Court approves amalgamation scheme under Companies Act 1956, shareholder objections dismissed, assets transferred, company dissolved.

The Court sanctioned the Scheme of Arrangement under Sections 391 and 394 of the Companies Act, 1956, involving the amalgamation of two companies. Objections raised by a shareholder were deemed meritless, and compliance with statutory procedures was confirmed. The Court found the Scheme just, fair, and reasonable, approving the transfer of assets and dissolution of one company without winding up. Requirements for NOC from the stock exchange were considered non-mandatory. The Court directed necessary filings and fund deposits, ultimately allowing the petitions with no costs awarded.

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Issues Involved:
1. Sanction to the Scheme of Arrangement under Sections 391 and 394 of the Companies Act, 1956.
2. Objections raised by Mr. H.K. Chadha.
3. Compliance with statutory procedures and requirements.
4. Validity of AGMs and audit reports.
5. Allegations of fraudulent activities and mismanagement.
6. Requirement of No Objection Certificate (NOC) from Delhi Stock Exchange (DSE).

Issue-wise Detailed Analysis:

1. Sanction to the Scheme of Arrangement under Sections 391 and 394 of the Companies Act, 1956:
The petitions filed by Phenil Sugars Pvt. Ltd. (PSPL) and Basti Sugar Mills Co. Ltd. (BSMCL) sought sanction for the Scheme of Arrangement involving the amalgamation of BSMCL with PSPL effective from 1st April 2010. The Court directed the convening of meetings for shareholders and creditors, which were held, and approval was granted to the Scheme. The Court ultimately sanctioned the Scheme, noting that all statutory procedures were complied with, and there were no substantial objections from shareholders or creditors.

2. Objections raised by Mr. H.K. Chadha:
Mr. H.K. Chadha, a shareholder of BSMCL, raised several objections, including the validity of AGMs, the authenticity of audit reports, and allegations of fraudulent activities. The Court noted that Mr. Chadha had a history of litigation and his objections were found to be without merit. The Court also observed that the objections were similar to those raised in previous applications and were not substantiated by any material evidence.

3. Compliance with statutory procedures and requirements:
The Court examined whether all requisite statutory procedures were followed, including the holding of meetings and obtaining necessary approvals. It was noted that the Scheme was backed by the requisite majority vote and all relevant material was placed before the voters. The Court found that the Scheme was just, fair, and reasonable, and complied with the provisions of Sections 391 and 394 of the Act.

4. Validity of AGMs and audit reports:
The Court addressed the objections regarding the validity of AGMs held on 29th September 2004, 30th September 2005, and 30th December 2006. It was noted that the audited accounts for the relevant financial years were placed and adopted in subsequent AGMs, and any default in this regard was condoned. The Court found no merit in the objection that adjustment entries needed to be made in the accounts prepared by the previous auditor, BRS.

5. Allegations of fraudulent activities and mismanagement:
Mr. H.K. Chadha alleged that the property of BSMCL was transferred for an unrealistically low consideration and that shares of certain shareholders were illegally transferred to PSPL. The Court found no material evidence to support these allegations. It was noted that no other shareholder or creditor had objected to the sale or transfer of shares, and the allegations were not substantiated by any credible evidence.

6. Requirement of No Objection Certificate (NOC) from Delhi Stock Exchange (DSE):
The Court addressed the issue of obtaining an NOC from the DSE. It was noted that despite several reminders, the DSE did not respond. The Court observed that the requirement of obtaining an NOC from the stock exchange was not mandatory and that the Scheme could be approved as long as it was filed with the stock exchange one month before presenting it to the Court.

Conclusion:
The Court found that the objections raised by Mr. H.K. Chadha were without merit and that all statutory procedures and requirements were complied with. Consequently, the Court sanctioned the Scheme of Arrangement, transferring all properties, rights, and powers of BSMCL to PSPL, and dissolving BSMCL without winding up. The Court also directed that necessary intimation be filed with the Registrar of Companies within 21 days and ordered the deposit of Rs. 1 lakh with the Common Pool Fund of the Official Liquidator. The petitions were allowed, with no order as to costs.

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