Gujarat High Court
Micro Products Pvt Ltd vs Respondent(S) on 31 January, 2014
Author: R.M.Chhaya
Bench: R.M.Chhaya
O/COMP/254/2013 JUDGMENT
IN THE HIGH COURT OF GUJARAT AT AHMEDABAD
COMPANY PETITION NO. 254 of 2013
In
COMPANY APPLICATION NO. 213 of 2013
With
COMPANY PETITION NO. 255 of 2013
In
COMPANY APPLICATION NO. 214 of 2013
FOR APPROVAL AND SIGNATURE:
HONOURABLE MR.JUSTICE R.M.CHHAYA
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1 Whether Reporters of Local Papers may be allowed to
see the judgment ?
2 To be referred to the Reporter or not ?
3 Whether their Lordships wish to see the fair copy of the
judgment ?
4 Whether this case involves a substantial question of law
as to the interpretation of the constitution of India, 1950
or any order made thereunder ?
5 Whether it is to be circulated to the civil judge?
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MICRO PRODUCTS PVT LTD....Petitioner(s)
Versus
.....Respondent(s)
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Appearance:
MR TUSHAR P HEMANI, ADVOCATE for the Petitioner(s) No. 1
MS VAIBHAVI K PARIKH, ADVOCATE for the Petitioner(s) No. 1
Page 1 of 8
O/COMP/254/2013 JUDGMENT
MR M IQBAL A SHAIKH, ADVOCATE for the Respondent(s) No. 1
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CORAM: HONOURABLE MR.JUSTICE R.M.CHHAYA
Date : 31/01/2014
COMMON ORAL JUDGMENT
1. These are the petitions filed for the sanction of the Scheme of arrangement in the nature of amalgamation of Micro Mech Products Private Limited, the Transferor Company with Leistung Engineering Limited, the Transferee Company, under sections 391 to 394 of the Companies Act, 1956. Both the Petitioner Companies belong to the same group of management.
2. By Order dated 18th September 2013 passed in the Company Application No. 213 of 2013, meetings of the Equity Shareholders, sole Secured Creditor and Unsecured Creditors of the Transferor Company, as the case may be, were dispensed with in view of the written consent letters from all the concerned persons being placed on record and substantiated by the certificates of the Chartered Accountant.
3. It has been submitted that by Order dated 18th September 2013 passed in Company Application No. 214 of 2013, meeting of the Equity Shareholders of the Transferee Company, Page 2 of 8 O/COMP/254/2013 JUDGMENT as the case may be, was dispensed with in view of the written consent letters from all the concerned persons being placed on record and substantiated by the certificate of the Chartered Accountant.
4. The petitions were admitted vide order dated 1st October 2013. The public notice for the same were duly advertised in the newspapers Indian Express, English daily and Jansatta - Loksatta, Gujarati daily, both Ahmedabad Editions dated 24th October 2013 and the publication in the Government Gazette was dispensed with. Affidavit dated 11th November 2013 confirms the same. No one has come forward with any objections to the said petitions even after the publication. The same has been further confirmed by the additional affidavit dated 28th January 2014.
5. Notice of the petition of the Transferor Company was served upon the Official Liquidator attached to Gujarat High Court. The Official Liquidator has filed report dated 16th January 2014 in Company Petition No. 254 of 2013, wherein it is observed that the affairs of the Transferor Company have not been conducted in the manner prejudicial to the interest of its members or public. The Transferee Company shall preserve its books of accounts, papers and Page 3 of 8 O/COMP/254/2013 JUDGMENT records as per the statutory requirement under the Companies Act, 1956.
6. Notice of the petitions has been served upon the Central Government and Shri M. Iqbal A. Shaikh, Standing Counsel appear for the Central Government. An affidavit dated 10th January 2014 has been filed by Shri Shambhu Kumar Agarwal, the Regional Director, Ministry of Corporate Affairs, NorthWestern Region, whereby several observations are made. The same pertains to - (a) payment of the requisite stamp duty and registration fees for increased authorized capital of the Transferee Company;
(b) approval to the scheme from the creditors of the Transferee Company and (c) compliance of Accounting Standard14 for the accounting entries. An additional affidavit dated 28th January 2014 has been filed on behalf of both the Petitioner Companies dealing with the said observations.
7. The attention of this court is drawn to the Additional Affidavit dated 28th January 2014, whereby all the above issues have been dealt with. I have further heard submissions made by Ms. Vaibhavi Parikh, learned advocate appearing for the petitioner as follows:
(a) With respect to the first observation at Page 4 of 8 O/COMP/254/2013 JUDGMENT paragraph 2(b) of the affidavit dated 10/01/2014 filed by the Regional Director, it has been undertaken by the Transferee Company that upon the scheme being effective, the Transferee Company shall comply with the requirements of the provisions of Section 94/97 read with Section 192 of the Companies Act, 1956 and file requisite forms with the Registrar of Companies and pay the required stamp duty and registration fees for the increase in the authorized share capital.
(b) With respect to the second observation at paragraph 2(c) of the affidavit dated 10/01/2014 filed by the Regional Director, it is submitted that the proposed scheme does not envisage any compromise or arrangement with the Creditors of the Transferee Company. The Transferee Company shall continue to exist and carry on its commercial activities even after the Scheme is made effective. Further, both the Transferor and Transferee Companies are profit making Companies and as explained vide paragraph 7.3 of the petition, the amalgamation is proposed between the two companies belonging to the same group of management which are involved in the commercial activities of the same nature. It is envisaged that the synergic benefits shall be achieved which will be in the interest of the shareholders as well as Page 5 of 8 O/COMP/254/2013 JUDGMENT creditors of the amalgamated company. The said contention is further supported by the fact that even after the publication of notice of petition in the newspapers inviting objections to the proposed Scheme no Creditor has come forward with any objections. This aspect reaffirms the contention of the Petitioner that the rights and interests of the Creditors of the Transferee Company are not affected due to the Scheme. In support of the above submission, reliance has been placed upon Union of India and Others v. Ambalal Sarabhai Enterprises Limited reported in (1984) 55 Company Cases 623 (Guj). Considering the facts and circumstances, it is not found necessary to issue any such directions to obtain the approval of the creditors of the Transferee Company and observation of the Regional Director is hereby overruled.
(c) With respect to the third observation at paragraph 2(d) of the affidavit dated 10/01/2014 filed by the Regional Director, it has been submitted on the behalf of the Petitioner Companies that the clause 10(a) of the scheme provides that the accounting entries shall be passed in accordance with the applicable Accounting Standards. It has been submitted that the present scheme envisages the Amalgamation in the nature of merger and under Page 6 of 8 O/COMP/254/2013 JUDGMENT the pooling of interest method, the transfer of assets and liabilities shall take place at their book values as in the books of the Transferor Company. Further, the identity of the Reserves is preserved and they appear in financial statements of the Transferee Company in the same form in which they appeared in the books of the Transferor Company. However, it is undertaken by the Transferee Company that it shall follow and adopt the provisions of the Accounting Standard-14 and adopt all the related provisions of the Companies Act, 1956 and all other applicable laws to give effect of the amalgamation in its books.
(d) It has been submitted on the behalf of the Petitioner Companies that the Regional Director in its affidavit at paragraph 2(e) has observed that as per the said report, no compliant and/or representation has been received against the Petitioner Companies including any complaint/representation in respect of the proposed scheme of amalgamation.
8. I have heard Ms. Vaibhavi Parikh, Advocate for the Petitioner Companies and the Standing Counsel for the Central Government. Considering the affidavits placed on record, and the submissions made in this regard, I am satisfied that the observations made by the Regional Page 7 of 8 O/COMP/254/2013 JUDGMENT Director, Ministry of Corporate Affairs, do not survive and the scheme of amalgamation would be in the interest of the Companies, their members, creditors and in the public interest and the same deserves to be sanctioned. Prayers in terms of paragraph 15(a) of the Company Petition Nos. 254 and 255 of 2013 are hereby granted.
9. The petitions are disposed of accordingly. So far as the cost to be paid to the Central Government Standing Counsel is concerned, I quantify the same at Rs.7,500/ per petition. The same may be paid to the learned advocate appearing for the Central Government. The cost of Rs.7,500/ be paid to the Office of the Official Liquidator for the Transferor Company.
(R.M.CHHAYA, J.) mrp Page 8 of 8