Case laws on amalgamation and merger

1.     Companies Act 1956 ΓÇô Sec 97, 391 & 394 amalgamation ΓÇô Increase of share capital

Juggilal Kamplapat Holding Ltd In re (2006) 132 Comp. Cas 237 (All.)

Facts

The company application u/s 391, 394 of the Companies Act, 1956 was jointly filed by JKH Ltd. (transferee co.) JKI Ltd. (transferor company No. 1) and KI Ltd. (transferor company No. 2) to approve the scheme of amalgamation for the amalgamation of transferor company Nos. 1 and 2 with the transferee company.
The Regional Director, Ministry of Company Affairs in his affidavit raised a objection, that the authorized share capital of the transferee company shall automatically increased by addition of authorized share capital of the transferor companies. Therefore the transfer of authorized share capital could only be done after following the procedure prescribed under the relevant provisions of the Companies Act, 1956, payment of requisite fees to the Registrar of Companies and stamp duty to the State Government.

Held

The HonΓÇÖble High Court relying on the decisions of Bombay High Court in the case of PMP Inds. Ltd. In re (1994) 80 Comp. Cas. 289  (Bom) and Gujarat High Court in the case of Maneck Showk and Ahmedabad Manufacturing Co. Ltd. In re (1970) 40 Comp. Cas 819 (Guj.) held that when the transferee companies and transferor company had already paid the prescribed fee of their respective authorized share capital and since the combined authorized capital of the transferee company did not exceed the authorized capital of all the three companies no further fees or stamp duty was required to be paid.


2.     Doctrine of Merger ΓÇô Interim Orders ΓÇô

Gurswarup Joshi vs. Beena Sharma & Ors. (2006) 5 SCC 119

Facts

In an appeal against order granting probate passed by Addl. District Judge. The High Court passed an interim order in mandatory form directing enforcement of the will.

Held

The HonΓÇÖble Apex Court observed that whether the terms stipulated in the will were capable of being implemented was a matter of interpretation by High Court. The High Court was first required to determine validity or otherwise of the will.
The effect of interim order would be that not only the appeal would became infructuous but parties would also be forced to give effect to the provisions of the will.
The HonΓÇÖble Court further relying on the decision of Chandi Prasad vs. Jagdish Prasad (2004) 8 SCC 724 observed that when an appellate court exercise its power and passes a judgement, the same would be replaced by the judgment of the lower court and only its judgment would be treated as final.
The HonΓÇÖble Apex Court therefore held that grant of mandatory injunction in the circumstances of case suffered from manifest error.