T.K.Basu, J. - (1.) This is an application by the Reliance Jute and Industries Ltd., under Section 391(2) read with Section 394 of the Companies Act, 1956 (hereinafter referred to as "the Act"), for the sanctioning of a scheme of amalgamation. The petitioner which is the transferee-company was incorporated on 25th October, 1960. It is a very solvent and prosperous concern according to the affidavit of Jyoti Prasad Mukherjee, which has been filed on behalf of the CLB which is opposing this application. The transferee-company has built up huge reserves and as on 31st March, 1979, its net worth is Rs. 226.61 lakhs as against a paid-up capital of Rs. 126.72 lakhs.
(2.) Keshari Steels and Industries Ltd., the transferor-company, was incorporated on 12th August, 1971. Its original name was Rolta Industries Private Ltd., which has been subsequently changed to the name mentioned above. It carries on business at Dewas in Madhya Pradesh. It is admittedly a wholly owned subsidiary of the transferee-company. The transferor-company is admittedly quite sick and has a large accumulated loss.
(3.) The reasons for the proposed scheme of amalgamation are stated in para. 13 of the petition as follows : " (1) The transferor-company is a sick unit and is lacking in finance. The amalgamation will end the financial crisis and give stability to the transferor-company. (2) The transferor-company is a wholly owned subsidiary of the transferee-company as mentioned above and has a common management. The proposed amalgamation will reduce and minimise the overhead expenses and lead to efficient management. (3) Apart from the usual advantages and economics of the amalgamation, the transferee-company will be able to diversify its business activity.";