Court approves amalgamation scheme despite objections, directs compliance with Accounting Standard 14

The court sanctioned the scheme of amalgamation between the transferor and transferee companies under sections 391(1), 393, and 394 of the Companies Act, 1956, despite objections from the Central Government regarding accounting entries/adjustments and the absence of a specific clause in the petitioner's memorandum of association for amalgamation. The court accepted the petitioner's compliance with Accounting Standard 14 and legal precedents allowing amalgamation without a specific provision in the memorandum, ultimately approving the scheme and directing adherence to Accounting Standard 14 for formalizing the amalgamation.

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Issues:
Application under sections 391(1), 393, and 394 of the Companies Act, 1956 for sanctioning the scheme of amalgamation. Central Government's objections regarding accounting entries/adjustments and lack of clause in the memorandum of association for amalgamation.

Analysis:
1. The application sought the court's sanction for the scheme of amalgamation between the transferor and transferee companies under sections 391(1), 393, and 394 of the Companies Act, 1956.

2. The Central Government raised objections related to accounting entries/adjustments and the absence of a clause in the petitioner-company's memorandum of association enabling amalgamation with another company.

3. Regarding objection (a) on accounting entries/adjustments, the petitioner agreed to follow Accounting Standard 14 as notified by the Central Government under section 211(3A) of the Companies Act, 1956.

4. Concerning objection (b) about the lack of a clause in the memorandum of association, the petitioner argued that for statutory amalgamation with court sanction, specific power of amalgamation in the memorandum is not mandatory, citing legal precedents from various High Courts.

5. The Assistant Solicitor General of India acknowledged the legality of the amalgamation without a specific provision in the memorandum due to court sanction, aligning with the precedents set by different High Courts.

6. The court, considering the statutory power of amalgamation invoked under the Companies Act and the compliance with all formalities, including shareholder approval and Regional Director's views, sanctioned the amalgamation without requiring an amendment to the petitioner's memorandum.

7. The court approved the scheme of amalgamation and granted the requested prayers, directing the transferor company to adhere to Accounting Standard 14 for formalizing the amalgamation.

This detailed analysis covers the issues raised in the legal judgment, the objections by the Central Government, arguments presented by both parties, relevant legal precedents cited, and the court's final decision sanctioning the scheme of amalgamation under the Companies Act, 1956.

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