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2014 DIGILAW 533 (GUJ)

In Re: Welspun Fintrade Private Limited v. .

2014-04-16

HARSHA DEVANI

body2014
JUDGMENT : HARSHA DEVANI, J. 1. The Petitioner Company has filed this petition under sections 391 to 394 of the Companies Act, 1956 seeking sanction to the arrangement embodied in the Scheme of Amalgamation between Welspun Developers and Infrastructure Limited and Kalyan Reality and Developers Private Limited and Welspun Fintrade Private Limited and their respective share holders and creditors. 2. It is averred in the petition that the two Transferor Companies and the petitioner Transferee Company belong to the same group of management. The amalgamation is proposed in order to achieve synergic benefits and consolidation of the activities and elimination of number of non-operating companies in the group, reduction and operation compliance costs and simplification of the group structure. According to the petitioner, the amalgamation will be advantageous to the share holders as well as the creditors of the company. The details of the benefits envisaged due to the Scheme are set out in the petition. 3. It is further averred that vide order dated 10.01.2014 passed in Company Application No. 15 of 2014, the meetings of the Equity Shareholders, the Unsecured Creditors and Preference Shareholders of the Transferee Company were dispensed with in view of the written consent letters of all the Equity Shareholders, Unsecured Creditors and Preference Shareholders being placed on record and there being no secured creditors of any of the transferee companies. 4. The substantive petition was admitted vide order dated 29th January, 2014 and public notices for the same were duly advertised in the newspapers, Times of India (English Daily), Rajkot Edition and Kutch Mitra (Gujarati Daily), Rajkot Edition on 7.2.2014. The publication in the Government Gazette was dispensed with. The affidavit dated 11th March, 2014 confirms the publication of the public notices in the newspapers. As submitted on behalf of the Transferee Company, no one has come forward with any objection to the said petition even after the publication. It is further averred in the petition that the Transferor Companies have filed Company Applications No. 64 of 2014 and 65 of 2014 and subsequently Company Petition No. 117 of 2014 and 118 of 2014 before the High Court of Judicature at Bombay. Company Petitions No. 117 of 2014 and 118 of 2014 have been admitted by the High Court of Judicature at Bombay on 03.04.2014 and are awaiting further orders from the said court. 5. Company Petitions No. 117 of 2014 and 118 of 2014 have been admitted by the High Court of Judicature at Bombay on 03.04.2014 and are awaiting further orders from the said court. 5. Notice of the petition has been served upon the Regional Director (Western Region), Registrar of Companies and an affidavit of service has been filed before this court. Shri Iqbal A. Shaikh, learned senior standing counsel appears in Company Petition No. 17 of 2014 and has filed an affidavit dated 24.03.2014 made by the Regional Director, (North- Western Region), Ministry of Corporate Affairs, wherein it has, inter alia, been stated that there appears to be no justification in keeping the two "appointed dates" as 01.04.2013 and 02.04.2013 and that the common appointed date should have been 01.04.2013 for both the transferee companies. Therefore, the transfer of assets and liability may be directed to be with effect from 01.04.2013 and the court may direct the Petitioner Company to keep the common appointed date as 01.04.2013 or any other common date as may be directed by this court so as to avoid any confusion in recording the entries of amalgamation due to different appointed dates. It is also stated that the Ministry of Corporate Affairs vide its Circular No. 2/1/2014 dated 15.1.2014 has directed that the Regional Director concerned shall invite specific comments from the Income Tax Department giving 15 days time to the said department to inform about objections, if any, for the proposed Scheme under sections 391 or 394, as the case may be and to file the report on behalf of the Central Government accordingly. That though a letter dated 06.02.2014 has been issued by the Directorate to the Chief Commissioner of Income Tax, Ahmedabad, Gujarat with a view to give specific comments of the Income Tax Department about the proposed Scheme, no reply has been received from the Income Tax Department in this regard. It is, accordingly, prayed that the Petitioner Company be directed to undertake compliance of the Income Tax Act and rules in the matter. 6. It is, accordingly, prayed that the Petitioner Company be directed to undertake compliance of the Income Tax Act and rules in the matter. 6. In response to the affidavit of the Regional Director, on behalf of the Petitioner Company, reply affidavit has been filed stating that since the statutory period of 15 days as envisaged by the relevant circular of the Ministry of Corporate Affairs is over, it can be presumed that the Income Tax Department has no objection to the proposed Scheme of arrangement. The Petitioner Company, however, is duty bound to undertake compliance of all applicable provisions of the Income Tax Act and rules in view of which, no further directions are required to be issued to the Petitioner Company in this regard. As regards the observation with regard to the need and rationale of two appointed dates, it is submitted that in order to avoid any ambiguity in respect to issue of shares as consideration on merger of the first Transferor Company and second Transferor Company with the petitioner Transferee Company, the Scheme contains two appointed dates. According to the petitioner, there is no legal bar on the choice of appointed date. It is the prerogative of the Board of Directors of the Petitioner Company to select the appointed date for the Scheme which is required to be approved by the shareholders of the respective petitioner companies. Both these requisites have been complied with in the present proceedings. It is further the case of the petitioner that the said principle has been widely accepted in a large number of decisions of this court, in view of which, no directions are necessary to change the appointed date of the Scheme. The Regional Director, in his affidavit, has stated that there is no other objection and that the Scheme of Amalgamation of M/s. Welspun Developers and Infrastructure Limited and M/s. Kalyan Reality and Developers Private Limited with Petitioner Transferee Company namely M/s. Welspun Fintrade Private Limited, is not prejudicial to the interest of the shareholders of the Petitioner Company and the public at large. 7. Heard Ms. Dharmishta Raval, learned advocate for the Petitioner Company and the learned senior standing counsel appearing for the Central Government. 7. Heard Ms. Dharmishta Raval, learned advocate for the Petitioner Company and the learned senior standing counsel appearing for the Central Government. Having gone through the petitions, and having considered the submissions made in this regard and being satisfied that amalgamation under the proposed Scheme would be in the interest of the companies and their members and creditors, the court is of the view that the Scheme deserves to be sanctioned. The arrangement otherwise seems to be appropriate and hence, it is required to be sanctioned with a specific observation that sanctioning of this Scheme would not absolve anyone who is otherwise liable for any responsibility or liability, only on account of this sanctioning. 8. Having regard to the fact that the two Company Petitions No. 117/2014 and 118/2014 filed by the two Transferor Companies are pending final hearing before the High Court of Judicature at Bombay, the Scheme at Annexure-E is sanctioned subject to approval being obtained by the two Transferor Companies in Company Petitions No. 117/2014 and 118/2014 by the High Court of Judicature at Bombay. The prayer in terms of paragraph- 24(a) of the Company Petition No. 17 of 2014, is hereby granted subject to the Scheme being approved by High Court of Judicature at Bombay in Company Petitions No. 117/2014 and 118/2014 filed by the two Transferor Companies. 9. The petition is disposed of accordingly. So far as the cost to be paid to Shri Iqbal A. Sheikh, the Central Government Counsel is concerned, the same is quantified at Rs. 7500/- and should be paid to him. 10. The Petitioner Company is further directed to lodge a copy of this order, the schedules of immovable assets of all the Transferor Companies as on the date of this order and the Scheme duly authenticated by the Registrar, High Court of Gujarat, with the concerned Superintendent of Stamps, for the purpose of adjudication of stamp duty, if any, on the same within 60 days from the date of the order. 11. The Petitioner Company is directed to file a copy of this order along with a copy of the Scheme with the concerned Registrar of Companies, electronically, along with E-Form 21 in addition to physical copy as per the relevant provisions of the Act. 12. Filing and issuance of drawn up order is hereby dispensed with. 13. 11. The Petitioner Company is directed to file a copy of this order along with a copy of the Scheme with the concerned Registrar of Companies, electronically, along with E-Form 21 in addition to physical copy as per the relevant provisions of the Act. 12. Filing and issuance of drawn up order is hereby dispensed with. 13. All the concerned authorities shall act on a copy of this order along with the Scheme duly authenticated by the Registrar, High Court of Gujarat. The Registrar, High Court of Gujarat shall issue the authenticated copy of this order along with Scheme as expeditiously as possible. 14. Registry to maintain copy of this order in this company petition.