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Delhi High Court Approves Merger Scheme under Companies Act The High Court of Delhi granted sanction to the scheme of Merger/Amalgamation between M/s. Steel Kingdom Netcom Limited and M/s. Indo German International ...
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Delhi High Court Approves Merger Scheme under Companies Act
The High Court of Delhi granted sanction to the scheme of Merger/Amalgamation between M/s. Steel Kingdom Netcom Limited and M/s. Indo German International Private Limited under sections 391(2) and 394(1) of the Companies Act, 1956. The Court modified the effective date of the scheme based on approvals from both companies, and the transferor company was to dissolve without winding up proceedings. No objections were raised, and the Official Liquidator supported the scheme. The Court's decision was influenced by the case law in Marshall Sons & Co. (India) Ltd. v. ITO.
Issues: Petition seeking sanction of the scheme of Merger/Amalgamation under sections 391 and 394 of the Companies Act, 1956.
Analysis: The petition filed by M/s. Steel Kingdom Netcom Limited sought the sanction of the scheme of Merger/Amalgamation with M/s. Indo German International Private Limited. Both companies had their registered offices within the territorial jurisdiction of the High Court of Delhi. The petition was supported by relevant documents, including Memorandum and Articles of Association, Annual Reports, and the scheme of Merger/Amalgamation. The meeting of Equity Shareholders and creditors was dispensed with as all shareholders and creditors had given their written consent to the proposed scheme.
The salient features of the scheme and the reasons for it were explained in the petition. It was asserted that no proceedings under sections 235 to 251 of the Companies Act were pending against the company. The petition was supported by an affidavit and filed on 12-12-2003. Notices were issued to relevant authorities, and the citation was published in newspapers. The Regional Director, Department of Company Affairs, filed an affidavit stating that the claim of the companies being engaged in the same/similar business was factually incorrect. However, the counsel for the petitioner argued that the diversity of objects of the two companies should not be a ground for declining sanction to the proposed scheme of amalgamation.
Despite advertisements and notices, no objections were received, and no opposition was presented in court. The Official Liquidator had no objections to the scheme being sanctioned. The petitioner sought to modify the effective date of the scheme, which was allowed based on the approval of the respective Boards and Extraordinary General Meetings of both companies. The Court relied on the judgment in Marshall Sons & Co. (India) Ltd. v. ITO to support its decision to modify the effective date.
After considering the petition, materials on record, and reports filed by the Regional Director, the Court granted sanction to the scheme of Amalgamation under sections 391(2) and 394(1) of the Companies Act. The transferor company was to stand dissolved without undergoing the process of winding up. The petition was disposed of, and no legal impediments to the grant of sanction were found.
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