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2006 DIGILAW 1411 (PNJ)

In Matter of : Motorla India Private Limited v. .

2006-03-30

HEMANT GUPTA

body2006
ORDER Hemant Gupta, J. (Oral) - This order shall dispose of objections filed in C.P. No. 145 of 2005 and the objections vide C.A. Nos.177, 176 and 175 of 2006 in C.P. No. 7 of 2006 on behalf of United Wireless Technologies Ltd. (hereinafter referred to as UWTL) United Telecom Ltd. (hereinafter referred to as UTL) and Priyaraj Electronics Limited (hereinafter referred to as PEL), in respect of the Scheme of Amalgamation, collectively hereinafter referred to as the Objectors as well as the Company Petition No. 145 of 2005 and No. 7 of 2006 seeking sanction of this Court for the Scheme of Amalgamation (Annexure P. 1). 2. C.P. No. 145 of 2005 was filed by M/s Motorola (India) Electronics Pvt. Ltd. (hereinafter referred to as the First Transferor Company), a Company incorporated on August 12, 1991 and having authorised share capital of Rs. 9,60,000,000/- divided into 9,600,000 Equity Shares of Rs. 100/- each and the Issued, Subscribed and Paid-up Share Capital of Rs. 950,077,700/- divided into 9,500,777 equity shares of Rs. 100/- each as on September 15, 2005; G.I. India Pvt. Ltd. (hereinafter referred to as the Second Transferor Company) incorporated on January 22, 2003, having authorised share capital of Rs. 400,000,000/- divided into 40,000,000 equity shares of Rs. 10/- each and Issued, Subscribed and Paid-up Share Capital as Rs. 153,195,410/- divided into 15,319.541 Equity Shares of Rs. 10/- each as on September 15, 2005; Force Computers Pvt. Ltd. (hereinafter referred to as the Third Transferor Company), originally incorporated-as Smart Modular Tech India Pvt. Ltd., on June 23, 2000, having authorized share capital of Rs. 100,000,000/- divided into 100,000 Equity Shares of Rs. 1000/- each and the Issued Subscribed and Paid-up Share Capital of Rs. 47,158,000/- divided into 47,158 Equity Shares of Rs. 1000/- each as on September 15, 2005 and September 31, 2005, respectively and Winphoria Networks (India) Private Limited, (hereinafter referred to as the Fourth Transferor Company), incorporated as a Private Limited Company on August 30, 2000 having authorised share capital of Rs. 10,00,000/- divided into 100,000 Equity Shares of Rs. 10/- each and the Issued, Subscribed and Paid-up Share Capital of Rs. 696,860/- divided into 69,686 Equity Shares of Rs. 10,00,000/- divided into 100,000 Equity Shares of Rs. 10/- each and the Issued, Subscribed and Paid-up Share Capital of Rs. 696,860/- divided into 69,686 Equity Shares of Rs. 10/- each as on September 15, 2005, seeking amalgamation with M/s Motorola India Pvt. Ltd. (hereinafter referred to as the Transferee Company) incorporated as a Private Limited Company on January 16, 1996 having authorised share capital of Rs. 2,000,000,000/- divided into 200,000,000/- Equity Shares of Rs. 10/- each and the Issued Subscribed and Paid-up Capital of Rs. 1,825,784,690/- divided into 182,578,469 Equity Shares of Rs. 1O/- each as on September 15, 2005. 3. It is the case of the petitioners aforesaid that it is desirable and expedient to amalgamate with and transfer, on occurrence of the effective date and with effect from the appointed date the entire business and undertaking of the petitioner-Transferor Companies with the petitioner Transferee Company, as a going concern on the terms and conditions set forth in the scheme so as to become the assets, liabilities and undertakings of the Transferee Company in the manner and on the terms and conditions stated in the scheme. 4. It is pleaded that the Board of Directors of The Transferor and the Transferee Companies by resolutions passed in their respective meetings have unanimously approved the scheme. It has further been pleaded that the aggregate assets of the Transferee Company after the coming into force of the scheme is expected to be more than sufficient to meet all the liabilities of all the Transferor Companies and the said scheme will not adversely affect the rights of any of the creditors of the petitioner Companies in any manner, whatsoever. Due provisions have been made for payment of all liabilities as and when the same fall due in ordinary course of business. The exchange ratio, of the share of the Transferor Companies for share of the Transferee Company has been fixed on a fair and reasonable basis, based on the structure of the scheme as proposed and based on the report submitted by M/s. Price Waterhouse Coopers, the independent valuers. It has been further pointed out that the share holders of all the Transferor Companies in their extra-ordinary general meeting held on September 27, 2005, have passed resolutions giving their consent to the implementation of the scheme. It has been further pointed out that the share holders of all the Transferor Companies in their extra-ordinary general meeting held on September 27, 2005, have passed resolutions giving their consent to the implementation of the scheme. Such resolutions have been produced on record along with an affidavit of the authorised signatory in respect of each of the Transferor Companies. 5. The share holders of the Transferee Company also gave their consent to the implementation of the Scheme without any amendment/modification in their extra-ordinary general meeting held on September 27, 2005. The Transferee Company has four secured creditors to the tune of Rs. 826,212,458.69. The Transferee Company relied upon no objection (Annexure P.27) in respect of all the secured creditors, to the scheme of amalgamation proposed. The Transferee Company has 409 unsecured creditors, representing unsecured credit of Rs. 3,364,819.249. The list of unsecured creditors annexed to the petition included parties for whom provisions have been made by the respective petitioner Company in its books of accounts, as a matter of abundant caution. It was pointed out that inclusion of amounts provided for in the list of unsecured creditors is not intended to and does not amount to an admission or acknowledgment of those sums and claims and further the same is without prejudice to the petitioners right to contest the claim of such parties in whole or in part. 6. Keeping in view the claim of the petitioners, this Court vide order dated November 10, 2005, dispensed with the convening and holding of meeting of the share holders of the petitioner Companies and the meeting of secured creditors of the Transferee Company. The meetings of unsecured creditors of the petitioner Companies were directed to be convened and held on December 24, 2005 at the Registered Office of the Companies for the purposes of considering and if thought appropriate, approving with or without modification the scheme. Public notices were also ordered to be published in the Tribunal, Dainik Bhasker and Haryana Government Gazette, apart from individual notices to the unsecured creditors of the petitioner Companies. 7. In the individual meetings of unsecured creditors of the Transferor Companies, the scheme was unanimously carried through without any modification/amendment. However, in the meeting of unsecured creditors of the Transferee Company, 148 poll slips representing unsecured credit of Rs. 2,803,246,768/- were in favour of the resolution and 3 poll slips representing unsecured credit of Rs. 7. In the individual meetings of unsecured creditors of the Transferor Companies, the scheme was unanimously carried through without any modification/amendment. However, in the meeting of unsecured creditors of the Transferee Company, 148 poll slips representing unsecured credit of Rs. 2,803,246,768/- were in favour of the resolution and 3 poll slips representing unsecured credit of Rs. 44,766.685/- were against the resolution. Thus, the scheme was approved (without any modification/amendment) by 98.01% of the poll slips in number representing 98.43% in value of those present and voting at the meeting. The 3 poll slips, who have voted against the resolution are the UWTL, UTL and PEL, who have filed objections in C.P. Nos. 145 of 2005 i.e. first motion petition and C.A. Nos. 177, 176 and 175 of 2006 in C.P. No. 7 of 2006, i.e. the second motion petition. The three sets of objections filed in C.P. No. 145 of 2005 and that in C.P. No. 7 of 2006 are substantially the same, therefore, the said objections are being decided by the common order. 8. Briefly, the objections are that an agreement was executed between the Objector UTL and the Transferee Company envisaging the incorporation of a new entity for establishing Motorola Centre of Excellence to leverage high end technical capability of Indian talent towards creating a cost effective services delivery option for the Transferee Company projects in Asia Pacific Region exclusively to meet Motorola requirements on the terms and conditions and in the manner set out therein. In furtherance of the said agreement, UTL incorporated UWTL as its associate to set up such Motorola Centre of excellence for rendering engineering services for Motorola projects. A definite agreement was executed in terms of the memorandum of understanding on August 26, 2002 between the Transferee Company, UTL and UWTL. As per the Objectors in September, 2003, the Transferee Company for no apparent reason, completely negated the purpose and the object for which UWTL was set up. The Transferee Company relieved the Engineers of UWTL from deployment without reason and prior notice, failed to issue and delayed the issue of purchaser order in breach of its commitment for further deployment of Engineers etc. It is the case of the Objectors that huge sum of money was invested in setting up Motorola Centre of Excellence for training its Engineers and for meeting its obligations under the said agreement. It is the case of the Objectors that huge sum of money was invested in setting up Motorola Centre of Excellence for training its Engineers and for meeting its obligations under the said agreement. Considerable time, effort and money was put in anticipation of the business projects by the Transferee Company from time to time. It is also pleaded that on September 25, 2003, Mr. Pramod Saxena, the then Chief Executive of the Transferee Company had sought a soft loan of Rs. 50 lacs from Dr. Rao of UWTL. The said amount was arranged by Dr. Rao to tide over his personal difficulty. However, the Central Bureau of Investigation has registered an FIR on September 25, 2003, one of the accused being the Transferee Company. Sine the money was sourced from UTL Group, Dr. Rao was also named in the FIR. A fact finding team was constituted by Motorola Inc., the parent company of the Transferee Company to investigate into the said incident. As per the Objectors, it is believed that such fact finding team recommended termination of the relationship of the Transferee Company with UWTL. 9. It is the case of the Objectors that the amount of the Transferee Company did not reflect the outstanding dues to the Objectors accurately, nor the Transferee Company has made disclosure of its contingency liabilities of Rs. 176.48 crores. The representatives of the Objectors attending the meeting of unsecured creditors on December 24, 2005, made a written representation to the Chairman of the meeting to adjourn the meeting to obtain appropriate orders from this Court. The Chairman of the meeting refused to adjourn the meeting and/or to enhance the amount of outstanding dues to the Objectors. It is submitted that the Transferee Company by understating the amount outstanding dues and payable to the Objectors perpetrated a fraud on the Objectors and on this Court. The Transferee Company has compounded the aforesaid irregularity by including in the class of unsecured creditors; its common group (Associated Companies) to whom amounts are purportedly due and outstanding by the Transferee Company. It is pointed out that no amount is due and payable by the Transferee Company to its group/associated Companies, much less a sum of Rs. 135,22,13,645/-. It is alleged that the classification of the unsecured creditors in this manner is contrary to the provisions of law. It is pointed out that no amount is due and payable by the Transferee Company to its group/associated Companies, much less a sum of Rs. 135,22,13,645/-. It is alleged that the classification of the unsecured creditors in this manner is contrary to the provisions of law. The various classes of creditors should have been delineated and separate meetings of these classes should have been called as the right, status and position of the unsecured creditors excluding the creditors, who are group/associated Companies are inherently dissimilar and peculiar and distinct from the group/associated Companies. The unsecured creditors of the Transferee Company have been placed at disadvantage by being placed in the same class as the other creditors i.e. group/associated Companies. 10. It is also submitted that the Transferee Company has deliberately concealed the true status of its financial position by not reflecting the actual amount due to the Objectors for engineering services rendered under the agreement. The Transferee Company has also not reflected the claim made by the Objectors on the Transferee Company on account of breaches committed of the aforesaid agreement. Therefore, all material facts relating to the Company such as latest financial position of the Company and the latest auditors report on the accounts of the Company including the fact of complaint filed against the Transferee Company by the Central Bureau of Investigation, having not been disclosed, the order of sanctioning of the scheme should not be made. It is also pointed out that the notice of the meeting of December 24, 2005, was received on December 8, 2005. Thus, the objectors have not received the requisite notice as contemplated under the law. 11. It has also been pleaded that on January 4, 2006, a sum of Rs. 33,65,154.00 was due and payable by the Transferee Company to UWTL for the services rendered but the Objectors have received cheques for Rs. 8,58,565.05 and Rs. 9,14,641.66 respectively, towards some of the outstanding invoices. It is pointed out that such payment is clearly inconsistent with the stand adopted by the Transferee Company earlier. It was pointed out that the Objectors have also filed a suit in the Bombay High Court for recovering the amount due and payable for the services rendered under the agreement dated August 25, 2002 and for recovery of unliquidated damages for the breaches committed by the Transferee Company. 12. It was pointed out that the Objectors have also filed a suit in the Bombay High Court for recovering the amount due and payable for the services rendered under the agreement dated August 25, 2002 and for recovery of unliquidated damages for the breaches committed by the Transferee Company. 12. The petitioner Companies in reply to such objections have pointed out that the objections have been raised with mala-fide intent of delaying the proceedings before this Court. In respect of investigation initiated by the Central Bureau of Investigation, it has been pointed out that the investigations are pending and charges have not been framed. Since the matter is sub-judice, the Transferee Company refrains from making any averment in relation thereto except stating that the complainant has no basis. The Transferee Company severed relationship with the Objectors in accordance with its rights under the agreement. The inter-se disputes sought to be raised by the Objectors are impermissible in law in the present proceedings. The objections to the scheme, if any, can only relate to the scheme and/or the conduct of meeting of the unsecured creditors. The purported breach of agreement by the Transferee Company has no relevance on the present proceedings as the Transferee Company reserves its rights to make appropriate submissions in the said proceedings before the Bombay High Court. 13. The general meeting of the Company was required to be called by giving not less than 21 days notice in writing in terms of Section 171(1) of the Companies Act, 1956. The notices of the meeting through UPC were sent on November 28, 2005 for the meeting to be held on December 24, 2005. The allegation that notice of the meeting was received only on December 8, 2005 as alleged, is not relevant for the purpose of compliance of issuing of notice. Still further, the representative of the Objectors has visited the registered office of the Company on December 12, 2005 to conduct inspection of all the documents listed in the notice dated November 17, 2005. A copy of the compete set of Company Petition No. 145 of 2005 was also given to the representative of the Objectors. Another copy was sent through Courier as an objection was raised that the copy of the petition was incomplete. 14. It is denied that the list of unsecured creditors does not reflect the position of outstanding correctly. A copy of the compete set of Company Petition No. 145 of 2005 was also given to the representative of the Objectors. Another copy was sent through Courier as an objection was raised that the copy of the petition was incomplete. 14. It is denied that the list of unsecured creditors does not reflect the position of outstanding correctly. The Transferee Company denied the purported claim of Rs. 176.48 crores as a contingency liability. The claim of the Objectors to vote for Rs. 1,815,048,082/- (Rs. 50,548.082) claimed as outstanding and balance Rs. 176.48 crores as unliquidated damages. The Transferee Company has provided an amount of Rs. 44,766.685/- against the three entities in its list of unsecured creditors. Since all other 148 unsecured creditors present and voting, voted in favour of the implementation of the scheme, therefore, the claim was approved by 98.01% in number representing 98.43% in value of the unsecured creditors present and voting, in the meeting. Even assuming the Objectors are entitled to vote on the said amount of Rs. 50,548.082/- the same would have no bearing on the outcome of the meeting inasmuch as the scheme would have been approved representing 98.23% in value. 15. It is pointed out that in the course of its business, the Transferee Company has received products and services from Overseas Motorola entities for valuable consideration. Therefore, such Overseas Motorola entities are included in the list of unsecured creditors. The allegation that no amount is due or payable to such Overseas Motorola entities, is vehemently denied. Such amount due is reflected in its books of accounts as well. It is pointed out that the Overseas Motorola entities constitute only 17 votes representing unsecured credit of Rs. 1,352,213,654/- and other 134 unsecured creditors represent unsecured credit of Rs. 1,501,581.196/-. It is pointed out that even if the 17 Motorola Overseas votes are excluded, still the scheme was approved by 131 unsecured creditors representing Rs. 1,45,10,33,114/- i.e. 97.76% of unsecured creditors in number representing 96.63% in value. However, it is denied that classification of Overseas Motorola entities along with other creditors is in any way not justified. It is pointed out that such entitles are not the preferential creditors or a different compromise being offered to any particular set of creditors within one class. 1,45,10,33,114/- i.e. 97.76% of unsecured creditors in number representing 96.63% in value. However, it is denied that classification of Overseas Motorola entities along with other creditors is in any way not justified. It is pointed out that such entitles are not the preferential creditors or a different compromise being offered to any particular set of creditors within one class. The scheme is one of amalgamation of Transferor companies with the Transferee Company and no compromise or re-arrangement on, debt is envisaged. Upon implementation of the scheme, the inter-se rights and obligations of the petitioner Companies and its Creditors would remain unaltered and preserved. This apart from the fact that the objections in respect of classification was not raised even before the Chairperson of the meeting on December 24, 2005. 16. It is also pleaded that the service agreement between the Objectors and the Transferee Company specifically excluded special damage, hence the claim of UWTL has no legal sanctity or validity. In any case, the said claim for unliquidated damages has no relevance to the present proceedings. Still further until and unless the claim is adjudicated and decree awarded, the same does not constitute a debt and no provision is required to be made in the books of accounts for such claim. Still further in terms of service agreement between UWTL and the Transferee Company receipt of payment by UWTL is contingent upon receipt of payment by Transferee Company from BSNL. Hence, the invoices raised by UWTL on the Transferee Company can be measured only by a decree of estimation unless payments are received from BSNL. Therefore, in the list of unsecured creditors, the amount is reflected provisionally in terms of Accounting Standard 29 and does not constitute a debt as alleged. 17. I have heard learned counsel for the parties at some length and do not find any merit in the objections raised by the Objectors. 18. The objection that material facts and the like information such as registration of FIR by the Central Bureau of Investigation, have not been disclosed which was a necessary prerequisite condition to seek consent to any compromise or arrangement in terms of Section 391(2) of the Companies Act, 1956 is unfounded. 18. The objection that material facts and the like information such as registration of FIR by the Central Bureau of Investigation, have not been disclosed which was a necessary prerequisite condition to seek consent to any compromise or arrangement in terms of Section 391(2) of the Companies Act, 1956 is unfounded. In my view, though it is the stand of the Transferee Company that the FIR is not registered against the Transferee Company but against Shri Pramod Saxena in his individual capacity but the fact remains that registration of an FIR by itself is not such a fact, which was required to be disclosed in the proposed scheme. With the FIR registered, the investigating machinery is set in motion to find out the veracity of the allegations contained in such FIR. It is only on completion of investigation, prima facie, it can be said that there is allegation of misfeasance, which may be a relevant fact to be disclosed in the proposed scheme. Therefore, the non disclosure of the FIR in respect of some allegations against the former Country Manager of the Transferee Company is not material fact, the consequences of which can be passed on to the Transferee Company. As a matter of fact in the objections itself, it is the allegation of the Objectors that a sum of Rs. 50/- lacs was given to Shri Parmod Saxena to tide over his personal difficulty. Therefore, to allege that the conduct of the Company is under investigation seems to be far fetched, but since the matter is under investigation, it will not be appropriate to comment any further on this aspect of the matter. 19. The objection raised that the Objectors did not get 21 clear days of notice of the meeting is again not sustainable in law. The requirement in terms of Section 171(1) of the Act stipulates issuance of notice of 21 days prior to the date of meeting. As per Section 53(2)(b) of the Companies Act, 1956, notice is deemed to be effected on the expiration of 48 hours after the letter containing the same is posted. As per the certificate of posting, the notices were posted on November 28, 2005 under postal certificate, there-fore, the presumption raised in terms of Section 27 of the General Clauses Act, is that notice is delivered in the normal course of delivery. As per the certificate of posting, the notices were posted on November 28, 2005 under postal certificate, there-fore, the presumption raised in terms of Section 27 of the General Clauses Act, is that notice is delivered in the normal course of delivery. Therefore, the Transferee Company has proved the despatch of notice to unsecured creditors including the Objectors. Mere assertion that Objectors have received notice on December 8, 2005, will not vitiate the issuance of notice in terms of Section 171 of the Act. It may be noticed that the objection that 21 days notice was not received, was not raised by the Objectors in the first instance before the Chairman, appointed for the meeting on December 24, 2005. It appears that the said objection is an after thought. Even in communication dated December 9, 2005 written by UWTL to the Transferee Company, there is no reference to the fact that the notice has been received by the Objectors on December 8, 2005. 20. The claim of the Objectors that the amounts due and payable to the Objectors have not been correctly disclosed, is refuted by asserting that the amount due in the list of unsecured creditors is on the basis of degree of estimation. Such amount is in terms of Accounting Standard No. 29 framed by the Council of Institute of Chartered Accountants of India. The said Standard is said to be mandatory in nature. Even if the amount of Rs. 50,548,082/- is taken to be due to the Objectors, still the scheme would be deemed to be approved by 98.01% in number and 98.23% in value. Though the Objectors have relied upon para 12 of the Accounting Standard 29, and the Transferee Company relies on para 14 of the same Accounting Standard, but such discussion is only academic in nature as in either case, the scheme is approved with consent of majority of unsecured creditors. 21. The argument that contingent liability of Rs. 176.48 crores is not reflected its the list of unsecured creditors, is again without any merit. Mere filing of the suit to claim the said amount cannot be said to be a cause of accrued or contingent liability. The claim of the said amount is based upon unliquidated damages in respect of loss of expected future profits. 176.48 crores is not reflected its the list of unsecured creditors, is again without any merit. Mere filing of the suit to claim the said amount cannot be said to be a cause of accrued or contingent liability. The claim of the said amount is based upon unliquidated damages in respect of loss of expected future profits. Since the claim is required to be established before the competent Court of law, therefore, the same amount cannot be said to be a liability of the Transferee Company, which was required to be reflected in the list of unsecured creditors. 22. The objection that classification of the unsecured creditors by including Motorola Overseas entities as unsecured creditors is with a view to gain undue leverage to the Transferee Company, is again not tenable in law. The amount due is claimed to be reflected in books of accounts. There is nothing on record, which may lead to an inference that such amount was not reflected in the books of accounts. In the scheme of amalgamation of the Companies, the unsecured creditors such as the Objectors and Motorola Overseas entities are not sought to be dealt with separately. The entire claim of unsecured creditors is sought to be maintained without any modification. The amount due and payable to the Objectors is not to be diminished or affected in any manner. The mere fact that Motorola Overseas entitles are also the unsecured creditors and reflected in the end of the list of unsecured creditors will not require a separate meeting for such class of unsecured creditors. 23. It has been held by Gujarat High Court in Maneckchowk and Ahmedbad Manufacturing Company Limited, (1970)40 Company Cases 819, that a duty is cast upon the Company to put proper materials before the Court so that the Court may give proper directions for separate meetings of different classes of creditors and members. The creditors composing the different classes must have different interests. When a different state of fact existing among different creditors, which may differently affect, their minds and their judgment, they must be divided in different classes. Speaking very generally in order to constitute a class, members belonging to a class must form a heterogeneous interests are combined in a class, naturally, majority having common interests may ride rough shod over the minority, representing a distinct interest. Speaking very generally in order to constitute a class, members belonging to a class must form a heterogeneous interests are combined in a class, naturally, majority having common interests may ride rough shod over the minority, representing a distinct interest. One test that can be applied with reasonable certainty is to the nature of compromise offered to different groups or classes. It was held that generally speaking the creditors of the Company should be divided into three different classes i.e. Secured Creditors, Preferential Creditors and Unsecured Creditors. The workers of the company would be a preferential creditors and indisputably they would form a separate/distinct class. 24. That was a case where the preferential creditors i.e., workmen were clubbed with other unsecured creditors. It was found that such classification is not justified, but the Court instead of remitting the scheme to convene separate meetings of unsecured and preferential creditors, proceeded to examine the approval of the scheme. Since in respect of unsecured creditors, the scheme contemplates to honour all the claims in its entirety, the fact that Motorola Overseas entities are reflected at the end of the unsecured creditors, is wholly immaterial. In fact, such manner of reflection can be said to be fair and reasonably so as to make the entire set of unsecured creditors aware of the liability in respect of Motorola Overseas entities as well prominently. 25. The objection of the Objectors that relevant documents were not supplied to the Objectors, is again not made out. The Transferee Company has relied upon communication dated December 9, 2005, addressed by UWTL, wherein Mr. Ameya Joshi, Advocate, was authorised to inspect and take copies of the documents specified therein. Mr. Joshi has inspected the documents on December 12, 2005. The inspection of the documents is not found to be deficient in any manner. The objection that the copy of the petition was received only on the afternoon of December 23, 2005 cannot be believed in as much as on December 24, 2005, no such objection has not been raised before the Chairman appointed for the meeting of unsecured creditors. 26. It may be noticed that the Objectors are the unsecured creditors of the Transferee Company alone. The scheme of amalgamation is in respect of four Transferor Companies. The assets which are contemplated to amalgamate with the Transferee Company are much more than the projected liability of the Objectors. 26. It may be noticed that the Objectors are the unsecured creditors of the Transferee Company alone. The scheme of amalgamation is in respect of four Transferor Companies. The assets which are contemplated to amalgamate with the Transferee Company are much more than the projected liability of the Objectors. It will be so evident from the following chart : (Rs in Million) MIPL MIEL WNIPL FIPL GIIPL Share Capital 1825.8 950 0.7 47.2 153.2 Reserves 860.1 1129 67.3 66.5 - Loans 1167 - - 7.8 - Total 3852.9 2079 68.0 121.5 153.2 Net Fixed Assets 634.8 246.8 14.9 54.2 - Deferred Tax Assets - 46.6 0.8 (1.2) - Investments 857.6 Net Current (21.6) Assets 3218.1 928 52.3 68.5 P/L 174.8 Total 3852.9 2079 68.0 121.5 153.2 27. The above accretion of the assets to the Transferee Company, are much more than the projected liabilities of the Transferee Company. Therefore, the amalgamation of the Transferor Companies, is not going to reduce the credit- worthiness of the Transferee Company, in any manner, which may be a cause of concern for the Objectors. 28. The Regional Director, Northern Region, Ministry of Company Affairs, has pointed out that the authorised share capital of the Transferee Company is not sufficient to allot shares to the members of the Transferor Companies and, therefore, the Transferee Company may be directed to increase its authorised share capital after following the procedure, prescribed under the relevant provisions of the Companies Act. 1956. In respect of such objections, it has been pointed out in reply filed on behalf of the Companies supported by an affidavit that as per Clause 2.5 of the Scheme on occurrence of the effective date and with effect from the appointed date, the entire authorised share capital of the Transferor Companies constituting Rs. 146.10 Crores, shall stand merged/ transferred to and re-organised and reclassified as the authorised share capital of the Transferee Company. Thus, the authorised share capital of the Transferee Company prior to merger Rs. 2,000,000,000/- would become Rs. 3,461,000,000/-. The said authorised capital would be sufficient to allot equity share to the share holders of the Transferor Companies. 146.10 Crores, shall stand merged/ transferred to and re-organised and reclassified as the authorised share capital of the Transferee Company. Thus, the authorised share capital of the Transferee Company prior to merger Rs. 2,000,000,000/- would become Rs. 3,461,000,000/-. The said authorised capital would be sufficient to allot equity share to the share holders of the Transferor Companies. To the Objection of the Regional Director that the authorised share capital, can be increased after following the procedure prescribed under relevant provisions of the Companies Act, 1956 and payment of requisite fee to the Registrar of the Companies and the Stamp Duties to the government, it has been pointed out in the reply that the Transferor Companies had paid requisite fee and other charges in respect of the petitioner Companies at the time of its authorised share capital was created. The question of payment of stamp duty also came up for consideration before this Court in C.P. No. 131 of 2005 (Saluja Fabrics Limited And Saluja Processors Private Limited And SEL Manufacturing Company Private Limited And for amalgamation of Saluja Fabrics Limited And Saluja Processors Private Limited with SEL Manufacturing Company Private Limited) decided on 23.2.2006, as well. Relying upon a judgment of the Bombay High Court in Company Petition No. 25 of 2003 in the matter of Jaypee Cement Limited decided on March 10, 2004, it was held that if the authorised share capital of the Transferee Company is increased with the merger of the authorised share capital of the Transferor Company, the fee is not required to be paid again as the fee stands paid by the Transferor Company. Therefore, I do not find any merit in the said objection. 29. In respect of the objection that Memorandum of Association of a Company can be amended after following the procedure prescribed under the relevant provisions of the Companies Act, 1956, including passing of special resolution by the members of the Company in general meeting and filing of the relevant forms with the Office of Registrar of the Companies, it has been pointed out that Clause 3 of the Scheme stipulates that upon scheme coming into effect, the Memorandum of Association of the Transferee Company would stand amended in Clauses 4 to 7 as set out in Clause 3.1.1 of the scheme. Since, the scheme including Clause 3.1.1 relating to amendment of main object clause of Memorandum of Association of the Transferee Company, has been approved by 1000% of the share holders of the Transferee Company, hence the requirement regarding a special resolution stand fulfilled. It is pointed out that the provisions of the Sections 391 to 394 of the Act is a complete Code in itself and the sanction therein constitutes single window clearance under the Companies Act,1956. 30. In view thereof, since the scheme has been approved in the Annual General Meeting of the share holders, therefore, the requirement of special resolution in terms of Section 17 of the Act is a matter of procedure alone, which procedure stands followed with the approval of the scheme by the share holders in a meeting convened and presided over by a nominee of this Court. 31. The objection that the surplus arising out of the scheme of amalgamation i.e. amalgamation reserves" is of capital nature and cannot be considered as General Reserve as the General Reserve, is free for distribution to the share holders of a Company in the form of dividends, bonus shares, whereas amalgamation reserve cannot be utilised for distribution to the share holders. In respect of the said objection of the Regional Director, it is pointed out that the Accounting Standard issued by the Council of Institute of Chartered Accountants of India specifically provides for a treatment in respect of such amalgamation reserves in terms of Clause 23 of the Accounting Standard 14. Therefore,in terms of the Scheme, it is deemed to specify the user of Amalgamation Reserve. 32. The objection has been raised by the Regional Director that para 2.5.5.3 of the Scheme be not allowed by this Court as one equity share is held by an individual in the share capital of M/s G.I. India Pvt. Ltd, as a nominee of the Transferee Company and it is pointed out that as per the provisions of the Companies Act. 1956, the shares held by the nominee of the Transferee Company in the Transferor Company is to be cancelled and extinguished. In reply, it is the stand of the Company that Paras 2.5.5.3 be modified and that the equity shares held by the Transferee Company including nominee in the said Transferor Companies would get cancelled and extinguished. 1956, the shares held by the nominee of the Transferee Company in the Transferor Company is to be cancelled and extinguished. In reply, it is the stand of the Company that Paras 2.5.5.3 be modified and that the equity shares held by the Transferee Company including nominee in the said Transferor Companies would get cancelled and extinguished. Therefore, the modified clause 2.5.5.3 of the scheme shall read as under : "The Equity Share held by the Transferee Company including its nominee in the Share Capital of GIIPL shall stand cancelled and extinguished." 33. In respect of balance sheet as on 31.3.2005 of Transferor Company M/s Force Computers India Pvt. Ltd., it has been clarified that there is a typographical error in Schedule B to the balance sheet. The error is in giving the face value of the equity shares as Rs. 100/- instead of Rs. 1000/-. Such error is apparently a typographical error and does not in any manner affect the other figures or computations in the balance sheet as the amount in Schedule B is given correctly by taking into consideration the face value of the equity shares as Rs. 1000/-. It has been further pointed out that the face value of the equity shares has been given correctly in para 23 of the Company Petition as well as Clause 2.1.1 of the Scheme. Since the mistake is typographical, therefore, there is no necessity to file an application to seek correction of the same. 34. In a separate reply filed on behalf of the Official Liquidator, it has been pointed out that the Official Liquidator appointed M/s K.B. Sood and Associates Chartered Accountants to assist the Official Liquidator to make his report pursuant to Second proviso to Section 394(1) of the Companies Act, 1956. It has been pointed out that the Auditors in their report have submitted that the affairs of the Transferor Companies have not been conducted in the manner prejudicial to the interest of its members or to public interest. 35. Since the objections raised by the Regional Director have been either addressed by the Company or have been found to be without any merit, as well the objections raised by the Objectors have been found to be without any substance, therefore, there is no impediment in approving the Scheme of Amalgamation with modification of Clause 2.5.5.3 as noticed above. 35. Since the objections raised by the Regional Director have been either addressed by the Company or have been found to be without any merit, as well the objections raised by the Objectors have been found to be without any substance, therefore, there is no impediment in approving the Scheme of Amalgamation with modification of Clause 2.5.5.3 as noticed above. There is nothing on the record which can lead to inference that the scheme is unfair and unjust which may warrant interference by this Court. 36. In view of the above, I am satisfied that all the statutory requirement have been duly complied with. Accordingly, the proposed Scheme of Amalgamation as modified, is hereby sanctioned. Consequently, the Transferor Companies shall stand dissolved without winding up process. 37. The order of Sanctioning the Scheme shall be duly notified by the Public Notice in the Tribune, Dainik Bhasker and Haryana Government Gazette within 30 days. 38. Any person interested shall be at liberty to approach this Court in the above matter for any directions that may be necessary. 39. Both the petitions and the objections stand disposed of in terns of the above order. Petition disposed of.