TaxTMI 
TaxTMI 
2010 (6) TMI 332
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....provisions of sections 391 and 394 of the Companies Act, 1956. 2. The Petitioner is listed on the Bombay Stock Exchange and the National Stock Exchange of India limit. The issued, subscribed and paid up capital of the Petitioner prior to 31-3-2009 was Rs. 18,96,66,78,160 comprising of 1,89,66,67,816 equity shares of Rs. 10 each. After 31-3-2009 same increased to Rs. 18,96,78,92,270 on account of ESOPs. 3. The Petitioner is primarily engaged in the business of surveying, prospecting, drilling, exploring and dealing in minerals, natural oils, petroleum, gas and related products. The transferor-companies are the Petitioner's subsidiaries. The transferor-companies also carry on business activities in India through their project offices. Each of the transferor-companies is a participant in various oil and gas blocks granted by the Government of India through production sharing contracts entered into with the Government of India and other joint venture parties. 4. A copy of the audited statement of accounts as of 31-3-2009 and unaudited statement of accounts as on 30-9-2009 of each of the transferor-companies has been annexed to the petition. Further a copy of the audited statement of....
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....r and representing 99.88 per cent in value present and voting in person or by proxy or by authorised representatives voted in favour of the scheme. Twenty three equity shareholders holding 19,300 equity shares representing in value a sum of Rs. 1,93,000 constituting 5.61 per cent in number and representing 0.12 per cent in value present and voting in person or by proxy or by authorised representatives voted against the scheme. Thus the overwhelming majority of the equity shareholders voted in favour of the scheme. 8. The Bombay Stock Exchange and the National Stock Exchange issued certificates stating that they had no objection to the scheme. 9. The Petitioner thereafter filed the present Petition on 2-3-2010. 10. The Regional Director has filed an affidavit stating that the scheme is not prejudicial to the interest of the shareholders and the public. However, two objections were raised in a further affidavit filed on behalf of the Regional Director. 11. Mr. Avasia, the learned counsel appearing on behalf of the Regional Director submitted that under the provisions of the scheme the appointed date is uncertain as the scheme does not provide for a specific "effective date". He s....
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....rd of Directors of the companies to modify the scheme without the sanction of the Court. He submitted that the power to modify the same after its sanction lies only with the High Court that sanctions such scheme. 14. Although this may not have been the intention of the said companies, the clause certainly requires modification to eliminate the defect rightly pointed out by Mr. Avasia. 15. In the circumstances, clause 19.1 is modified by deleting the words "or any other authority" appearing between the words "High Court(s)" and "may deem fit" and also by deleting the words "or which may otherwise be considered necessary, desirable or appropriate by them (i.e., the Board of Directors or a Committee thereof and resolve all issues that may arise for carrying out the Scheme", appearing between the words "or impose" and the words "and do all acts . . ." It is so ordered. 16. The objections raised on behalf of the Regional Director are thus taken care of. 17. One of the shareholders Mr. D.V. Lakhani objected to the scheme on several grounds. He holds 8,000 equity shares which represents 0.000422 per cent of the issued, subscribed and paid up equity capital of the company. 18. Mr. Lak....
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.... his report of the result of the meeting in Form No. 39 giving all the details including the names and address of the members who attended the meeting. The objectors submitted that the Chairman's report gives the number of shareholders, their authorised representatives and proxies who attended the meeting but, does not give the individual names and address of the members and therefore, the report is not consonance with Rule 78 and Form No. 39. In Industrial Enterprises & Finance Limited, Company Petition No. 1085/2002 decided on 5th June, 2003, reported in 2003 (8) LJSOFT 47 = 2003 (4) Bom.C.R. 482 = 2003 (4) ALL MR 606, following the decision of the Calcutta High Court in Darjeeling Commercial Company Ltd. v. Pandam Tea Company Ltd., reported in 1983 (54) Company Cases 814, this Court held that Court should not take pedantic and strict view while considering the rules and the forms but, Court should be liberal and substantial compliance of the procedural rules would be enough. The petitioner has filed on record the names and address of the members their authorised representatives and proxies who attended the meeting also giving the manner in which they voted along with the affidav....
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....proposal to write off by adjusting the value of the goodwill against the securities premium account is unfair and unjust. He submitted that there was no compulsion on the Petitioner to write off the entire amount of goodwill by adjusting the same from the securities premium account at one stroke. He submitted that this ought to be done in instalments. He referred to paragraph 8 of his additional affidavit in which it is stated that International Financial Reporting Standards which come into effect from 1-4-2011 also allows the companies to decide the period of write off and does not make it mandatory to write off at one stroke. 27. Absent any impropriety, mala fides, fraud or absurdity these are decisions which are best left to the members. It is difficult for the Court to sit in appeal over their judgment in such matters namely whether to write off the amounts in instalments or in one stroke. 28. Mr. Lakhani then submitted that the goodwill of the transferor-companies which vested in the Petitioner was of the value of Rs. 25,319 crores as appearing in the consolidated accounts of the Petitioner for the fifteen months period ending 31-3-2009. He submitted that the officers of the....
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....hose in paragraph 6 thereof including as to obtaining the valuation report from an independent valuer, using the same as the basis for determining the goodwill at the time of the scheme coming into effect, that the special resolution dated 2-3-2010 will not be relied on or utilized for any purpose except for adjustment of the goodwill arising pursuant to the scheme and to apply to this Court for confirmation of the minute of reduction of the securities premium account after the value of the goodwill to be adjusted is determined, are accepted. If the undertakings are violated the shareholders have a remedy. The undertakings/statements if followed adequately safeguard the interests of the members. 32. Mr. Lakhani "wondered" what would happen if the scheme is approved by this Court but the Government of India does not permit the transfer of the operating assets as contemplated under the scheme. The obvious answer is that if the permission from the Government of India, is required, and is rejected, the scheme will fail. 33. Mr. Lakhani submitted that the company had not complied with the provisions of section 391(2) of the Companies Act as it had failed to produce the latest financia....
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....e were to look at the provisions regarding amalgamation scheme the time appears to be the essence in approval of such Schemes. In fact, within the time prescribed, the meeting has to be held, and within 15 days the Chairman has to file his report in this Court and within a week thereof the Petition has to be presented in this Court so as to enable the Court to consider Amalgamation Scheme at the earliest. In a given case the Petition may come up for hearing after three or four years and to say that the Petitioner need not disclose the latest financial position of the Company would render the entire objective meaningless. It is pertinent to note that the words used "Court must be satisfied with regard to the latest financial position of the Company". In this context as mentioned earlier, the judgment of the Delhi High Court in Bhagwan Singh's case (supra) the meaning of words "latest financial position" has categorically been held as the financial position should be when the matter is due for sanction. Obviously, it means at the time of final hearing of the Petition and this requirement is statutory since the Supreme Court in Miheer H. Mafatlal's case (supra) has categorically held ....
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.... the final hearing of the petition. This would depend upon the facts of each case. If the financial position as of a date reasonable proximate to the date of hearing of the petition is furnished, nothing more is required unless the Court has reason to believe that even during this period, the financial position has or may have undergone such a change as to necessitate the Petitioner bringing the same to the notice of the Court. 37. In Blue Star Ltd., In re [2000] 24 SCL 300 (Bom.), another learned Single Judge while dealing with the same question of law, held that the relevant time of the latest financial position would be at the time of filing the petition and that it is only when there is a long gap between filing of the latest balance-sheet etc. and when the Court considers the scheme for sanction that the Court may require the latest financial position. Mr. Chagla relied upon the following observations in paragraph 11 of the judgment :- "11. Mr. Grover, learned Counsel appearing for the objectors has raised a large number of objections. Mr. Grover is right in his submission that the objectors cannot be told that they have no locus standi to object to the scheme as they have c....
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....became due for sanction. This decision is not contrary to the judgment of the Gujarat High Court. It lays down that the latest financial position has to be given as on the date of the sanction by the Court. But the observation has to be seen in the light of the facts of each case. In that case the meetings of the creditors and shareholders were held on April 25, 1978, approving the scheme of arrangement, and the report of the Chairman submitted on May 23, 1978. Instead of filing the petition within seven days of the filing of the report by the Chairman as required under Rule 79 of the Companies (Court) Rules, 1959, the petition was moved on November 15, 1978. The learned Judge rejected the reason given for the delay and dismissed the petition. While dealing with section 391(2) of the Companies Act it was observed that the Company has chosen to file balance-sheet up to March, 1980 and has not cared to submit the latest balance-sheet. The Company had been specifically directed in that case to submit the latest balance sheet, profit and loss account, list of shareholders and shares held by them and the Auditor's report, during the course of argument a month earlier before the judgment....
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.... judgment of the Gujarat High Court in Navjivan Mills Com. Ltd. are both given by the same learned Judge viz., D.A. Desai, J. Reading all the judgments together, one can say that the relevant point of time for disclosing the latest financial position would be at the time of filing of the petition. It is only as in the case of Bhagwan Singh (supra) when there is a long gap between the filing of the latest balance sheet etc. and the time when Court considers the scheme for sanction that the Court may require the latest financial position, otherwise it has been clearly laid down that the latest financial position should be disclosed at the time of moving/filing of the petition. Mr. Grover thereafter relied upon the judgment of the Allahabad High Court in the case of Premier Motors (P.) Ltd. v. Ashok Tandon and others 1971(41) Comp. Cas. 656. This judgment merely reiterates that all material particulars should be placed before the Court to enable the Court to come to a conclusion with regard to the question of propriety of sanctioning the scheme. It does not decide the issue as to when the latest petition should be placed before the Court. Mr. Grover thereafter relied upon 1995 (82) Co....
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....tter of Blue Star Limited Company Petition No. 1007/98. Shri Tulzapurkar further submitted that this judgment has subsequently been affirmed by the Division Bench, of this Court. After referring to the judgment of the Gujarat High Court in Navjivan Mills Co. Ltd., Kollol, In re. Kohinoor Mills Co. Ltd., reported in 1972 (Vol. 42) Co. Cases 265, and judgment of Delhi High Court in Bhagwan Singh & Sons (P.) Ltd. v. Kalavati & others, reported in 1986 (Vol. 60) Company Cases 94 and of another judgment of the Gujarat High Court in Maneckchowk v. Ahmedabad Manufacturing Company Limited, reported in 1970 (Vol. 40) Company Case 819, Nijjar, J., observed : "Reading all the judgments together, one can say that the relevant point of time for disclosing the latest financial position would be at the time of filing of the petition. It is only as in the case of Bhagwan Singh (supra) when there is a long gap between the filing of the latest balance sheet etc. and the time when Court considers the scheme for sanction that the Court may require the latest financial position, otherwise it has been clearly laid down that the latest financial position should be disclosed at the time of moving/filing....
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....ofit and loss account up to period ending 30-9-2001 (for which provisional balance sheet was prepared). The learned Counsel for the petitioner handed in the copies thereof both in respect of transferor as well as transferee-company. Copies are taken on record and marked Exhibit-A in their respective petitions. The Counsel for the petitioner undertakes to file an affidavit proving those copies within a period of two weeks. Undertaking is accepted. Copy of this order shall not be issued until the affidavit is filed." The learned Judge noted that the judgment in Blue Star Ltd. (supra) was earlier than the judgment in KEC International Ltd. (supra). In fact the judgment in KEC International Ltd. (supra) is dated 5/6-8-2009, whereas judgment in Blue Star Ltd. (supra) is dated 7-12-1999. The learned Judge has noted counsel's submission that the judgment in Blue Star Ltd. case ( supra) was affirmed by the Division Bench. The judgment of the Division Bench was decided on 1-3-2000 and reported in 2000(12) LJ SOFT 14 = 2000(4) Bom. C.R. 589. The Division Bench however did not deal with this point. The observations regarding the latest auditors report apply to the latest financial position.....
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....th the Auditor's Report for the year ending 31st March, 2001 both in the case of APBL as well as APIL. Despite the fact that the petitions came up for hearing before the learned Single Judge sometimes in the year October, 2002 when the latest audited accounts as well as the auditor's report for the year ending 31st March, 2002 were available, they were not produced by the company. We must however, mention that Mrs. Darshana Kenia (appellant in Appeal Stamp No. 981 of 2002) had produced the latest Balance Sheet and financial position of APIL after conclusion of the hearing before the learned Single Judge but, before pronouncing of the judgment. The learned Single Judge however, declined to look into the same for the reasons mentioned in paragraph 39 of its judgment. In the case of in the matter of Scheme of Amalgamation of Zee Interactive Multimedia Limited, Company Petition No. 1096 of 2001 decided on 1st February, 2001 one of us (Karnik, J.) reported in 2002 (7) LJSOFT 83 = 2002 (4) Bom. C.R. (O.O.C.J.) 137, has clarified that the latest Balance Sheet, Profit and Loss Account and the Auditor's Report must be produced up to the date of hearing of the company but, if they are not pr....