C.M. SMITH AND SONS LTD. Vs. STATE

JUDGEMENT

(1.) THESE petitions are filed by three petitioner companies for sanction of the scheme of arrangement in the nature of amalgamation of Madhu Auto Cast P. Ltd. and Smith Techno Cast P. Ltd., the transferor companies with C. M. Smith and Sons Ltd., the transferee company under Section 391 read with Section 394 of the Companies Act, 1956 ('the Act'). All the petitioner companies belong to the same group of management.

(2.) IT is the case of the Petitioner companies that the transferor companies and the transferee company belong to the same group of management and are engaged in similar commercial activities in the related sector. According to the petitioners, it would be advantageous to amalgamate the transferor companies with the transferee company as the amalgamation would result in optimum utilization of management and other resources and would reduce the administrative costs. The Resources of the companies would be conveniently merged and pooled together leading to a more effective and centralized management and reduction in the administrative expenses and overheads which are presently being multiplied because of separate entities. The amalgamation will result in the larger pool of financial and other resources, which will enable the amalgamated company to broaden its asset base and in the long run improve financial gearing.

(3.) VIDE order dated May 16, 2008, passed in Company Application No. 355 of 2008 in the matter of C.M. Smith and Sons Ltd., the transferee company (copy at page No. 49 (exhibit D) of the compilation of Company Petition No. 176 of 2008), meetings of equity shareholders were dispensed with in view of the written consent letters placed on record.