2015 (3) TMI 115 - HC - Companies Law

Court approves amalgamation petition between companies, addressing concerns, ensuring compliance with Companies (Court) Rules, 1959.

In Re. :- Sigma Soya Industries Pvt. Limited and Sigma Spice Industries Pvt. Limited

The Court approved the petition for amalgamation between two companies, ensuring compliance with Companies (Court) Rules, 1959. Despite concerns raised by ... Application for amalgamation under Section 391(2) to 394 of the Companies Act, 1956 - The Regional Director observations regarding compliance of Section 117 & Section 394 of Companies Act ,2013 and Treatment of asset & liabilities with compliance of AS-14 issued by ICAI It is submitted that commercial production of the transferor company has not been started and no profit and loss account has been drawn till date and also the company does not have any reserve and surplus in the balance sheet. It is also submitted that since the share exchange ratio is fixed at 1:1, no surplus shall arise post amalgamation. However it is submitted, surplus, if accrues, shall be transferred to capital reserve and the scheme shall be amended accordingly as may be directed by this Court. According to the learned counsel for the petitioners, the observation made in paragraph 2(a) of the affidavit filed by the Central Government as regards complying with the provision of Section 117 of the Companies Act, 2013 and filing of form MGT-14 is concerned, the same are not required since Clause 25 of the Articles of Association of the transferee company specifically states that the share capital can be altered by passing any Ordinary Resolution. It is further submitted for the petitioners that as stated in Clause 10.1 of the scheme of amalgamation, the authorized share capital of the transferee company shall automatically stand increased without any further act, instrument and deed on the part of the transferee company I find that observations of the Regional Director, Company Law Board, Eastern Region, Ministry of Corporate Affairs made in paragraph 2(a) of their Affidavit i.e. compliance of Section 117, are unnecessary and therefore on this aspect the submissions made by the learned counsel for the petitioners are accepted. It is held that compliance with provisions of Section 117 of the Companies Act, 2013 and filing of e-form MGT-14 are not required. -Scheme of Amalgamation approved. Issues involved:Petition under Section 391(2) to 394 of the Companies Act, 1956 for amalgamation approval.Analysis:1. Compliance with Court Orders: The petitioners sought approval for the amalgamation between two companies, transferring assets and liabilities from one to another. The Court ensured compliance with the Companies (Court) Rules, 1959, by verifying meeting reports and ordering notices to be advertised and served on relevant parties.2. Central Government's Observations: The Central Government, through the Regional Director, raised concerns regarding the scheme of amalgamation. They highlighted the need for amendments related to the capital clause, dissolution without winding up clause, and accounting treatment of assets and liabilities in the books of the Transferee Company.3. Petitioners' Submissions: The petitioners' counsel addressed the Central Government's observations. They clarified that the dissolution without winding up clause was already included in the scheme. They disputed the accounting treatment concerns, stating no commercial production had started, and any surplus would be transferred to capital reserve if it arose.4. Compliance with Companies Act: The petitioners argued against the necessity of amending the scheme to comply with Section 117 of the Companies Act, 2013, as the Articles of Association and the scheme already covered the required provisions. They provided evidence of the authorized share capital increase and fee payments to the Registrar of Companies.5. Court's Decision: After considering the submissions of the Central Government and the petitioners, the Court accepted the petitioners' explanations and granted approval for the scheme of amalgamation. The Court directed the necessary orders to confirm the amalgamation, disposing of the case with the specified orders.6. Registrar's Action: The Court instructed the Registrar General to draw up the necessary order in Form No.42 under the Companies (Court) Rules, 1959, to formalize the approval and implementation of the amalgamation scheme.