THE HON’BLE SRI JUSTICE B.SESHASAYANA REDDY Company Petition No.25 of 2010 connected with Company Application No.2120 of 2009 And Company Petition No.26 of 2010 connected with Company Application No.2121 of 2009 And Company Petition No.27 of 2010 connected with Company Application No.2122 of 2009 Date:12th March, 2010 Between: M/s. Sieger Solutions Ltd., a Company incorporated under the Companies Act, 1956 having its registered office at No.36, Sarojini Devi Road, Secunderabad – 500 003, represented by its Company Secretary, N.Nagaraja. … Petitioner/1st Transferor Company M/s.Deccan Chronicle Bangalore Ltd., a Company incorporated under the Companies At, 1956 having its registered office at No.36, Sarojini Devi Road, Secunderabad – 500 003, represented by its Director N.Krishnan. … Petitioner/2nd Transferor Company M/s.Asianage Holdings Limited, a Company incorporated under the Companies Act, 1956 having its registered office at No.36, Saroini Devi Road, Secunderabad – 55 003, represented by its Director P.K.Iyer. … Petitioner/3rd Transferor Company *** THE HON’BLE SRI JUSTICE B.SESHASAYANA REDDY Company Petition No.25 of 2010 connected with Company Application No.2120 of 2009 And Company Petition No.26 of 2010 connected with Company Application No.2121 of 2009 And Company Petition No.27 of 2010 connected with Company Application No.2122 of 2009 COMMON ORDER: These three petitions have been filed under Section 391 and 394 of the Companies Act, 1956, seeking sanction and confirmation of this Court for the scheme of amalgamation as approved by the shareholders of the three transferor Companies and the Board of Directors of the transferee company. 2. M/s.Sieger Solutions Ltd, a company incorporated under the Companies Act, 1956 (hereinafter referred to as ‘the 1st transferor Company) and M/s.Deccan Chronicle Bangalore Ltd., a Company incorporated under the Companies At, 1956 (hereinafter referred to as the ‘2nd transferor Company) and M/s.Asianage Holdings Limited, a Company incorporated under the Companies Act, 1956 having their registered offices at No.36, Saroini Devi Road, Secunderabad, (hereinafter referred to as ‘the 3rd transferor Company) are subsidiaries to M/s. Deccan Chronicle Holdings Limited (hereinafter referred to as ‘the transferee Company). The objects of the respective companies have been detailed in para.10 of the respective petitions. Salient features of the scheme of amalgamations have been detailed in para.24 of the respective petitions. M/s.Deccan Chronicle Holdings Limited is a principal promoter of these three companies. Conducting of shareholders meeting of the three transferor companies have been dispensed with as per orders in C.A.Nos.2020, 2021 and 2022 of 2009. 3. The Official Liquidator placed on record the reports reporting no objection for the proposed scheme. The Central Government raised objection with regard to payment of stamp duty under Schedule- I-A, Article 20(d). Learned counsel appearing for the petitioner Companies submits that there is no allotment of shares by the transferee company to the transferor companies since the transferee company is holding 100% shares. Therefore, Schedule-I A, Article 20(d) is not applicable to the facts of the case. The scheme of amalgamation is explicit that the transferee company is holding 100% shares in all the three transferor companies. Hence, the objection raised by the Central Government is not sustainable. 4. A learned single Judge of this Court in In re Nebula Motors Limited[1] held that there is no need for the transferee company to approach the Court for necessary sanction. It is appropriate to refer Section 394 of the Companies Act, which reads as hereunder: Provisions for facilitating reconstruction and amalgamation of companies.— 394. (1) Where an application is made to the Court under Section 391 for the sanctioning of a compromise or arrangement proposed between a company and any such persons as are mentioned in that section, and it is shown to the Court- (a) that the compromise or arrangement has been proposed for the purposes of, or in connection with, a scheme for the reconstruction of any company or companies, or the amalgamation of any two or more companies; and (b) that under the scheme the whole or any part of the undertaking, property or liabilities of any company concerned in the scheme (in this section referred to as a 'transferor company') is to be transferred to another company (in this section referred to as 'the transferee company') The Court may, either by the order sanctioning the compromise or arrangement or by a subsequent order, make provision for all or any of the following matters :-- (i) the transfer to the transferee company of the whole or any part of the undertaking, property or liabilities of any transferor company; (ii) the allotment or appropriation by the transferee company of any shares, debentures, policies, or other like interests in that company which, under the compromise or arrangement, are to be allotted or appropriated by that company to or for any person; (iii) the continuation by or against the transferee company of any legal proceedings pending by or against any transferor company; (iv) the dissolution, without winding-up, of any transferor- company; (v) the provision to be made for any persons who, within such time and in such manner as the Court directs, dissent from the compromise or arrangement; and (vi) such incidental, consequential and supplemental matters as are necessary to secure that the reconstruction or amalgamation shall be fully and effectively carried out: Provided that no compromise or arrangement proposed for the purposes of, or in connection with, a scheme for the amalgamation of a company, which is being wound-up, with any other company or companies, shall be sanctioned by the Court unless the Court has received a report from the Company Law Board or the Registrar that the affairs of the company have not been conducted in a manner prejudicial to the interests of its members or to public interest: Provided further that no order for the dissolution of any transferor company under Clause (iv) shall be made by the Court unless the Official Liquidator has, no scrutiny of the books and papers of the company, made a report to the Court that the affairs of the company have not been conducted in a manner prejudicial to the interests of its members or to public interest. (2) Where an order under this section provides for the transfer of any property or liabilities, then, by virtue of the order, that property shall be transferred to and vest in, and those liabilities shall be transferred to and become the liabilities of, the transferee company; and in the case of any property, if the order so directs, freed from any charge which is, by virtue of the compromise or arrangement, to cease to have effect. (3) Within thirty days after the making of an order under this section, every company in relation to which the order is made shall cause a certified copy thereof to be filed with the Registrar for registration. If default is made in complying with this sub-section, the company, and every officer of the company who is in default, shall be punishable with fine which may extend to fifty rupees. (4) In this section- (a) 'property' includes property, rights and powers of every description; and 'liabilities' includes duties of every description; and (b) 'transferee company' does not include any company other than a company within the meaning of this Act; but 'transferor company' includes any body corporate, whether a company within the meaning of this Act or not." A perusal of the said provision shows that if it is shown to the Court that an arrangement has been proposed for the amalgamation of any two or more companies, the Court having regard to the provisions contained in Section 391 of the Act and the procedure envisaged thereunder and the proviso incorporated under Section 394, sub- section (1), is satisfied that the proposed arrangement for amalgamation is not in any manner prejudicial to the interests of its members or to public interest shall sanction the scheme. It is obvious, therefore, that the section requires the sanction of the scheme for amalgamation of two companies. In the instant case, there are three transferor companies and one transferee company. All the transferor companies are subsidiaries of the transferee company. The scheme of amalgamation has been approved by the shareholders of the three transferor companies. On perusing the scheme and the objects of these companies, I do not see any impediment in sanctioning the scheme of amalgamation as approved by the shareholders of the transferor companies. The scheme of amalgamation has been enclosed in Annexure-9 to the respective petitions. The scheme of amalgamation is stated to be beneficial for the three transferor companies. Hence, the scheme as approved by the shareholders of the three transferor companies is sanctioned. 5. Accordingly, all the three petitions stand allowed. A certified copy of this Order shall be filed before the Registrar of Companies within thirty (30 days) from the date of receipt of the same for registration. The order of this Court shall be drafted in Form No.42. ______________________ B.SESHASAYANA REDDY, J. Date:12th March, 2010. CS THE HON’BLE SRI JUSTICE B.SESHASAYANA REDDY Company Petition No.25 of 2010 connected with Company Application No.2120 of 2009 And Company Petition No.26 of 2010 connected with Company Application No.2121 of 2009 And Company Petition No.27 of 2010 connected with Company Application No.2122 of 2009 Date:12th March, 2010 [1] 2003 (5) ALD 327