M/S. Meil Green Power Limited, v. -

HON'BLE SRI JUSTICE S.V.BHATT COMPANY PETITION No.108 OF 2016 ORDER:

Heard learned counsel for the petitioner.

M/s MEIL Green Power Limited/petitioner filed this petition under Sections 391 and 394 of the Companies Act, 1956 (for short 'the Act') praying for sanction of scheme of amalgamation with M/s MEGHA Engineering & Infrastructures Limited.

These corporate entities are called, for convenience, transferor company and transferee company respectively. Learned counsel for the petitioner has placed reliance upon MIHEER H.MAFATLAL V.

MAFATLAL INDUSTRIES LIMITED[1], NEBULA MOTORS LIMITED[2] and ANDHRA BANK HOUSING FINANCE LIMITED V. M/S ANDHRA BANK[3] to explain the jurisdiction of this Court under Sections 391 and 394 of the Act.

The gist of the case is as follows:

The transferor company was incorporated for carrying on the business of design, construction, finance, operation and maintenance of grid connected Solar Thermal Power Project of 50 MW capacity to be located at Virannapalle, Pamidi, Ananthapur in the State of Andhra Pradesh under Power Purchase Agreement to be entered into with NTPC Vidyut Vyapar Nigam Limited. The transferee company has substantially same and similar business objectivities and activities. The Memorandum and Articles of Association of the transferor company is filed as Annexure A1. The audited balance sheet of transferor company as on 31.03.2015 is

annexed to the petition as Annexure A2. Annexure A3 is the Memorandum and Articles of Association of transferee company and Annexure A4 is the audited balance sheet as on 31.03.2015. On 01.01.2016, the Board of Directors of transferor company approved the scheme of amalgamation. The Board of Directors of transferee company, having regard to the advantages perceived with the amalgamation of transferor company, approved the scheme of amalgamation. The effective date of amalgamation is 01.04.2015. The transferor company has set out the salient features of the scheme of amalgamation and with the assistance of learned counsel appearing for the petitioner, I have perused the exhibits.

The transferor company filed C.A.No.247 of 2016 under Section 391 of the Act to dispense with the requirement of convening the meeting of shareholders and unsecured creditors of the transferor company. On 03.0.3.2016, the application was allowed and the requirement of convening the meeting of shareholders and unsecured creditors was dispensed with.

On 30.03.2016, this Court, in the instant company petition, ordered notice to the Regional Director, South East Region, Ministry of Corporate Affairs, Hyderabad and the Official liquidator attached to the Company Court. The petitioner was directed to cause publication of notice of scheme of amalgamation in Business Standard (English) and Andhra Bhoomi (Telugu) daily newspapers of Hyderabad editions. The petitioner submits that notices on the statutory authorities were served and the advertisement was published in newspapers on 15.04.2016.

On 06.06.2016, the Regional Director, South East Region,

Ministry of Corporate Affairs, Hyderabad filed report. On 03.06.2016, the Official Liquidator has filed the report on the scheme of amalgamation under consideration.

Learned counsel for the petitioner submits that the transferor and transferee companies are wholly owned subsidiary and holding companies respectively. The shareholders and creditors of the transferor company have given their consents for proposed scheme of amalgamation.

The jurisdiction of this Court, while approving the scheme of amalgamation, according to Miheer H.Mafatlal's (1 supra) case, is as follows:

"(1) The sanctioning Court has to see to it that all requisite statutory procedure for supporting such a scheme has been complied with and that requisite meetings as contemplated by Section 391(1)(a) have been held.

(2) That the scheme put up for sanction of the Court is backed up by the requisite majority vote as required by Section 391(2).

(3) That the concerned meetings of the creditors or members or any class of them had the relevant material to enable the voters to arrive at an informed decision for approving the scheme in question. That the majority decision of the concerned class of voters is just and fair to the class as a whole so as to legitimately bind even the dissenting members of the class.

(4) That all necessary material indicated by Section 393(1)(a) is placed before the voters at the concerned meetings as contemplated by Section 391(1).

(5) That all the requisite material contemplated by the proviso to sub-section (2) of Section 391 of the Act is placed before the Court by the concerned applicant seeking sanction for such a scheme and the Court gets satisfied about the

same.

(6) That the proposed scheme of compromise and arrangement is not found to be violative of any provision of law and is not contrary to public policy.

For ascertaining real purpose underlying the scheme with a view to be satisfied on this aspect, the Court, if necessary, can pierce the veil of apparent corporate purpose underlying the scheme and can judiciously x-ray the same.

(7) That the Company Court has also to satisfy itself that members or class of members or creditors or class of creditors, as the case may be, were acting bona fide and in good faith and were not coercing the minority in order to promote any interest adverse to that of the latter compromising the same class whom they purported to represent.

(8) That the scheme as a whole is also found to be just, fair and reasonable from the point of view of prudent men of business taking a commercial decision beneficial to the class represented by them for whom the scheme is meant.

(9) Once the aforesaid broad parameters about the requirements of a scheme for getting sanction of the Court are found to have been met, the Court will have no further jurisdiction to sit in appeal over the commercial wisdom of the majority of the class of persons who with their open eyes have given their approval to the scheme even if in the view of the Court there could be a better scheme for the company and its members or creditors for whom the scheme is framed. The Court cannot refuse to sanction such a scheme on that ground as it would otherwise amount to Court exercising appellate jurisdiction over the scheme rather than its supervisory jurisdiction."

Learned counsel appearing for the statutory authorities have reported no objection for the proposed scheme of amalgamation.

I have considered the material available on record, the principles of law enunciated by the Apex Court in Miheer H.Mafatlal's case (1 supra) and the conclusions/ recommendations of the statutory authorities through their reports dated 03.06.2016 and 06.06.2016.

Having regard to the above material/reports, this Court is of the opinion that the proposed scheme of amalgamation is in conformity with the provisions of the Act. The scheme does not affect the interest of stakeholders and the public or public interest and is intended to further business interests of transferor and transferee companies for more profit and maximum utilization of available resources.

Therefore, scheme of amalgamation approved in the meeting of Board of Directors of transferor company on 01.01.2016 is sanctioned with effect from the date appointed i.e., 01.04.2015. The transferor company viz., M/s MEIL Green Power Limited is ordered to be dissolved without going through the process of winding up. The transferor and the transferee companies are directed to communicate certified copy of this order to the Registrar of Companies for the State of Telangana and the State of Andhra Pradesh, Hyderabad within 30 days from the date of receipt of a copy of this order. They are further directed to take all consequential and statutory steps required in pursuance of the approved scheme of amalgamation and the Act.

Company petition is ordered accordingly.

____________ S.V.BHATT, J Dt.08.06.2016 Lrkm

[1] 1996(87) Company Cases 792, [2] 2003(5) ALD 327 [3] 2002(3) ALD 654