NAVYUG INVESTMENTS LIMITED Vs. UNION OF INDIA

JUDGEMENT

(1.) M/s. Navyug Investments Limited (Transferee. Company) filed a petition under Sections 391 and 394 of the Companies Act, 1956 (hereinafter called the 'Act'), read with Rule 79 of the Companies (Court) Rules 1959 (hereinafter called the Rules) tor obtaining the sanction of this court to compromise and arrangement wherein the petitioner as Transferee Company will amalgamate/merge with it six transferor companies namely Navyug Investments Private Limited, with five other transferor companies namely M/s. Anshu Holdings Private Limited, Chand Holdings Private Limited, Garima Holdings Private Limited, Pawansut Forgings Private. Limited, Gaurav Holdings Private Limited and Rathi Holdings Limited. The registered office of the transferee company as well as that of the transferor companies is situated at 3B and 3A respectively at Vandana, 11, Tolstoy Marg, New Delhi-110001.

(2.) The transferor companies have also filed their respective petitions for the purpose of amalgamation/merger with the transferee company. The same are listed C.P. No. 181 to 186/92 with C.As. 532/92 to 537/92. The transferee and the transferor companies are involved, inter alia, in the business of invest, buy, hypothecate, sell, transfer, deal in and dispose of any shares, stocks, debentures, securities, properties of any other company etc. It is also the function of the transferee as well as transferor companies to act as brokers, underwriters and to give any guarantee for the payment of money or the performance of any obligation or underwriting. However, because of the limitations associated with the small operations and because of lack of large scale investible funds, transferee company decided to amalgamate/merge with it all the six transferor companies with a view to augment its financial resources which will eventually and in the long run benefit the shareholders of the transferee company as it can then venture into expanding its business activities and consequently the shareholders of the transferor companies will also derive benefit and advantage. It has also been stated that the amalgamation will strengthen the organisational base and will augment the resource base of the transferee company. Both transferee and transferor companies have common promoters and there is over-lapping and duplication in the distribution of directional talents and expertise. Therefore in order to avoid duplication of managerial time and effort, it has been decided to get the transferor companies amalgamate and merge with the transferee company. It will facilitate smoother managerial control and will avoid problems of inter dependence. The amalgamation will result greater cohesiveness and uniformity in the working of the transferor companies. It will improve the corporate image of the company in the market which will eventually benefit the shareholders of the company besides improving the credibility of the company with the financial institutions, banks and general investing public. Keeping in view the overall efficiency of the business operation which will help in achieving economies in administra- tion, technical and commercial spheres and to improve the collection efforts in concentrating on building up of the goodwill. Since the Director of the transferee company, Sh. Rajesh Rathi is common director in all the companies, the transferee company is closely held investment company and the shares are held amongst family members and friends of the promoters of the associated companies. So in a way they can be called sister concerns. The transferee and transferor companies are operating from the same premises and the shareholders of all the companies are family members and friends.

(3.) On 23rd July, 1992, directions were issued for hold ing and convening of the meeting of the shareholders and unsecured creditors on 5th June, 1992at the registered office of the companies and for issuance of publication in the newspaper 'Statesman' and 'Jansata' atleast 21 clear days before the meeting.