2009 (8) TMI 690 - HC - Companies Law

Rajasthan High Court Approves Amalgamation Scheme between ESL India Limited and Secure Meters Limited

ESL India Ltd., In re

The High Court of Rajasthan approved the scheme of amalgamation under sections 391-394 of the Companies Act, 1956, between ESL India Limited and Secure ... Amalgamation and merger - Held that:- As the petitioner has placed on record the resolution of the Board of Directors of the transferee-company approving the scheme of amalgamation as Annexure-D (ii). Therefore, it is clear that in the facts circumstances which are available in this petition, the transferee-company can be dispensed with from approaching the High Court for seeking sanctioning of scheme of amalgamation under sections 391-394 of the Act. No reason to exempt the applicant-company from holding the meeting of equity shareholders. The applicant since had no secured or unsecured creditors, therefore, the meeting of the Equity Shareholders of Applicant-Company shall be convened and held at the Registered Office of the Applicant-Company at Pratapnagar Industrial Area, Udaipur, Rajasthan on 10-9-2009 at 11:30 AM for the purpose of considering and if thought fit approving with or without modifications, the Scheme of Amalgamation proposed to be made between the transferor-company and transferee-company. Issues:1. Scheme of amalgamation under sections 391-394 of the Companies Act, 1956.2. Dispensing with the requirement of convening a meeting of Equity Shareholders.3. Exemption of the Transferee-Company from approaching the High Court for sanctioning the Scheme of Amalgamation.Issue 1: Scheme of Amalgamation under sections 391-394 of the Companies Act, 1956:The case involves an application by ESL India Limited, seeking sanction of the High Court for the scheme of amalgamation with Secure Meters Limited. ESL India Limited, a technology and R&D support provider, aims to merge with Secure Meters Limited, its 100% subsidiary, to streamline corporate structure and consolidate operations. The scheme outlines the transfer of assets and liabilities to the transferee-company. The applicant has provided detailed reasons for the amalgamation, emphasizing effective management and unified control of operations.Issue 2: Dispensing with the requirement of convening a meeting of Equity Shareholders:The applicant requests the High Court to dispense with the need for a meeting of Equity Shareholders, as all shareholders and the board of directors have unanimously approved the proposed scheme of amalgamation. However, the Court decides that the meeting of Equity Shareholders must be held to consider and approve the scheme. The meeting is scheduled at the Registered Office of the Applicant-Company, with specific instructions regarding quorum, chairman appointment, notice publication, and voting by proxy.Issue 3: Exemption of the Transferee-Company from approaching the High Court for sanctioning the Scheme of Amalgamation:The applicant argues for the exemption of the Transferee-Company from seeking High Court approval based on precedents from Mumbai, Delhi, and Punjab and Haryana High Courts. These judgments suggest that in certain circumstances, when the transferor-company is a 100% subsidiary of the transferee-company, the latter can be exempted from approaching the High Court for approval. The Court examines the relevant judgments and concludes that in the present case, the Transferee-Company can be dispensed with from seeking sanctioning of the scheme of amalgamation under sections 391-394 of the Act.In conclusion, the High Court of Rajasthan, after considering the submissions and relevant judgments, approves the scheme of amalgamation under sections 391-394 of the Companies Act, 1956. The Court mandates the convening of a meeting of Equity Shareholders for approval and outlines detailed procedures for conducting the meeting. Additionally, the Court exempts the Transferee-Company from approaching the High Court for sanctioning the scheme based on established legal precedents.