IN RE: UNION SERVICES PRIVATE LIMITED Vs. STATE

JUDGEMENT

(1.) This is a petition under Sections 391 and 394 of the Companies Act, 1956, to sanction the scheme of arrangement and amalgamation of the petitioner-company, viz.. Union Services Private Ltd. with another company, viz., the Union Company (Motors) Private Ltd. The two companies are sister-companies and many of the shareholders are common to both the companies. There are 11 shareholders in the petitioner-company (which would be hereinafter referred to as the transferor-company), of which one shareholder is the Union Company (Motors) Private Ltd. (hereinafter referred to as the transferee-company). The authorised capital of the transferor-company is Rs. 5 lakhs consisting of 5,000 equity shares of Rs. 100 each. The subscribed capital is Rs. 2,62,000 consisting of 2,620 equity shares of Rs. 100 each. Out of this, the transferee-company owns 1,000 shares. The transferor-company has been doing business as repairers, engineers, fitters, founders and painters of motor vehicles. The transferee-company has been carrying on business of distribution of cars and automobile spare parts. Both the companies are having their registered office at No. 29, Mount Road, Madras-2. Both the companies have similar objects as per the respective memorandum of association.

(2.) It is stated that the management of the two companies have given their attention to schemes of increasing the capacity of the two companies for carrying on more economically and profitably the business of the two companies and also for increasing the volume of business, as a result of which it is now proposed to amalgamate the transferor-company with the transferee-company. As both the companies are under the same management, it is considered that there is no advantage in the transferor-company carrying on business as separate legal entity from that of the transferee-company and that it would be advantageous for all the parties concerned and to the shareholders of both the companies if the transferor-company is amalgamated and merged with the transferee-company. According to the averments in the petition, such amalgamation and merger would enable the (sic) complementary to each other, to be carried on more efficiently and economically.

(3.) The board of directors of each of the two companies had entered into an agreement dated November 1, 1971, setting out as schedule thereto a scheme of arrangement and amalgamation, which provides for the amalgamation of the two companies by the merger of the transferor-company with the transferee-company and the latter taking the entire undertaking of the former company as a going-concern together with all its assets and liabilities. The said scheme was approved by the board of directors of both the companies at a meeting held on November 19, 1971.