TaxTMI 
TaxTMI 
2008 (1) TMI 619
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....is will appear from the report of the chairpersons filed in respect of the transferor and transferee- companies. Thereafter, once again advertisements were issued in the dailies with notice to the Central Government. It is after this second round of advertisements that an affidavit has been filed by the Central Government wherein certain objections have been raised regarding the clauses of the scheme. 2. The Central Government has raised two objections relating to paragraph 5 of Part III, which specifies passing of consideration by the transferor to the transferee-companies. According to counsel for the Central Government no time limit has been fixed for the said payment. The said consideration is nothing but an outright sale and therefore....
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....liance has also been placed on Highway Cycle Industries and Sunbeam Auto Ltd., In re [1999] 97 Comp. Cas. 846 (Punj. & Har.) for the proposition that cash consideration per se would not frustrate or invalidate the proposed scheme. Therefore, avoidance of capital gains can be no reason for not sanctioning the scheme of arrangement as avoidance of capital gains is a matter of revenue and will attract the provisions of the Income-tax Act. 5. Paragraph 3.8 of Part II has also been accepted by the shareholders and is to happen at a future date. There is no reason to apprehend that the terms may not be favourable. No objection has also been raised to the said clause by any of the shareholders. There is no reason for the court not to sanction the....
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....r way must be honoured. The reason for doing so is that the shareholders today are well equipped and have the prowess to evaluate the pros and cons of the functioning of the company. They are enlightened and astute businessmen who are prudent in business management. They have their own interest and the interest of the company in mind. It is only a scheme of arrangement, which is just, fair, reasonable and commercial, which will be approved by them and none else. In the instant case the scheme of arrangement has been approved and passed by the requisite majority. Therefore, it cannot be said that the scheme of arrangement is unfair, unreasonable or fraudulent to its shareholders. 8. For all the said reasons, I see no reason to interfere wit....