Delhi High Court
In Re: Steel Kingdom Netcom Limited vs Unknown on 18 May, 2004
Equivalent citations: [2005]128COMPCAS441(DELHI), 112(2004)DLT901, [2005]59SCL544(DELHI)
JUDGMENT
S.K. Agarwal, J.
1. By this petition under Sections 391 and 394 of the Companies Act, 1956, petitioner M/s. Steel Kingdom Netcom Limited (hereinafter “Transferor Company”) is seeking sanction of the scheme of Merger/Amalgamation of M/s. Indo German International Private Limited (hereinafter “Transferee Company”) with Transferor Company.
2. The registered offices of both the companies are situated at 8B, Sagar, 6, Tilak Marg, New Delhi, which are within the territorial jurisdiction of this Court.
3. The petition is supported by copies of Memorandum and Articles of Association, Annual Reports for the year ending 31.3.2003 of both the companies. It is also accompanied by copy of the scheme of Merger/Amalgamation. By order dated 24.11.2003 passed in C.A.(M) No. 149/2003, holding of the meeting of Equity Shareholders and creditors of the petitioner company was dispensed with in view of the fact that all the shareholders and creditors of the company had given their written consent to the proposed scheme of Merger/Amalgamation.
4. The salient features of the scheme and the circumstances necessitating the same have been explained in the petition. It is also pleaded that no proceeding under Sections 235 to 251 of the Companies Act is pending against the company. Petition is duly supported by affidavit.
5. This petition was filed on 12.12.2003. Notices were issued to the Central Government and Regional Director, Department of Company Affairs, Kanpur, and also to the Official Liquidator. The citation was also ordered to be published in “The Indian Express” (English and “Jansatta” (Hindi). Notices were duly published and the citations have been filed. Mr. U.C. Nahta, Regional Director, Northern Region, Department of Company Affairs has filed an affidavit and stated that the claim that the transferor and transferee companies are engaged in same/similar business is factually incorrect. Reliance is placed on the balance sheet of the transferor company for the year ending 31.3.2003. Learned Counsel for the petitioner, in the reply affidavit, has stated that the transferor and transferee companies are run by the same management. Learned Counsel for the applicant argued that for sanction of the scheme of amalgamation it is not mandatory that the objects of the two companies arepair material or that the companies are involved in similar businesses. He placed reliance on the decisions in the matter of W.A. Beardsell and Co. (P) Ltd. and Anr., (1968) 1 Comp. L.J. 102 (Madras); and in the matter of Meleod Russel (India) Ltd., (1997) 4 Comp. LJ 60 (Cal.). Amalgamation under Section 394 of the Companies Act is primarily an internal matter of the two companies and requires approval of the shareholders, secured and unsecured creditors of the companies seeking amalgamation. It is essentially an arrangement for mutual benefit in creating a larger resource base and streamlining administration. The scope of interference by the Court is confined to considerations of legality and public interest only, Diversity of objects of the two companies cannot, in any case, be a ground for declining sanction to the proposed scheme of amalgamation.
6. No other objection been received despite advertisement of notices in the newspapers and nobody has appeared in Court to oppose the prayer in the petition. Learned Counsel for the Official Liquidator submits that they have no objection to the scheme being sanctioned.
7. Learned Counsel for the petitioner next argued that it had earlier been prayed for sanction of the scheme on or before 1st January, 2004 and since it could not get the sanction in time, it is now prayed, by way of C.A. 537/2004, to make the scheme effective from 30.6.2004 instead of 1.4.2004. He relied on the judgment of Apex Court in Marshall Sons and Co. (India) Ltd. v. Income-tax Officer, , to submit that while sanctioning the scheme of Amalgamation, it is open to the Court to modify the effective date and prescribe such date of amalgamation as it thinks appropriate in the facts and circumstances of the case. In view of the fact that the extended dates have been approved by the respective Boards of the two companies and also in the Extraordinary General Meetings of the two companies, the reasons stated in the application are accepted and the application is allowed in terms of the prayer clause.
8. Taking into consideration, the averments made in the petition, materials placed on record and reports filed by Regional Director, this Court is satisfied that the prayers made in the petition deserve to be allowed. I do not find any other legal impediment to the grant of sanction to the scheme. The sanction is accordingly granted to the scheme of Amalgamation under Section 391(2) read with Section 394(1) of Companies Act. The transferor company shall stand dissolved without undergoing the process of winding up.
9. Petition stand disposed of.