Scheme of Arrangement between East West Pipeline Infrastructure Pvt. Ltd.
- 2022-02-16
Citation: (2009) 150 Com Cases 728 (Kar)
Facts: M/s. Nokia Siemens Network India Private Limited, a transferor company seeking sanction of amalgamation with M/s Nokia Siemens Networks Private Limited (hereinafter referred to as a transferee company) so as to make the same binding on all the shareholders, secured and unsecured creditors of the transferor as well as the transferee company.
Issue: Whether the scheme of amalgamation is binding?
Judgement: In Miheer H. Mafatlal v. Mafatlal Industries Ltd., the Hon’ble Supreme Court has laid down the broad approvals of the jurisdiction of the Company Court in the matter of scheme of amalgamation. The court held that all such approvals have been complied with.
It further held that the sanctioning court has to consider whether the scheme putforth for sanction is backed up by the requisite majority vote as required under Section 391(2) of the Act and that the scheme is not violative of any provision of law and is not contrary to public policy; that the members or the creditors of the company are acted in a bonafide manner and in good faith and not coercing the minority in order to promote any interest against the interest of the minority and also where the scheme affects members or its creditors either because it involves reorganisation of the share capital or otherwise.
In the proposed scheme, as per clause 7 extracted above, there is no reorganisation of the share capital and when 100% subsidiary company is seeking to amalgamate with its holding company where the scheme is not detrimental in any manner to the interests of the members or creditors of the transferee company. Since the instant scheme does not affect rights of the members or the creditors of the transferee company as it does not involve reorganisation of the share capital, it is nothing but the amalgamation of the subsidiary company with the holding company for the convenience of business and efficient administration. Therefore, it is binding on all the shareholders secured and unsecured creditors of the petitioner (transferor company) and on the transferee company.
