2016 (11) TMI 212 - HC - Companies Law

Court approves Scheme of Arrangement & Amalgamation under Companies Act. Assets transferred, compliance required.

IN RE : MAGHAN PULP AND PAPER INDUSTRIES PRIVATE LIMITED AND MAGHAN PAPER MILLS PRIVATE LIMITED

The Court sanctioned the Scheme of Arrangement and Amalgamation under Sections 391 to 394 of the Companies Act, 1956, involving a Transferor Company and a ... Scheme of Arrangement and Amalgamation - Held that:- On consideration of all the relevant facts and the procedural requirements in terms of Section 391-394 of the Act and the relevant Rules and on due consideration of the reports of the Regional Director, Ministry of Corporate Affairs, New Delhi and the Official Liquidator, the Scheme of Arrangement and Amalgamation is hereby sanctioned and as a result thereto, the Assets and Liabilities of the Maghan Pulp and Paper Industries Private Limited (Transferor Company) shall stand vested in Maghan Paper Mills Private Limited (Transferee Company) and the Transferor Company shall be dissolved without being wound up. The Transferor and Transferee Companies shall comply with the provisions of Accounting Standard-14 of Institute of Chartered Accountant of India as has been undertaken. The Scheme of Arrangement and Amalgamation shall be binding on the Petitioner-Transferor and Transferee Companies, their respective Shareholders, Creditors and all concerned. Issues:Petition for sanctioning Scheme of Arrangement and Amalgamation under Sections 391 to 394 of the Companies Act, 1956.Detailed Analysis:The petition filed jointly by the petitioners-companies sought approval for the Scheme of Arrangement and Amalgamation involving a Transferor Company and a Transferee Company. Meetings of Equity Shareholders and Creditors were dispensed with as there were no Secured and Unsecured Creditors of the Transferor Company. Notice was duly issued to relevant authorities and published in newspapers as per the order dated 16.05.2016.The Official Liquidator raised objections regarding the Transferor Company's conduct, including unauthorized dividend payments and non-disclosure of corporate guarantees in financial statements. The management's response was provided, justifying the actions taken. The Chartered Accountant's report highlighted discrepancies in the company's financial affairs, leading to concerns about compliance with Accounting Standards.In response to objections, the petitioner-Companies undertook to comply with relevant accounting standards upon the Scheme being sanctioned. Detailed explanations were provided by the Director of the Transferor and Transferee Companies addressing the objections raised by the Regional Director and the Official Liquidator. The Court considered all relevant facts, reports, and procedural requirements before sanctioning the Scheme of Arrangement and Amalgamation.The Court ordered the Assets and Liabilities of the Transferor Company to vest in the Transferee Company, leading to the dissolution of the Transferor Company without winding up. Compliance with Accounting Standard-14 was mandated for both companies. The Scheme was deemed binding on the companies, shareholders, creditors, and all concerned parties. Formal order sanctioning the Scheme was directed to be filed with the Registrar of Companies within 30 days.Additionally, the Court allowed interested parties to apply for any necessary directions, and the Petitioner-Companies agreed to deposit a sum in the Common Pool Fund Account of the Official Liquidator. The case was disposed of accordingly, ensuring compliance with legal procedures and requirements.