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Judgment
Vikramajit Sen, J.—These petitions have been filed under Sections 391 to 394 of the Companies Act, praying for sanction to be accorded to the Scheme of Amalgamation of Highland Electro Appliances Private Limited (Transferor Company No.1), Jetland Marketing Services Private Limited (Transferor Company No.2) and K.T. Electronics Private Limited (Transferor Company No.3) with Global Solutions Private Limited (Transferee Company)
The Petitioners have placed on record copies of the Scheme of Amalgamation. The objects and salient features of the Scheme and the circumstances necessitating the amalgamation of the above said companies have been explained in the petitions. I find no reason to disagree with he expectations of the Petitioner Companies.
The Registered Offices of all the above said Transferor Companies and of the Transferee Company are situated at New Delhi, within the territorial jurisdiction of this Court. In fact they share the same address in respect of their Registered Office.
The Board of Directors of the Transferor Companies 1 to 3 and of the Transferee Company have passed their respective Resolutions approving the proposed Scheme of Amalgamation. True copies of the said Resolutions have been placed on record. The Petitioners have also placed on record copies of the Memorandum and Articles of Association as well as Audited Accounts of the Applicant Companies as at 31st March 2001.
It has also been submitted that there are no investigations or proceedings pending in relation to the Transferee Company or any of the Transferor Companies under Sections 235 to 251 of the Companies Act, 1956.
The Regional Director, Department of Company Affairs, Kanpur pursuant to notice issued to him, has, in terms of his Report, raised an Objection in respect of Transferor Company No.2 to the effect that the Memorandum of the Company does not contain the power to amalgamate with any other company, the proper course to be adopted is for the Transferor or Company to first carry out requisite amendments in its Objects clause in the Memorandum. This would be achieved by taking recourse to Section 17 of the Companies Act. Learned counsel for the Petitioner, however, submits that this Objection is without merit as the matter stands comprehensively settled by a series of judgments of the Calcutta High Court, and a judgment of the Bombay High Court.
In Hari Krishna Lohia v. Hoolungooree Tea Co. Ltd. and Anr. (1970) 40 Comp. Cas. 458, a Division Bench of the High Court of Calcutta held that "the power to amalgamate one company with another may flow from the memorandum of it may be acquired by resorting to the statute which confers a right on a company to alter its memorandum in aid of amalgamation with another company. If a company by virtue of its power in the memorandum desires to amalgamate with another company without coming to a court of law, such amalgamation would be valid". A Single Judge of the Calcutta High Court has adopted this view in United Bank of India Limited. v. United India Credit and Development Co. Limited (1977) 47 Comp. Cas. 689 and in Marybong & Kyel Tea Estates Ltd. (1977) 47 Comp Cas. 802. The Learned Judge had based his conclusion on the principle that by invoking Sections 391 and 393 of the Companies Act, the statutory powers exercised by the Company Judge had been invoked, and that consequently there are no fetters on the exercise of such powers regardless of whether the power to amalgamate with another company is contained in the Memorandum of the concerned company. This view has also found favor with the High Court of Bombay in Aimco Pesticides Ltd. (2001) 103 Comp. Cas. 463. I am in respectful agreement with the views expressed by both the High Courts. It appears to me to be uncontrovertable that the powers of the Court under Sections 391 to 394 are not circumscribed by or predicated on the applicant company possessing powers under its objects clause to amalgamate with any other company. As has been observed by the Division Bench of the Calcutta High Court, if such a power is in fact contained in the Memorandum of the respective companies, those companies need not seek the imprimatur and approval of the Company Judge and may initiate and effect the amalgamation de hors the company Judge. In these circumstances the object on raised by the Regional Director is overruled.
The Regional Director has also raised Objection to the effect that in view of the present shareholding pattern and the shareholding pattern of Transferee Company after the proposed Scheme of Amalgamation and also the position of Reserves and surplus as at 31.03.2001, the possibility of the Scheme having been framed to make the said Trust a virtual owner of all the four Companies and to avoid payment of Income Tax cannot be ruled out. In this regard learned Senior counsel appearing on behalf of the Petitioner undertakes that the Income Tax shall be paid individually or severally by all the above said Transferor Companies, Transferee Company or the Trust. Subject to the above undertaking, this Objection of the Regional Director is also overruled. There being no other Objection, the Scheme is hereby sanctioned subject to the undertaking given by learned Senior Counsel appearing on behalf of all the above said Petitioner Companies.
The Official Liquidation attached to this Court, pursuant to notice issued to him, has also recorded his No Objection to the Scheme of amalgamation in respect of Transferor Companies 1 to 3 and the Transferee Company, in terms of his Report.
Vide Orders of this Court dated 30.5.2002, the separate Meetings of the Equity Shareholders of Transferor Companies 1 to 3 and the Transferee Company were directed to be dispensed with since all the Equity Shareholders of the Transferor Companies and the Transferee Company and granted their consent in writing to the proposed Scheme of amalgamation. Since the Transferor Companies had no Creditor existing up-to-date, the Transferor Companies were also exempted from the requirement of convening the Meetings of their Creditors. However, by the same Order the separate meeting of the creditor of the Transferee Company was directed to be convened. The said Meeting was duly convened. In the meeting of the Creditor the Scheme of Amalgamation was unanimously approved. Copy of the ''No Objection Certificate'' of the creditor of the Transferee Company is on the record.
By Orders dated 9.8.2002, in addition to the issuance of notices to the Regional Director and Official Liquidator, citation was also ordered to be published in ''Statesman'' (English) and ''Veer Arjun'' (Hindi). These have been duly carried out. In spite of the advertisement of the notice of these petitions in the newspapers, no one has filed any objection to the grant of sanction to the Scheme. There has also been no appearance before the Court to oppose the prayers contained in the petitions, or to the said Scheme of Amalgamation.
In the circumstances narrated above, and having regard to the averments in the petitions and the materials placed on record, and after consideration of the respective Reports of the Regional Director and Official Liquidator, I am satisfied that the prayers in the petitions deserve to be allowed. I do not find any legal impediment to the grant of the sanction to the Scheme of Amalgamation. Hence the sanction is hereby granted to the above mentioned Scheme of Amalgamation under Sections 391 to 394 of the Companies Act, 1956. Consequent to the amalgamation of the Companies, which will be deemed to have taken effect from the appointed date, the Transferor Companies 1 to 3, having amalgamated with the Transferee Company shall stand dissolved without the process of winding up.
Petitions stand disposed of in the above terms.