step to the approved scheme. The relevant safeguard is the second proviso to section 394(1), which permits dissolution only if the official liquidator reports that the company's affairs were not conducted prejudicially to members or public interest. Here, the official liquidator's report disclosed no impediment, so dissolution was fit to be granted.

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Issues: Whether, after sanction of a scheme of amalgamation, a fresh notice to the Central Government is required at the stage of dissolution of the transferor company without winding up, and whether an order for such dissolution can be passed on the official liquidator's report.

Analysis: The statutory scheme under section 394A of the Companies Act, 1956 contemplates notice to the Central Government at the stage when the compromise, arrangement or scheme of amalgamation is placed before the court for sanction. The subsequent prayer for dissolution without winding up is only a follow-up to the sanctioned scheme and does not call for a second notice. The only substantive safeguard is the second proviso to section 394(1), which prohibits dissolution unless the official liquidator reports that the affairs of the company have not been conducted in a manner prejudicial to the interests of its members or to public interest. In the present matter, the official liquidator's report, based on the chartered accountant's report, disclosed no impediment.

Conclusion: No fresh notice to the Central Government was required at the dissolution stage, and the prayer for dissolution without winding up was fit to be granted.

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