2014 (5) TMI 1234 - HC - Companies Law

Delhi HC approves company merger scheme under sections 391-394 after shareholder creditor consent and regulatory clearance

Delhi HC sanctioned a scheme of amalgamation under sections 391-394 of the Companies Act, 1956. The court found no impediment to approval after reviewing ... Seeking sanction to the Scheme of Amalgamation - sections 391 to 394 of the Companies Act, 1956 - HELD THAT:- In view of the approval accorded by the Shareholders and Creditors of the Petitioner Companies; representation/reports filed by the Regional Director, Northern Region and the Official Liquidator, attached with this Court to the proposed Scheme of Amalgamation, there appears to be no impediment to the grant of sanction to the Scheme of Amalgamation. Consequently, sanction is hereby granted to the Scheme of Amalgamation under sections 391 and 394 of the Companies Act, 1956. The Petitioner Companies will comply with the statutory requirements in accordance with law. Petition allowed. Issues:1. Sanction to the Scheme of Amalgamation under sections 391 to 394 of the Companies Act, 1956.Analysis:The judgment pertains to a second motion joint Petition filed seeking sanction to the Scheme of Amalgamation involving multiple companies. The Petitioner Companies sought approval for the amalgamation of several Transferor Companies with a Transferee Company. The petition included details of the companies involved, their capital structure, resolutions passed by the Boards of Directors, and compliance with relevant provisions of the Companies Act, 1956.The Official Liquidator and the Regional Director, Northern Region, Ministry of Corporate Affairs, were issued notices regarding the petition. The Official Liquidator confirmed no complaints against the proposed Scheme and that the affairs of the Transferor Companies were not prejudicial. The Regional Director highlighted certain observations, including pending Share Application Money and typographical errors in the audited accounts of one of the Transferor Companies.In response to the observations, the Petitioner Companies addressed the concerns raised by the Regional Director, ensuring compliance with the requirements. The counsel for the Petitioner Companies clarified the technical aspects of the reduction of capital due to crossholding of shares and the necessity of compliance with relevant provisions.The judgment acknowledged the compliance with the provisions of the Companies Act, 1956, and the Companies (Court) Rules, 1959, regarding the reduction of share capital. An application seeking exemption from filing a separate petition for capital reduction was allowed based on substantial compliance with the applicable rules.Approval was granted to the Scheme of Amalgamation considering the representations/reports filed by the Regional Director and the Official Liquidator, along with the absence of objections from any other party. The order directed the transfer of assets, rights, and liabilities to the Transferee Company upon the Scheme coming into effect, leading to the dissolution of the Transferor Companies without winding up.The judgment also emphasized the compliance with statutory requirements, the filing of a certified copy of the order with the Registrar of Companies, and the voluntary deposit of a sum in the Common Pool fund of the Official Liquidator by the Petitioner Companies. The order clarified that it did not exempt from stamp duty or other charges and specified the necessary compliance with any other legal requirements.In conclusion, the Petition was allowed in the specified terms, ensuring the completion of the amalgamation process in accordance with the law.