JUDGMENT 1. - This is a petition filed by Shreya's India Private Limited ('the transferee Company') under Section 391 of the Companies Act, 1956 for obtaining sanction of a Scheme of arrangement and consequential advantages in terms of Sections 391 -394 of the Companies Act, 1956 for amalgamation of the transferee Company with Samrat Industries Private Limited ('the transferor company'). 2. The transferor Company was incorporated under the name of SMS Polymers Pvt. Ltd. on 31 -7-1998 with the Registrar of Companies, Rajasthan, which was subsequently changed to Samrat Industries Pvt. Ltd. on 9-7-1999, as would be evident from the Memorandum and Articles of Association. It would have an authorised share capital of Rs. 1,50,00,000 divided into 5,00,000 equity shares of Rs. 10 each and 10,00,000 lakhs preferential shares of Rs. 10 each. The issue subscribed and paid up capital of transferor company is 5,00,000 equity shares of Rs. 10 each fully paid up and 5,00,040 preferential shares of Rs. 10 each fully paid. 3. It is stated that the transferor Company is a private limited Company and thus, does not require certificate of commencement of business. The last accounts of the Company were reviewed up to 1-10-2006. The auditors of the transferor Company have not made any adverse remarks and comments and no irregularity or mismanagement of affairs was reported. The copies of the balance-sheet and profit and loss accounts of the transferor Company for the year ended on 1-10-2006 with the auditor's report are placed on record as Annexure-1. 4. The objects which are sought to be achieved by virtue of amalgamation of the transferor Company in the transferee Company, as stated in Para 5 of the petition, are as follows: (1) The transferor Company and the transferee Company having the same kind of business whereby the transferor Company is producing the raw material for the transferee Company and hence, in order to reap the benefit of vertical backward integration of business, it is proposed to pool the resources of the transferor Company and transferee Company for the optimum growth and development of the said business and exploitation of the potential thereof the activities of both the Companies can be conveniently combined together and closely integrated. Moreover, both the companies belong to the same group of companies and are virtually in common management and control. Moreover, both the companies belong to the same group of companies and are virtually in common management and control. (2) The amalgamation of both the companies will result into the formation of a larger company with larger Capital and Financial base enabling them to conduct and carry on business more economically, efficiently and profitably to a greater advantage. The registered office of the transferee Company is also situated at Jaipur, Rajasthan and if the scheme of amalgamation is sanctioned, the necessity, to have separate registered offices will be done away with. (3) The amalgamation of both the companies will result into the advantage of economies of sale, administrative conveniences, elimination of duplication of work and other benefits. (4) The merged entity shall have a stronger financial base which shall enable the transferor Company to participate more vigorously and profitably in competitive market environment and also in future diversification and growth. (5) A stronger financial base shall facilitate the merged entity in raising capital, servicing and conducting business on more favourable terms and identifying and exploiting new growth opportunities. (6) The merger shall enable the companies to nationalise and streamline their management, business and finances and will also eliminate duplication of the work. (7) The merger shall have the beneficial results for all the Companies, their shareholders, employees and all concerned. (8) After the scheme of amalgamation is sanctioned, one set of documents will have to be filed with the Registrar of Companies, therefore, the need of filing separate set of documents on behalf of the transferor Company will be done away with. 5. It is submitted that the aforesaid objects of the transferror Company, as set out in the Memorandum and Articles of Association, have been approved by the Board of Directors of both the Company. Therefore, for the aforesaid purpose, an application being Company Application No. 10/2007 under Section 391 of the Companies Act was moved by the transferor Company for a direction to convene the meeting of equity shareholders and preferential shareholders. The said application came to be decided by order dated 19-1-2007, thereby directing the transferor Company to convene the meeting of the preferential shareholders and equity share holders on 21-2-2007 under the Chairmanship of Shri Ashok Kumar Pareek, Advocate. 6. The said application came to be decided by order dated 19-1-2007, thereby directing the transferor Company to convene the meeting of the preferential shareholders and equity share holders on 21-2-2007 under the Chairmanship of Shri Ashok Kumar Pareek, Advocate. 6. By order dated 23-3-2007, this Court issued notices to the Regional Director, Northern Region, Department of Company Affairs, New Delhi, for hearing of the matter on 27-4-2004 and this Court further ordered for the publication of notice in the English Daily Hindustan Times, New Delhi Edition and the Hindi Daily Dainik Bhaskar, Jaipur Edition for inviting objections from the equity shareholders. 7. In compliance of the order dated 23-3-2007/30-3-2007, the notice of the meeting was published on 7-4-2007 in the English Daily Indian Express and the Hindi Daily Dainik Bhaskar on application for ratification being filed by the applicants. 8. The meeting of preferential shareholders and equity shareholders was held and the Chairman Shri Ashok Kumar Pareek submitted his report to this Court stating therein that the meeting was attended by 10 members. It was further stated that the Scheme of amalgamation in the form of arrangement was read out and explained by the Chairman which was unanimously approved by the members and the Director of the Company Shri Sunil Agrawal was authorised to sign and submit applications and deeds in relation to the amalgamation by the Board's Resolution. 9. It is stated that the transferee Company has an authorised share capital of Rs. 87,00,000 lakhs of Rs. 10 each for 80,000 shares and for 79,000 preferential shares of Rs. 100 each. It is further stated that the meeting of secured and unsecured creditors of the transferor Company was not convened since the transferor Company has obtained "No Objection Certificates" from its secured and unsecured creditors. However, in the scheme it has been agreed upon between the parties that the same shall not in any way affect the rights of any creditors whether secured or unsecured and the secured creditors shall continue to enjoy and hold charge upon their respective securities. This scheme is made subject to such changes/modifications as are imposed by this Court or the transferee Company may prefer. It was further stated that the scheme shall become operative from 1-10-2006 i.e. the effective date in view of Section 394 of Companies Act, 1956 and as resolved in the resolution dated 21-2-2007. This scheme is made subject to such changes/modifications as are imposed by this Court or the transferee Company may prefer. It was further stated that the scheme shall become operative from 1-10-2006 i.e. the effective date in view of Section 394 of Companies Act, 1956 and as resolved in the resolution dated 21-2-2007. It was further stated that after finalisation of the scheme, the transferor Company would stand dissolved, without winding up. It was also agreed upon between the parties that due to the amalgamation of members creditors would not in any manner be prejudicially affected. 10. Regional Director, Northern Region Department of Company Affairs, New Delhi has submitted a representation/affidavit under Section 394A of the Act, 1956. The objections have been raised that creditors meeting has not been convened in the present case and the copy of the valuation report has not been submitted by both the companies. Both the companies have stated that the Exchange Ratio for amalgamation has been finalised on the basis of book value of shares on the basis of audited balance sheet as at 1-10-2006 of both the companies. It was further objected that the ratio of exchange i.e. proposed allotment of shares has not been worked out by an independent valuer and both the companies have not obtained the valuation report from a recognised firm of Chartered Accountant. It was objected that the Board of Directors have not given the fullest information and explanations in their report as required under Section 217(3) of the Act. It is further stated that both the companies have prepared their balance-sheet for more than 15 months without obtaining prior approval under Section 210(4) of the Act. 11. The notice of the petition was also served on Official Liquidator for its report in terms of second proviso to Sub-section (1) to Section 394 of the Companies Act, 1956. Upon the same the Official Liquidator called for the relevant records of the company by letter dated 25-4-2007 and the same were produced by the transferor company before the Official Liquidator on 26-4-2007. Thereafter, the Official Liquidator has submitted his report before this Court on 17-5-2007, stating that the merger scheme is applicable to the members and unsecured creditors of the company as per the provisions of Section 391(2) of the Companies Act, 1956, but the meeting of secured creditors and unsecured creditors has not been convened. Thereafter, the Official Liquidator has submitted his report before this Court on 17-5-2007, stating that the merger scheme is applicable to the members and unsecured creditors of the company as per the provisions of Section 391(2) of the Companies Act, 1956, but the meeting of secured creditors and unsecured creditors has not been convened. It was further reported that the affairs of the transferor-company have not been conducted in a manner prejudicial to the interest of its members and creditors and, therefore, the transferor-company deserves to obtain the sanction or merger scheme and the transferor-company may be ordered to be dissolved within the meaning of Section 394(1)(iv) of the Companies Act, 1956. 12. Heard Mr. Gunjan Pathak, Mr. B.K. Sharma, counsel for the petitioner, Mr. R.C. Meena, Official Liquidator. 13. I have gone through the record of the case, I am satisfied that both the Companies have disclosed to this Court all the material facts relating to the amalgamation as required under proviso to Sub-section (2) of Section 392 of the Companies Act. The scheme of merger of the transferor Company in the transferee Company has been unanimously approved by the shareholders. It is true that the meeting of secured creditors and unsecured creditors of the Company has not been convened and no notice of meeting under Rule 73 of the Companies (Court) Rules, 1959. 14. As is evident from the report of Chairman of the meeting held under the order of this Court dated 19-1-2007 the Chairman was given "No Objection Certificate" by the transferor Company on behalf of its secured and unsecured creditors which are outstanding against the Company. It has been stated in the report that the secured and unsecured creditors have given their "No Objection Certificates" on the last balance-sheet date and in the otherwise case they have been repaid by the Company. Even if the objection raised by the Regional Director is sustained, the Court has inherent powers under Rule 9 of the Company (Court) Rules, 1959 to dispense with the requirement of giving notice of meeting to the creditors of the Company. Even if the objection raised by the Regional Director is sustained, the Court has inherent powers under Rule 9 of the Company (Court) Rules, 1959 to dispense with the requirement of giving notice of meeting to the creditors of the Company. The creditors of a Company which is sought to be merged in another Company and completely absorbed in the transferee Company would by the process of amalgamation be compelled to deal with and become the creditors of another Company, whether the existing Company or a new Company that may come into existence even though the creditors or some of them may have had no dealings with such new entity and may have, therefore, no confidence in its management and the creditors have got no right to vote on the proposed amalgamation. 15. The further objection to this scheme with regard to the Exchange Ratio for amalgamation is concerned, I do not find any legal or factual impediment to grant sanction to the scheme of amalgamation of the transferor Company in the transferee Company. The other objection are overruled in the interest of amalgamation. 16. In these facts and having been satisfied on the basis of the material produced on the record I am of the view that the prayer made in the petition deserves acceptance. 17. In the above facts and circumstances the scheme of amalgamation of the transferor Company in the transferee Company is hereby sanctioned under Section 391(2) of the Companies Act, 1956 from the effective order i.e. 1-10-2006. 18. All the property, rights and powers of the transferor Company specified in the Annexure I of the petition and all the other property, rights and powers of the transferor Company be transferred without further act or deed to the transferee company and accordingly the same shall pursuant to Section 394(2) of the Companies Act, 1956 be transferred to and vest in the transferee company for all the estate and interest of the transferor Company therein but subject to nevertheless to all changes now affecting the same. 19. As a consequence the authorised share capital of the transferor company shall get merged with the authorised share capital of Transferee Company without separately increasing the same. 20. 19. As a consequence the authorised share capital of the transferor company shall get merged with the authorised share capital of Transferee Company without separately increasing the same. 20. All the liabilities and duties of the transferor Company be transferred without further act or deed to the transferee company and accordingly the same shall pursuant to Section 394(2) of the Companies Act, 1956 be transferred to and become the liabilities and duties of the transferee company. 21. All proceedings now pending by or against the transferor company be continued by or against the transferee company; and 22. The transferee company do without further application allot to such members of the transferor company as have not given such notice of dissent as is required herein the shares in the transferee company to which they are entitled under the said compromise or arrangement. 23. The transferor Company do file with the Registrar of Companies a certified copy of this order within 14 days from this date for registration and on such certified copy being so furnished the transferor Company shall be dissolved and the Registrar of Companies shall place all documents relating to the transferor Company and registered with him on the file kept by him in relation to the transferee company and the files relating to the said two companies shall be consolidated accordingly. 24. Any person interest shall be at liberty to apply to the court in the above matter for any directions that may be necessary. 25. In view of the above, this petition stands disposed of. *******