' IJAZ UL AHSAN, J.---Through this application under sections 284 to 288 of the Companies Ordinance 1984, a prayer has been made for the merger of petitioner No,1 Omer Iqbal Solvents (Pvt.) Ltd. Into petitioner No,2, Tahir Omar Industries (Pvt.) Ltd., along with their assets and liabilities.
2. The petitioner No,1, Omer Iqbal Solvents (Pvt.) Ltd. Incorporated on 16-5-2003, is a private limited company and has a paid-up capital of Rs,20,000,000 (Rupees twenty million only), divided into Rs,2,000,000 shares of Rs,1000 each. The petitioner No,2, Tahir Omer Industries (Pvt.) Ltd. Established in 25-4-2003, is a private limited company and has a paid-up capital of Rs,20,000,000 (Rupees twenty million), divided into 2,000,000 shares of Rs,100 each. Both the two petitioners, for various reasons given in the petition, have prayed for the merger of Omer Iqbal Solvents (Pvt.) Ltd. Into Tahir Omer Industries (Pvt.) Ltd.
3. The merger of petitioner No,1 into petitioner No,2 in terms of the scheme attached with the petition as per Annexure "E" is sought on the ground that the creation of a single entity will combine the processes of chemical manufacturing into an efficient operation, save on - administrative expenses and overheads, enhance the profitability of the entity, improve operations, manufacturing and production of the unit and will simplify and streamline arrangements with creditors. Also that the reorganization of the capital through the amalgamation will be to the advance of the shareholders, creditors and employees of both the petitioners, jointly and severally.
4. On the presentation of the application, general meetings of the aforesaid companies were convened on 19-12-2009 under the supervision of Local Commission appointed by this court. The scheme of the proposed merger and various arrangements for its execution were placed before the Members in General Meetings. All those shareholders present or represented in the said meetings unanimously approved the scheme of amalgamation. Thereafter, notice of hearing was issued through newspapers in terms of Rule 16 of the Companies (Court) Rules, 1997. No one has, however, come forward to object the proposed scheme and amalgamation. The learned counsel for the petitioners has placed on record No Objection Certificates issued by a creditor bank of the petitioners Nos.1 and 2, and the Competition Commission of Pakistan stating that they have no objection to the proposed scheme of amalgamation.
5. The Securities and Exchange Commission of Pakistan (SECP) has filed its parawise comments. It has raised a technical objection to the effect that the petitioner/Companies may be directed to modify the analysis pertaining to merger of authorized capital and instead follow the procedure laid down in sections 92 and 94 of the Companies Ordinance, 1984 (the Ordinance). It is submitted on behalf of SECP that in clause vi (7) of the Scheme of Merger regarding petitioner No,1 into petitioner No,2, it has been stated that upon merger, the authorized capital of petitioner No,1 and petitioner No,2 shall be merged. The authorized capital of a company can only be increased in the mode and manner provided in section 92 of the Ordinance. There is nothing in sections 284 and 287 of the Ordinance to grant an exemption from compliances with the provisions of section 92 of the Ordinance. Section 92 is absolute in its effect and clearly lays down that whenever there is alteration in share capital, whether increase or decrease, the company is required to pass a special resolution authorizing such increase and must notify such increase to SECP. It is further submitted that merger of authorized capital is beyond the scope of sections 284 and 287 of the Ordinance. Section 287 of the Ordinance provides that upon merger, the assets and liabilities of the transferor company shall be transferred to the transferee company. The authorized capital is in essence an imaginary and notational figure upto which paid-up capital of the company can be raised, does not count as an asset of the transferor company as contemplated in section 287(4) of the Ordinance which can be transferred to the assets of the transferee company. The authorized capital being neither a property nor a liability cannot be transferred just as an object clause of the transferor company cannot be added to be objects clause of the transferee company upon amalgamation. It is also contended that merger of authorized capital of the companies is being sought only to avoid payment of fee applicable to an enhancement of the authorized capital in terms of section 92 of the Ordinance which does not furnish a lawful reason to create a mechanism for enhancement of the authorized capital not envisaged by law.
6. The learned counsel for the petitioner-Companies submits that the objections raised by SECP are not legally tenable. He points out that the pleas raised by SECP have already been considered and rejected by this court in Mahmood Power Generation Ltd. v. Mahmood Textile Mills 2006 CLD 1364 and Nishat Apparel Ltd. 2009 CLD 1172.
7. I have heard the learned counsel for the parties at length. The arguments and objections raised by SECP are based upon a judgment of the Indian Jurisdiction reported as Areva T and D Ltd.
1(2007) 138 Comp Case (Cal)] in which Sanib Banerjee, J. Expressed the view that authorized capital does not represent any capital at all, but sets a limit that the paid-up capital of a company may touch at any given point of time.
' There is no embargo on a company started with a small number of shares and small value having an ambitious figure for its authorized capital. Authorized capital is as the first part of the term implies the authority given by the subscribers or shareholders to the concerned company as to the upper limit, at any point of time to which the paid-up capital may even reach. It is notional in nature and does not reflect any money in the till of the company, or any corporal asset that it must relate or answer to. The 'worth of the company is not decided by its authorized capital, its paid-up capital may reflect upon it. He therefore concludes that just as the object clause of the transferor company does not get added to the objects clause of the transferor company upon amalgamation, so will the authorized capital of the transferor company not attach to the authorized capital of the transferee company upon the merger. Such right to increase its paid-up capital to its authorized limit is a right unique to each company and incapable of being transferred; just as fee paid for registration of a company is also incapable of being transferred. It is not necessary that every company that pays a high fee to have an ambitious authorized capital extend such right by increasing paid-up capital to the authorized limit. The company may just not to do so and the company may die, without any merger ever having taken any step for its paid-up capital to match its authorized capital. There can be no good-will attached to such right, if it be one. It is not a property at all that is covered by the definition found in section 394(4)(a) of the Act.
The learned Judge went on to hold that a charter received by a company upon payment of requisite fee to increase its paid-up capital upto a particular limit is not capable of being transferred to another company. It is personal to the company that has granted it and perishes with such company upon its legal death,
8. It is, however, interesting to note that the learned court allowed amalgamation of the authorized capital of the transferor company with the transferee company subject to the condition that the increase in the authorized capital of the transferee company shall be effective only upon the transferor company paying the requisite fee applicable to enhancement of authorized capital of the surviving company.
9. The above issue has been examined in a number of Indian judgments. In You Telecom India P.
Ltd. [20081141 Comp Case 43 (Bom), Dr. D.Y. Chandrachund, J. Examined the question in considerable detail in light of various judgments rendered by courts in India. He held as follows:-- ' The provisions of sections 391 and 394 of the Companies Act, 1956, were construed in a judgment of the Gujarat High Court in Maneckchowk and Ahmedabad Manufacturing Co. Ltd., in re [1970]40 Comp Cas 819. The proposed scheme envisaged a reorganization of the share capital including a reduction of capital and an objection was received to the effect that the Companies Act, 1956, envisaged a distinct procedure for effecting a reduction or as the case may be an increase in capital which was required to be independently followed. Hence, it was urged that it was not open to the court to sanction a scheme involving a reduction or increase of share capital in the exercise of powers under section 394 of the Act. The Gujarat High Court held that section 391 was a complete code' which provided for the sanctioning of a scheme of compromise and arrangement.
Rule 85 of the Companies (Court) Rules, 1959, specifically prescribed the procedure required to be followed where a proposed compromise involved a reduction of capital. Save and except for a situation envisaged in Rule 85, section 391 was constituted as a separate and complete code in itself. The Gujarat High Court held thus: "If section 391 was subject to other provisions of the Act, every time the scheme of compromise and arrangement is put forth for the sanction of the court, it includes things for which specific provisions are made and that will have to be gone through before the scheme is sanctioned, it would result in unnecessary duplication of procedure and would be cumbersome. On the contrary, it appears that if the creditors and members of the company arrive at a certain compromise which the court considers fair, it can be 'sanctioned under section 391 despite the fact that for some of the things included in the compromise another procedure is prescribed in the Companies Act and which has not been carried out. It therefore, appears that section 391 is a complete code which provides for sanctioning of the scheme of compromise and arrangement."
10. A similar view was taken in Vascant Investment Corporation Ltd. v. Official Liquidator, Calaba Land and Mill Co. Ltd. [1981]51 Comp Cas 20. The learned court held that except for a reduction of share capital which requires a special procedure to be followed under rule 85, the procedure for carrying out alterations in the Memorandum and Articles of Association of a Company prescribed by other provisions of the Companies Act, 1956, is not required to be followed before a scheme is sanctioned. The whole purpose of section 391 is to reconstitute the company without the company being required to make a number of applications under the Companies Act for various alternations which may be required in its Memorandum and Articles of association for functioning as a re- constituted company under the scheme.
11. These judgments were cited with approval in the case of PMP Auto Industries Ltd. In re [1994]80 Comp Cas 289 (Born). Summarizing the position in law, the learned court held as follows:-- "Section 391 invests the court with powers to approve or sanction a scheme of amalgamation/arrangement which is for the benefit of the company. In doing so, if there is any other things which, for effectuation, require a special procedure to be followed-except reduction of capital---then the court has powers to sanction them while sanctioning the scheme itself. It would not be necessary for the company to resort to other provisions of the Companies Act or to follow other procedures prescribed for bringing about the changes requisite for effectively implementing the scheme which is sanctioned by the court. Not only is section 391 a complete code as held by the courts, but in my view, it is intended to be in the nature of a single window clearance system to ensure that the parties are not put to avoidable unnecessary and cumbersome procedure of making repeated applications to the court for various other alterations or changes which might be needed effectively to implement the sanctioned scheme whose overall fairness and feasibility has been judged by the court under section 394 of the Act."
12. The above view has been reiterated in the judgments of several Indian High Courts. In the case of Saboo Leasing P. Ltd. In re [2003] 117 Camp Cas 728, the Andhra Pradesh High Court held that the requirement of the notice to be furnished to the Registrar under sections 95 and 97 of the Companies Act, 1956, was duly fulfilled when a certified copy of an order sanctioning a scheme under sections 391 and 394 was filed by the Registrar. The Andhra Pradesh High Court held as follows:-- "When the certified copy of the orders sanctioning the scheme by this court is required to be filed before the Registrar for the purpose of its registration, there is no reason as to why it shall not be treated as a notice to the registrar as envisaged under sections 95 and 97 of the Companies Act.
As discussed hereinabove, the object being the same, the necessary changes are required to be made in the concerned register by the Registrar of Companies can be effected after receiving the certified copy of the order of this court sanctioning the scheme. The sanction of the scheme by this court has its own effect. It is not a mere act of the parties individually and volitionally. The scheme upon being sanctioned by this court, becomes operational by virtue of the orders passed by this court. In other words, by operation of law, such changes would come into effect. Therefore, it has statutory genesis and statutory character, but not mere individual acts of the companies. In that view of the matter, no separate notice informing the Registrar under sections 95 and 97 of the Companies Act need be given, unlike the other cases which do not require the sanctions of the court, in my considered view, inasmu ch as the scheme is required to be sanctioned by this court and such sanction is required to be registered with the Registrar of Companies by filing the certified copy of the order of this court."
13. In the case of Hotline HI Celdings P. Ltd., In re [2005]127 Camp Cas 165, it was argued that the authorized share capital of the merged company was being increased as a result of the scheme of amalgamation and this could only be carried out after following the procedure prescribed by the relevant provisions of the Companies Act and payment of fees to the Registrar of Companies.
Rejecting the contention, the learned court held:-- 'This contention is ill-founded. In case of a merger like this where it is provided that the share capital of the transferor companies will become the authorized capital. Of the transferee company, no such payment of fee to the Registrar of Companies or stamp duty to the State Government is payable."
14. In Jaypee Cement Ltd., in re [20041 122 Camp Cas 854; [2004] 62 CLA 329, an objection of the Central Government was again that upon merger the authorized share capital of the transferee company was being combined with the authorized share capital of the transferor. This according to the objector amounted to an increase in the authorized share capital of the transferee which could not be affected without paying the requisite fee to the Government. On the other hand, it was urged on behalf of the company that the requisite fee had already been paid on the authorized capital of the transferor and merely because of its merger with the transferee, there was no reason why the same fee should be paid again on the same authorized capital. The submission urged on behalf of the company was accepted and the judgment followed the view taken in Vasant Investment Corporation Ltd. v. Official Liquidator, Colaba Land and Mill Co. Ltd. [1981151 Camp Case 20 (Bom) and the judgment of Mr. Justice B. N. Srikrishna in PMP Auto Industries Ltd., In re [1994180 Camp Case 289 (Bom) page 874 of 122 Comp Case. It was held that submission has force and no good reason has been shown why the two merged companies should be required to pay duty again on the same authorized capital on which duty has already been paid by the JPI.
15. In Magnaquest Solutions P. Ltd., In re [20081141 Camp Cas 728 (AP), Ramesh Ranganathan J. After elaborate discussion of the case-law on the subject, came to the following conclusions:-- "The Registrar of Companies has filed an affidavit, on behalf of the Central Government under section 394A, raising two objections to the scheme of amalgamation (1) that the transferee had not approached the High Court seeking dispensation of the meeting of the creditors and that the scheme may be considered subject to production of consent letters of the secured creditors of the transferee company, and (2) that clause (10) of the scheme, which contemplates combining the authorized capital of the transferor with the transferee, is impermissible since the authorized capital is the notional limit up to which the company can increase its paid-up capital, that two notational limits cannot be clubbed together, that, since the authorized capital of the company is a liability, unlike other liabilities to be returned or refunded, it would not come under the purview of transfer of liabilities under the scheme of amalgamation, that the transferor and the transferee companies are separate legal entities and, on amalgamation, it is only the transferor company which would be dissolved and the transferee company would continue to exist, that at this stage if the transferee, on account of the scheme of arrangement, increases its authorized capital it has to comply with the provisions of sections 94 and 97 of the Companies Act, 1956, by filing the relevant returns with the Registrar of Companies with registration fee/filing fee, that the Companies Act does not specifically exempt the transferee company, on account of the scheme of arrangement, from payment of registration fee for increase of its authorized capital, that if the transferee company was allowed to increase its authorized capital, on clubbing the authorized capital of the transferor company without any further act or deed as contemplated in the scheme, it would not only be against the provisions of the Companies Act, 1956; but would also involve substantial loss to the Central Government revenue, that clubbing of the authorized capital of the transferor with that of the transferee cannot be a part of the scheme since section 97 of the Companies Act, 1956, requires compliance by payment of the registration fee with the Registrar of Companies and does not require permission of the court.
16. Relying on Telesound India Ltd., In re [1983] 53 Comp Cas 926, the court observed:- "Amalgamation of a company with another or an amalgamation of two companies to form a third is brought about by two parallel schemes of arrangements entered into between one company and its members and the other company and its members and the two separate arrangements bind all the members of the companies and the companies when sanctioned by the court.
Amalgamation is, therefore, an absorption of one company into another or merger of both to form a third, which is not a mere act of the two companies or their members but is brought about by virtue of a statutory instrument and to that extent has statutory genesis and character, and to that extent it is distinguishable from a mere bilateral arrangement to merge or join in a common endeavour, an undertaking or enterprise. Once the court sanctions the amalgamation, the amalgamation is made effective and binding by virtue of statutory power, inter alia, by the transferor to the transferee company of the whole or any part of the undertaking, property rights and liabilities of the transferor company by virtue of the provisions of section 394 of the Act, which are intended to facilitate the process of amalgamation. The expression 'property' and 'liabilities' which can be transferred on amalgamation, under section 394(1) have been defined in very wide terms by subsection (4)(a) of that section, so as to include 'rights and powers of every description' and 'duties of every description' respectively. The expression 'property' would, therefore, be wide enough to include rights under a contract, including a contract of tenancy. These are co-extensive with the property and right which the transferor company has in relation to its assets, but could not be wider than what the transferor company was entitled to enjoy. The rights in property, as indeed the liabilities of the transferor company become the rights, property and liabilities of the transferee company by virtue of the order of vesting made by the court consequent on amalgamation. It is neither an assignment of right or property, nor an assignment of property by the company. It is the transfer of rights, property and liabilities along with the company itself and it is only as a result of confusion of thought that it could be described as an assignment by the company to another person, which is independent and distinct from the company. Such a notion ignores the peculiar position of amalgamation in company law and its true legal incident. It is for historical reasons that the device of amalgamation was built into the company law for facilitating the merger of companies, inter alia, with a view to help restoration of sick units to health, better more effective and economical management of the corporate sector to ensure continued production, increased employment avenues and generation of revenues. On amalgamation the transferor company merges into the transferee company shedding its corporate shell, but for all purposes remaining alive and thriving as part of the larger whole. In that sense the transferor company does not die either on amalgamation or on dissolution without winding up under subsection (1) of section 394. It is not wound up because it has merged into another. Winding up is unnecessary. It is dissolved not because it has died, or ceased to exist, but because for all practical purposes, it has merged into another forming part of one corporate shell. The dissolution is the death of its independent corporate shell, because a company cannot have two shells. It is, therefore, dissolved because the independent shell or corporate name is superfluous."
"On the scheme of amalgamation being sanctioned by the court, the rights, property and liabilities of the transferor become the rights, property and liability of the transferee company and, as a consequence thereof, the right which the transferor has to issue share capital and the existing liability in the form of its authorized capital stand transferred to and are vested in the transferee company. Since the authorized capital of the transferor, which is transferred to and stands vested in the transferee, has already been subjected to payment of the prescribed fee, absence of a specific provision either in the Companies Act, 1956, or the rules made thereunder, requiring the transferor to again seek approval of the Registrar of Companies or to pay fees on such authorized capital, the contention, that approval of the Registrar must again be sought and fees paid all over again, must necessarily be rejected."
17. In Saparna Infortech Ltd. v. Relinfo Ltd., the court held that:-- "if the transferor company has right to issue further share capital on the date of the amalgamation the same is a legal right in favour of the transferor company and such a right can be transferred in lieu of section 394(2) and (4) of the Companies Act.
18. In Regional Director and another v. Cavin Plastics and Chemicals P. Ltd. [2008]141 Camp Cas 475 (Mad), a learned Division Bench of the Madras High Court held as follows:- "The scope of sections 391 to 394 of the Act was construed in the judgment of the Gujarat High Court in Maneckchowk and Ahmedabad Manufacturing Co. Ltd., In re [1970]40 Camp Cas 819, in respect of a proposed scheme for reorganization of the share capital including a reduction of capital. An objection was received to the effect that the Companies Act, 1956, envisaged a distinct procedure for effecting a reduction of capital or the case may be for increase of share capital, which was required to be independently followed. Hence, it was argued that it was not open to the court to sanction a scheme involving a reduction or increase of share capital in the exercise of powers under section 394 of the Act. The court held that section 391 was a complete code, which provided for the sanctioning of a scheme of compromise and arrangement. Rule 85 of the Companies (Court) Rules, 1959, specifically prescribes the procedure required to be followed where a proposed compromise involved a reduction of capital. Save and except for a situation envisaged in Rule 85, section 391 was constituted as a separate and completed code in itself. The learned, therefore, concluded that:-- "If section 391 was subject to other provisions of the Act, every time the scheme of compromise and arrangement is put forth for the sanction of the court, if it includes things for which specific provisions are made and that will have to be gone through before the scheme is sanctioned, it would result in unnecessary duplication of procedure and would be cumbersome. On the contrary, it appears that if the creditors and members of the company arrive at a certain compromise which the court considers fair, it can be sanctioned under section 391 despite the fact that for some of those things included in the compromise another procedure is prescribed in the Companies Act and which has not been carried out. It, therefore, appears that section 391 is a complete code which provides for sanctioning of the scheme of compromise and arrangement
19. The above judgments were followed in a subsequent judgment of the Bombay High Court in PMP Auto Industries Ltd., In re [1994] 80 Comp Cas 289, wherein the learned court summarized the position as follows:-- "Section 391 invests the court with powers to approve or sanction a scheme of amalgamation/arrangement which is for the benefit of the company. In doing so, if there are any other things which, for effectuation, require a special procedure to be followed---except reduction of capital---then the court has powers to sanction them while sanctioning the scheme itself. It would not be necessary for the company to resort to other provisions of the Companies Act or to follow the procedures prescribed for bringing about the changes requisite for effectively implementing the scheme, which is sanctioned by the court. Not only is section 391 a complete code as held by the courts, but, in my view, it is intended to be in the nature of a 'single window clearance' system to ensure that the parties are not put to avoidable, unnecessary and cumbersome procedure of making repeated applications to the court for various other alternations or changes which might be needed effectively to implement the sanctioned scheme whose overall fairness and feasibility has been judged by the court under section 394 of the Act."
20. In the case of Hotline Hol Celdings P. Ltd., In re [2005]127 Comp Cas 165, the Delhi High Court followed the decision of the Andhra Pradesh High Court in Saboo Leasing P. Ltd., In re [2003] 117 Comp Cas 728, while considering an objection to the effect that the authorized share capital of the merged company was being increased as a result of the scheme of amalgamation and this could only be carried out after following the procedure prescribed by the relevant provisions of the Companies Act and held that in the case of such merger no such payment of fee to the Registrar of Companies or stamp duty to the State Government was payable.
21. It may be noted that in the aforesaid judgment the decision of the Calcutta High Court in Areva T and D India Ltd., In re [2007]138 Comp Cas 834 was also examined and the court came to the following conclusion:-- "The issue is not whether the fee, which is already paid by the transferor company would automatically be transferred to the transferee company. But, what is intended by section 391 of the Act is to re-constitute the company without the company being required to make a number of applications under the Companies Act for various alterations which may be required in its memorandum and the articles of association for functioning as a reconstituted company under the scheme.. Not only is section 391 of the Act a complete code in itself, but it is intended to be in the nature of a `single window clearance".
22. The aforesaid judgments are based upon an interpretation of section 394 of the Indian Companies Act, 1956. The provisions of sections 285 to 287 are pert materia with the aforesaid provisions of Indian Companies Act.
23. It may be useful to reproduce the provisions of sections 287 of the Companies Ordinance, 1984:- - "Provisions for facilitating re-construction and amalgamation of companies.---(1) Where an application is made to the court under section 284 for the sanctioning of a compromise or arrangement proposed between a company and any such persons as are mentioned in that section, and it is shown to the court that the compromise or arrangement has been proposed for the purposes of or in contention with a scheme for the re-construction of any company or companies or the amalgamation of any two or more companies the division of any two or more companies, and that under the scheme the whole or any part of the undertaking, property or liabilities of any company concerned in the scheme (in this section referred to as "the transferor company"), is to be transferred to another company (in this section referred to as "the transferee company"), the court may, either by the order sanctioning the compromise or arrangement or by any subsequent order, make provision for all or any of the following matters, namely:--
(a) the transfer to the transferee company of the whole or any part of the undertaking and of the property or liabilities of any transferor company;
(b) the allotment or appropriation by the transferee company of any shares, debentures, policies, or other like interests in that company which under the compromise or arrangement are to be allotted or appropriated by that company to or for any person;
(c) the continuation by or against the transferee company of any legal proceedings pending by or against any transferor company;
(d) the dissolution, without winding up of any transferor company;
(e) the provision to be made for any person who, within such time and in such manner as the court directs, dissent from the compromise or arrangement; and
(1) Such incidental, consequential and supplemental matters as are necessary to secure that the reconstruction of amalgamation is fully and effectively carried out.
(2) Where an order under this section provides for the transfer of property or liabilities, that property shall, by virtue of the order, be transferred to and vest in, and those liabilities shall, by virtue of the order, be transferred to and become the liabilities of, the transferee company, and, in the case of any property, if the order so directs, freed from any charge which is, by virtue of the compromise or arrangement, to cease to have effect.
(3) Where an order is made under section, every company in relation to which the order is made shall cause a certified copy thereof to be delivered to the Registrar for registration within thirty days after the making of the order, and if default is made in complying with this subsection, the company and every officer of the company who is knowingly and wilfully in default shall be liable to a fine which may extend to one thousand rupees.
(4) In this section the expression "property" includes property, rights and powers of every description, and the expression "liabilities" includes duties.
(5) In this section the expression "transferee company' does not include any company other than a company within the meaning of this Ordinance, and expression "transferor company" includes anybody corporate, whether a. Company within the meaning of this Ordinance or not."
It is abundantly clear that section 287 of the Companies Ordinance was intended to provide a one- window operation with respect of matters pertaining to mergers and amalgamations. As such, the sanction of scheme of merger by this court would automatically result in merger of authorized capitals of the merging companies without the need for an enhancement of the authorized capital of the surviving company in accordance with section 92 of the Companies Ordinance. Section 287 invests the court with powers to approve and sanction a scheme of amalgamation which is for the benefit of the company. In doing so, if there are any other procedural requirements which, for the effectuation require special procedure to be followed, then the court has powers to sanction them while sanctioning the scheme itself. It would not be necessary for the company to resort to other provisions of the Companies Ordinance or to follow other procedures prescribed to bring about the changes requisite for effectually implementing the scheme which is sanctioned by court. Section 287 is a complete code, and in my view it is intended to be in the nature of a single window clearance system to ensure that the parties are not put to unnecessary procedures for making applications for various changes which might be needed to implement the sanctioned scheme which has been examined, adjudged and approved by the court. If that were so, the entire purpose of getting a scheme sanctioned by this court would be defeated. The terms, "property" and, "liabilities" have been defined in very wide terms in section 287(4) of the Companies Ordinance, 1984 and include property, rights and powers of every description. The rights and property and the liabilities of the transferor company becomes the rights and property of the transferee company by virtue of the order of vesting made by the court after amalgamation. The right of the company to increase its paid-up capital upto the limit fixed as the authorized capital (on which a fee has already been paid) represents a tangible right and a power of the transferor company to do so and would, therefore, fall within the wide definition of property given in section 287(4) ibid. This right and power, in my opinion, is transferable in consequence of which the right which the transferor has to issue further share capital stands transferred to and vests in the transferee company on sanction of the scheme by the court. Since the authorized capital of the transferor which is transferred to and stands vested in the transferee has already been subject to payment of the prescribed fee, requiring the transferee to again seek approval of the SECP or to pay fee all over again is neither logical nor appears to be the intent of the law. It is common ground between the parties that the transferor company paid the entire statutory fee payable on its authorized capital.
After merger, the authorized share capital of the transfer will, therefore, be the aggregate of the authorized capitals of the transferor and the transferee company on which the required fees has already been paid by both companies. I therefore, find no reason or justification to direct payment of an additional fee by the transferee company calculated on the basis of the enhanced authorized capital or to direct the transferee company to go through the procedures provided in section 92 of the Companies Ordinance, 1984. For the aforesaid reasons the objections raised by SECP are rejected.
24. From the narration of the fact stated in the petition it transpires that the requisite statutory compliance required by the law has been duly made by the petitioners. Other than the objection raised by SECP discussed above, no other objection has been raised by any creditor, Member or SECP. The scheme is not prejudicial to the shareholders, creditors or members of the companies. In the circumstance, there is no reason why the scheme should not be sanctioned. Accordingly, the merger proposed through the aforesaid scheme at Annex "E" to this petition for the amalgamation of petitioner No,1 into petitioner No,2 is sanctioned with effect from 6-1-2010. Resultantly, petitioner No,1 Messrs Omer Iqbal Solvent (Pvt.) Limited, shall be dissolved without being wound up and share cease to exist with effect from the aforesaid date.
25. The petition is allowed in the aforesaid terms.