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2012 DIGILAW 406 (GUJ)

Aangi Shares and Services P. Ltd. , In Re v. .

2012-05-04

R.M.CHHAYA

body2012
JUDGMENT : R.M. Chhaya, J. The present petitions are filed seeking sanction of scheme of amalgamation proposed to be made between Aangi Shares and Services P. Ltd., and Anand Yogesh Shares and Consultancy P. Ltd., and Bhaktisuri Shares and Services P. Ltd., and D.B. Securities P. Ltd., and H.K. Stock Services P. Ltd., and Parsvanath Fincon P. Ltd., and Prasann Shares and Services P. Ltd., and Rajendrasuri Financial Services (Gujarat) P. Ltd., and Vajshah Shares and Consultancy P. Ltd., with Dharmanath Shares and Services P. Ltd. 2. Aangi Shares and Services P. Ltd., the transferor company filed Company Application No. 379 of 2010 seeking dispensation of the meeting of shareholders on the ground that consent of all the shareholders are obtained. It was stated on behalf of the petitioner that the petitioner does not have any creditor. This court vide order dated December 16, 2010, made in Company Application No. 379 of 2010 ordered dispensation of meeting of the shareholders of the petitioner-company. 3. Anand Yogesh Shares and Consultancy P. Ltd., the transferor company filed Company Application No. 380 of 2010 seeking dispensation of the meeting of shareholders on the ground that consent of all the shareholders are obtained. It was stated on behalf of the petitioner that the petitioner does not have any creditor. This court vide order dated December 16, 2010, made in Company Application No. 380 of 2010 ordered dispensation of meeting of the shareholders of the petitioner-company. 4. Bhaktisuri Shares and Services P. Ltd., the transferor company filed Company Application No. 381 of 2010 seeking dispensation of the meeting of shareholders on the ground that consent of all the shareholders are obtained. It was stated on behalf of the petitioner that the petitioner does not have any creditor. This court vide order dated December 16, 2010, made in Company Application No. 381 of 2010 ordered dispensation of meeting of the shareholders of the petitioner-company. 5. D.B. Securities P. Ltd., the transferor company filed Company Application No. 382 of 2010 seeking dispensation of the meeting of shareholders on the ground that consent of all the shareholders are obtained. It was stated on behalf of the petitioner that the petitioner does not have any creditor. This court vide order dated December 16, 2010, made in Company Application No. 382 of 2010 ordered dispensation of meeting of the shareholders of the petitioner-company. 6. It was stated on behalf of the petitioner that the petitioner does not have any creditor. This court vide order dated December 16, 2010, made in Company Application No. 382 of 2010 ordered dispensation of meeting of the shareholders of the petitioner-company. 6. H.K. Stock Services P. Ltd., the transferor company, filed Company Application No. 383 of 2010 seeking dispensation of the meeting of shareholders on the ground that consent of all the shareholders are obtained. It was stated on behalf of the petitioner that the petitioner does not have any creditor. This court vide order dated December 16, 2010, made in Company Application No. 383 of 2010 ordered dispensation of meeting of the shareholders of the petitioner-company. 7. Parsvanath Fincon P. Ltd., the transferor company, filed Company Application No. 384 of 2010 seeking dispensation of the meeting of shareholders on the ground that consent of all the shareholders are obtained. It was stated on behalf of the petitioner that the petitioner does not have any creditor. This court vide order dated December 16, 2010, made in Company Application No. 384 of 2010 ordered dispensation of meeting of the shareholders of the petitioner-company. 8. Prasann Shares and Services P. Ltd., the transferor company, filed Company Application No. 385 of 2010 seeking dispensation of the meeting of shareholders on the ground that consent of all the shareholders are obtained. It was stated on behalf of the petitioner that the petitioner does not have any creditor. This court vide order dated December 16, 2010, made in Company Application No. 385 of 2010 ordered dispensation of meeting of the shareholders of the petitioner-company. 9. Rajendrasuri Financial Services (Gujarat) P. Ltd., the transferor company, filed Company Application No. 386 of 2010 seeking dispensation of the meeting of shareholders on the ground that consent of all the shareholders are obtained. It was stated on behalf of the petitioner that the petitioner does not have any creditor. This court vide order dated December 16, 2010, made in Company Application No. 386 of 2010 ordered dispensation of meeting of the shareholders of the petitioner-company. 10. Vajshah Shares and Consultancy P. Ltd., the transferor company, filed Company Application No. 387 of 2010 seeking dispensation of the meeting of shareholders on the ground that consent of all the shareholders are obtained. It was stated on behalf of the petitioner that the petitioner does not have any creditor. 10. Vajshah Shares and Consultancy P. Ltd., the transferor company, filed Company Application No. 387 of 2010 seeking dispensation of the meeting of shareholders on the ground that consent of all the shareholders are obtained. It was stated on behalf of the petitioner that the petitioner does not have any creditor. This court vide order dated December 16, 2010, made in Company Application No. 387 of 2010 ordered dispensation of meeting of the shareholders of the petitioner-company. 11. Dharmanath Shares and Services P. Ltd., the transferee company, filed Company Application No. 388 of 2010 seeking dispensation of the meeting of shareholders on the ground that consent of all the shareholders are obtained. It was stated on behalf of the petitioner that the petitioner does not have any creditor and it was further stated that the petitioner being transferee company, the meeting of creditors even otherwise not required to be held. This court vide order dated December 16, 2010, made in Company Application No. 388 of 2010 ordered dispensation of meeting of the shareholders of the petitioner-company. 12. The petitioners thereafter filed company petitions seeking sanction of the scheme of amalgamation. 13. This court vide order dated December 30, 2010, made the order of admission in all the petitions and directed issuance of notice to the Regional Director in case of all companies and notice to the official liquidator in case of the transferor companies. This court also directed publication of notice of petition in Gujarati daily Lok-Satta Jan-Satta and English daily Indian Express both Ahmedabad editions. 14. Pursuant to the order dated December 30, 2010, the petitioners have published the notice of petition in Gujarati daily Lok-Satta Jan-Satta and English daily Indian Express both Ahmedabad editions on January 29, 2011. The directors of the petitioner-companies have filed the affidavits in support of publication of advertisements. 15. Pursuant to the notice to the official liquidator in respect of the Company Petitions Nos. 220 to 228 of 2010, reports are filed by the office of the official liquidator. The reports of the official liquidator confirm that the affairs of the transferor companies have not been conducted in a manner prejudicial to the interest of its members or the public interest. 220 to 228 of 2010, reports are filed by the office of the official liquidator. The reports of the official liquidator confirm that the affairs of the transferor companies have not been conducted in a manner prejudicial to the interest of its members or the public interest. The official liquidator however has requested this court to direct the transferor companies to preserve its books, papers and records for a period of 8 years from the date of sanctioning of scheme of amalgamation and not to dispose of the records without the prior permission of the Central Government under section 396A of the Companies Act, 1956. 16. In response to the notice to the Regional Director, Western Region, Department of Company Affairs, Shri Pankaj Champaneri, the learned Assistant Solicitor General of India, has appeared and has filed an affidavit of the Regional Director dated April 25, 2011. A further affidavit is filed by the Regional Director on June 29, 2011. The petitioner has filed an affidavit dated May 3, 2011, explaining the observations made by the office of the Regional Director. The petitioner has also filed further affidavit on December 5, 2011, along with which the petitioner has also annexed a copy of the judgment dated September 17, 2009, of this court rendered in Company Petition No. 307 of 2008. 17. This court earlier made an order dated January 23, 2012, directing issuance of notice upon the Income-tax Department. In response to the said notice, Shri Sudhir Mehta, the learned advocate has appeared and has filed an affidavit of the Income-tax Officer in Company Petition No. 229 of 2010, a common affidavit in Company Petitions Nos. 220, 222, 225, 226 and 227 of 2010 and also an affidavit in Company Petition No. 228 of 2010. 18. In response to the first observation of the Regional Director, which is with regard to allotment of shares and forfeiture thereof, it is stated on behalf of the petitioner that it is the sole discretion of the board of directors of the company to issue and allot shares. It is further stated that it is also the sole discretion of the board of directors of the company to pass necessary resolution for forfeiture of shares in case of failure on the part of the shareholder in not depositing the call money on demand. It is further stated that it is also the sole discretion of the board of directors of the company to pass necessary resolution for forfeiture of shares in case of failure on the part of the shareholder in not depositing the call money on demand. It is also stated that the provisions of the Companies Act or any other statute does not contain any prohibition against such actions on the part of the board of directors. Without prejudice, it is also stated on behalf of the petitioner that by the act of forfeiture, the concerned petitioner-companies have received moneys and there is no out flow of funds from the corpus of the company. 19. With regard to the second observation which is on the aspect of fixation of premium amount on the allotment of shares, it is stated on behalf of the petitioners that the fixation of premium on the allotment of shares is also within the exclusive domain of the board of directors of the company. Further, there is no prohibition under the Companies Act, 1956, against charging of premium on the allotment of shares. There is also no loss occasioned to the company or to its funds. The company has received more funds from the shareholders. 20. With regard to the third observation which pertains to transfer of shares, it is stated that the list produced by the office of the Regional Director at annexure III itself shows that the consent of the transferee company has also been obtained. 21. With regard to the fourth observation which pertains to the applicability of AS-14 as notified by the Central Government under section 211(3A) of the Act, it is stated on behalf of the petitioner that it is incorrect to record that paragraph 11 of Part V of the scheme contain entries/adjustments which are not as per AS-14 as notified by the Central Government. It is also incorrect to state that sub-clauses 11.5, 11.7 and 11.8 of clause 11 of the scheme exempts the petitioner-company from complying with the Accounting Standard notified by the Central Government. It is asserted that the scheme complies with AS-14 as notified by the Central Government. It is also incorrect to state that sub-clauses 11.5, 11.7 and 11.8 of clause 11 of the scheme exempts the petitioner-company from complying with the Accounting Standard notified by the Central Government. It is asserted that the scheme complies with AS-14 as notified by the Central Government. The petitioner has also produced in this regard certificate dated April 3, 2011, issued by Kiran and Pradip Associates, chartered accountants certifying that paragraph 11 and in particular sub-clauses 11.1 to 11.8 of the scheme is in compliance with the accounting standard AS-14 notified by the Central Government under section 211(3A) of the Act. Without prejudice, it is stated on behalf of the petitioner that assuming without admitting that any of the petitioner-company has made any breach of any of the provisions of the Companies Act, 1956, such breach would not affect the scheme of amalgamation. In case the competent authority finds the breach, it is always open for the competent authority under the Act to take necessary action in accordance with law. The rights and contentions of the concerned authorities as also of the petitioner companies, as the case may be, shall remain open and the order of this court sanctioning the scheme may not conclude the issue. 22. In response to the affidavits filed on behalf of the Income-tax Department, the petitioner placed reliance on the affidavit in reply filed to further report of Regional Director at page 123. Reliance is also placed on the judgment of this court rendered in Company Petition No. 307 of 2008. By relying upon the said judgment, it is urged that as held by this court, any proceedings under the Income-tax Act cannot be a relevant circumstance for not sanctioning the scheme. Learned counsel for the petitioner extensively relied upon the said judgment and has submitted that by making appropriate observations, this court may grant sanction to the scheme. This court (Coram : Jayant Patel J.) vide order dated September 17, 2009, passed in Company Petition No. 307 of 2008 has observed thus : "10. The perusal of the points which have been raised by the official liquidator and re-produced at paragraph 10 in the report, prima facie go to show that as per the official liquidator, there are certain contravention to the provisions of the Income-tax Act, Central Excise Laws and other relevant statute by the transferor company. The perusal of the points which have been raised by the official liquidator and re-produced at paragraph 10 in the report, prima facie go to show that as per the official liquidator, there are certain contravention to the provisions of the Income-tax Act, Central Excise Laws and other relevant statute by the transferor company. Whereas, the case of the transferor company is that there is no concluded finding of any authority for breach of the relevant provisions of the Act by the company under the relevant statute. Under these circumstances, at the most it can be said that there is alleged contravention as per the official liquidator, whereas, the company has not admitted the same. As per the scheme, the transferee company is to continue even after merger of the transferor company. But, the alleged breach, if any, or the proceedings based thereon will have to be saved to the extent that if for the alleged breach any competent forum under the relevant statute, has found that the breaches have been committed, it would be open to the concerned authority to initiate the proceedings and at that stage the directors and/or office bearers of the transferor company would be at the liberty to raise all defence which may be permissible in law and the competent authority shall be at the liberty to take an independent view on the aspects of the so-called breaches thereafter. Therefore, no conclusion deserves to be recorded on the said aspects by observing that the order of this court in the present proceedings shall not be read as the question/s concluded and/or putting seal over such alleged breaches, more particularly, since the issue is covered by the above referred decisions of this court in the case of Arvind Mills Ltd., In re (2002) 111 Comp Cas 118 as well as Core Health Care Ltd., In re (2007) 138 Comp Cas 204 (Guj). Hence, subject to the aforesaid observations, the report of the official liquidator should not operate as an obstacle in considering the scheme further for sanction." 23. This court has heard learned counsel for the parties. The court has also perused the record, the affidavits and the counter affidavits. The court finds that the observation regarding Income-tax is squarely covered by the judgment of this court rendered in Company Petition No. 307 of 2008. This court has heard learned counsel for the parties. The court has also perused the record, the affidavits and the counter affidavits. The court finds that the observation regarding Income-tax is squarely covered by the judgment of this court rendered in Company Petition No. 307 of 2008. Pendency of any proceedings if any by the Income-tax Department cannot be a ground not to sanction the scheme. Even if there are any proceedings, the said proceedings cannot come in the way of sanction of the scheme. No conclusion is deserved to be recorded on the said aspect and the order of this court in these petitions shall not be read as concluding the questions which may be raised by the Income-tax Department. The court also finds that the issue and allotment of shares whether on premium or otherwise is in the sole domain of the board of directors of the company. Furthermore, even the action of the company in forfeiting the shares cannot be said to be against the provisions of Companies Act, 1956. In case of default in payment of call money, it is open for the board of directors of the company to forfeit the shares of the concerned shareholder. In any case, such aspects would not affect the scheme of amalgamation as proposed under sections 391 and 394 of the Companies Act, 1956. The court finds that there is nothing in the report which adversely affects the interest of the company and/or its shareholders, or creditors by virtue of the provisions of the scheme of amalgamation. The scheme of amalgamation is also not against the public interest. Without prejudice, sanction of the scheme would not conclude the issues which are raised by the Regional Director. In the circumstance, the court does not find anything objectionable which would render the scheme invalid. 24. There are no other objections received on the record of the present petitions. There are no other adverse circumstances against sanction of the scheme. 25. In the facts and circumstances, the scheme of amalgamation as annexed at annexure C to the petitions is hereby sanctioned. 24. There are no other objections received on the record of the present petitions. There are no other adverse circumstances against sanction of the scheme. 25. In the facts and circumstances, the scheme of amalgamation as annexed at annexure C to the petitions is hereby sanctioned. It is however, observed that the transferor companies will preserve their books, papers and records for a period of 8 years from the date of sanctioning of scheme of amalgamation and will not dispose of the records without the prior permission of Central Government under section 396A of the Companies Act, 1956. With these observations, the company petitions are accordingly allowed. 26. The cost of Mr. P.S. Champaneri, the learned Assistant Solicitor General of India and Mr. Y.V. Vaghela, the learned Central Government counsel is be quantified at Rs.7,500 each per petition. Liberty is given to the transferee company to pay the amount of cost directly by drawing a cheque in favour of Shri Pankaj Champaneri, the learned Assistant Solicitor General of India and Mr. Y.V. Vaghela, learned Central Government counsel. The cost of the office of official liquidator is quantified at Rs.7,500 each in respect of the transferor companies. Liberty is given to the transferee company to pay the amount of cost directly by drawing a cheque in favour of the official liquidator.