Amalgamation scheme sanctioned after regulatory objections were answered and compliance with applicable tax and corporate laws was preserved

A scheme of amalgamation under sections 391 to 394 of the Companies Act, 1956 was sanctioned where requisite consents were in place and shareholder and creditor meetings were properly dispensed with where permissible. Objections relating to SEBI compliance, FEMA and RBI guidelines were addressed through affidavits and accepted, including the position that no shares were being allotted under the scheme. The objection on reserves and Accounting Standard 14 was not accepted, and the Court directed compliance with the Income-tax Act and rules. The petitioners were also required to comply with all applicable laws and preserve statutory liabilities, after which the scheme was approved.

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Issues: Whether the Scheme of Amalgamation deserved sanction under sections 391 to 394 of the Companies Act, 1956 and whether the objections of the Regional Director and Official Liquidator required any further modification or condition before sanction.

Analysis: The Scheme was supported by the requisite consents and the meetings of shareholders and creditors had been dispensed with where permissible. The objections regarding compliance with SEBI circulars were answered by the petitioners' affidavit, and the Court accepted that such compliance had been met. The objection concerning FEMA and RBI guidelines was also answered on the basis that no shares were being allotted under the Scheme. The objection relating to reserves and Accounting Standard 14 was not accepted as tenable in the light of prior judicial consideration. As to income-tax compliance, the petitioners were directed to comply with the Income-tax Act and the Rules framed thereunder. The Official Liquidator's concerns were met by affidavits, and the petitioners were directed to ensure compliance with all applicable laws and that statutory liabilities would not be extinguished.

Conclusion: The requirements for sanction under sections 391 to 394 of the Companies Act, 1956 were satisfied and the Scheme was sanctioned.

Final Conclusion: The amalgamation was approved and the petitions succeeded, subject to continuing compliance with applicable laws and preservation of statutory liabilities.

Ratio Decidendi: A scheme of amalgamation is to be sanctioned where the statutory requirements are satisfied, the interests of shareholders and creditors are protected, and the regulatory objections are duly answered or rendered untenable.

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