Case Note & Summary
The Bombay High Court, exercising its ordinary original civil jurisdiction, considered two company petitions filed under sections 391 to 394 of the Companies Act, 1956, seeking sanction of a scheme of amalgamation. The transferor company, EOC Tailor Made Polymers India Private Limited, sought to amalgamate with the transferee company, Raj Prakash Chemicals Limited. The board of directors of the transferor company passed a resolution approving the scheme on 16 March 2004. On 6 May 2004, the court ordered the convening of meetings of equity shareholders and creditors of both companies. In those meetings, special resolutions were passed approving the scheme. Thereafter, the present petitions were moved for final sanction. The court noted that all procedural requirements under the Company Court Rules had been complied with. The Regional Director, Department of Company Affairs, filed an affidavit dated 1 December 2004 confirming no objections except that the company should follow the procedure for compliance. The Official Liquidator was present and had no objections. The court found the scheme to be fair and reasonable and not contrary to public interest. Accordingly, the court sanctioned the scheme of amalgamation, ordered that the transferor company be dissolved without winding up, and directed that the costs of the petitions be paid by the petitioner companies. The connected company applications were disposed of.
Headnote
A) Company Law - Amalgamation - Sanction of Scheme - Sections 391-394 Companies Act, 1956 - Court sanctioned the scheme of amalgamation after noting that all procedural requirements were complied with, the Regional Director filed an affidavit confirming no objections except a procedural direction, and the Official Liquidator had no objections. Held that the scheme is fair and reasonable and not contrary to public interest (Paras 1-4).
Issue of Consideration
Whether the scheme of amalgamation between EOC Tailor Made Polymers India Private Limited (transferor company) and Raj Prakash Chemicals Limited (transferee company) should be sanctioned under sections 391 to 394 of the Companies Act, 1956.
Final Decision
The court sanctioned the scheme of amalgamation under sections 391 to 394 of the Companies Act, 1956. The transferor company shall be dissolved without winding up. The costs of the petitions shall be paid by the petitioner companies. Connected company applications are disposed of.
Law Points
- Scheme of amalgamation
- sanction of scheme
- compliance with procedural requirements
- no objections from Regional Director or Official Liquidator
Case Details
2005 LawText (BOM) (02) 393
Company Petition No. 695 of 2004 and Company Petition No. 696 of 2004
Mrs. Mona Bhide i/b. Dave and Girish and co. for the petitioner in both petitions; Shri C.J. Roy with R.C. Master and M.M. Goswami Panel counsels i/b. T.C. Kaushik for Regional Director; Shri R.C. Gupta, Official Liquidator present in C.P.695/2004 only
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Nature of Litigation
Company petitions for sanction of scheme of amalgamation under sections 391 to 394 of the Companies Act, 1956.
Remedy Sought
Sanction of the scheme of amalgamation of EOC Tailor Made Polymers India Private Limited (transferor company) with Raj Prakash Chemicals Limited (transferee company).
Filing Reason
To obtain court approval for the amalgamation scheme after board resolution and shareholder/creditor approval.
Previous Decisions
On 6.5.2004, the court passed an order for convening meetings of equity shareholders and creditors; special resolutions were passed approving the scheme.
Issues
Whether the scheme of amalgamation is fair and reasonable and not contrary to public interest.
Whether all procedural requirements under the Companies Act and Company Court Rules have been complied with.
Submissions/Arguments
Petitioner submitted that all procedural requirements have been complied with and the scheme was approved by shareholders and creditors.
Regional Director filed affidavit dated 1.12.2004 confirming no objections except that the company should follow the procedure for compliance.
Official Liquidator had no objections.
Ratio Decidendi
The scheme of amalgamation is fair and reasonable and not contrary to public interest. All procedural requirements have been complied with, and no objections were raised by the Regional Director or Official Liquidator.
Judgment Excerpts
All the procedural requirements for the purpose of amalgamation as contemplated under section I of the Company court rules have been complied with by the petitioner.
An affidavit has been filed by the Regional Director dated 1.12.2004 and has confirmed that there are no objections except that the company should follow the procedure for compliance.
The Official Liquidator has no objection to the scheme of amalgamation.
Procedural History
On 16.3.2004, board of directors of transferor company approved scheme. On 6.5.2004, court ordered convening of meetings. Meetings held and special resolutions passed. Petitions filed for final sanction. Affidavit of Regional Director filed on 1.12.2004. Court heard petitions on 10.2.2005 and sanctioned scheme.
Acts & Sections
- Companies Act, 1956: 391, 392, 393, 394
