GOLKONDA ENGINEERING ENTERPRISES LIMITED Vs. GINNI VYAPPAAR LIMITED

JUDGEMENT

(1.) This is a petition filed by the transferee company (M/s. Golkonda Engineering Enterprises Ltd.) under section 394 read with section 391(2) of the Companies Act. The petitioner company hereinafter referred to as the transferee company was incorporated in February, 1985, in State of Maharashtra and, subsequently, the registered office was shifted to Secundarabad in October, 1990. The authorised share capital of the transferee company is Rs. 1,00,00,000 dividend into 10,00,000 of equity shares of Rs. 10 each. The issued subscribed and paid up capital is Rs. 49,50,700 comprising fully paid up shares of 4,95,070 comprising fully paid up shares of 4,95,070 of Rs. 10 each. The objects of the transferee company are set out in the memorandum of association. The transferor company, namely, M/s. Ginni Vyappaar Ltd., was incorporated on 8.12.1993 in West Bengal. It became a deemed public limited company with effect from 31.3.1994, its registered office is situated at Calcutta. Its authorised share capital is Rs. 2 crores while issue subscribed and paid up share capital is also Rs. 2 crores. The objects of the transferor company have been set out in the memorandum of association. In has been primarily incorporation in carrying on the business of, and to acquire by purchase or otherwise by subscription for tender, exchange, hold, sell, transfer, hypothecate, etc., of any shares, bonds, stocks, securities, etc. Clause III(B) 10 of the objects are understandingly (understandably) an ancillary to the main objects clause.

(2.) The transferee company is also inter alia engaged in the business carried on by the transferor company and in order to reduce the overheads and take advantage of localised and centralised large company for growth and to diversity for prosperity and for other reasons mentioned in para 11 intended to evolve scheme of amalgamation. The Board of directors of the transferee company in their meeting held on 1.3.1995 approved the scheme of amalgamation of the entire undertaking of the transferor company to be merged with the transferee company with effect from 1.4.1995. The Board of directors of the transferor company also held meeting and approved the amalgamation with transferee company. It is also stated that the transferor company filed Company Application No. 58/95 before the Calcutta High Court under section 391 of the Act and the court by orders dated 20.3.1995 directed the meeting of the equity shareholders. By order dated 8.8.1995 in Company Petition No. 135 of 1995 approved the scheme of amalgamation. By Company Application No. 141/95, this court passed an order for holding meeting of equity shareholders and accordingly, the meeting was conducted on 26.8.1995. Sri S.K. Jilani Basha is directed to act as a Chairman and to preside over the meeting. The meeting was conducted as per usually and in the said meeting, the following resolution was unanimously passed :

(3.) The Registrar of Companies on behalf of the Central Government filed counter affidavit stating that the matter relating to the scheme of arrangement of amalgamation was examined and an objection has been recorded by the Central Government stating that the transferee company is engaged in the business of buying, selling, exchanging/preparing for market, distribute etc., of all types of mechanical, electrical and electronic goods, while the transferor company has been carrying in the business on and to acquire, purchase, buy, subscribe, duly [deal] in disposing of all any shares, bonds, securities, etc. Therefore, it is submitted by the Central Government [that] the memorandum of association of the transferee company does not empower [it] to carry on the business of transferor company to carry (on), to deal in shares, stocks, etc., and, therefore, unless the object of the transferee company is suitably amended, the scheme of arrangement of amalgamation cannot be approved by this Court. Under those circumstances, the Central Government submits that the application as filed by the transferee company is liable to be dismissed.