AI OCR 
TaxTMI 
TaxTMI 
TaxTMI 
2009 (9) TMI 588
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.... No. 101 of 2009, vide order dated 20th April, 2009 passed by this court in Company Application No.179 of 2009, as all the equity shareholders of the company had given consent for approval of the scheme, the meeting of the equity shareholders of the company was dispensed with. 4. Both these petitions came to be admitted on 2nd May, 2009 and it was ordered to advertise in two daily newspapers, viz., Indian Express (English daily) and Loksatta Jansatta (Gujarati daily), both Ahmedabad editions and the publication in the Government Gazette was dispensed with. Notice was ordered to be issued to the Central Government through Regional Director, Department of Company Affairs, Mumbai in both the petitions. Further in case of transferor-company, notice was also issued to the official liquidator for examination into the affairs of the company and the OL was also permitted to engage chartered accountant for such purpose. 5. The affidavit dated 16th June, 2009 has been filed by Shri Dharmendra M Rathod, registered clerk of Smt. Swati Soparkar, learned advocate, stating compliance of the order for publication in the newspapers and together with the said affidavit, relevant extracts of paper ....
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....rt makes an order under section 391 sanctioning a compromise or an arrangement in respect of a company, it - (a) shall have power to supervise the carrying out of the compromise or an arrangement; and (b) may, at the time of making such order or at any time thereafter, give such directions in regard to any matter or make such modifications in the compromise or arrangement as it may consider necessary for the proper working of the compromise or arrangement." 11. The another section, which may have relevancy is section 394(1) of the Act, which provides that the court may either by the order sanctioning the compromise or arrangement or by a subsequent order, make provision for all or any of the following matters mentioned in clauses (i) to (vi) of the said sub-section. 12. As such, it is undisputed position that this court, while exercising the powers for sanctioning of the scheme, has also power to alter or modify the scheme and such would also include the modification or alteration in the appointed date and, therefore, no further discussion may be required on the said aspect. 13. In order to examine the said aspect further, the scope of the judicial power in a matter for sancti....
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....a scheme...." (emphasis supplied) [p.13 of 23 CLA] 14. It deserves to be recorded that by now the accounting year, for the purpose of income-tax and other fiscal laws, is codified by statute and every such accounting year begins from 1st April of a particular year and ends on 31st March of the next year. It is not that such codification of the accounting year would put complete embargo upon the choice or the discretion to be exercised by the company or its office bearers for entering into the scheme of merger or amalgamation. However, keeping in view the identification of the accounting year, at least for fiscal purpose, by the various enactments like income-tax, central excise, etc., the liability during that year is to be considered and discharged as provided under the respective statute/s. The scheme if is to meet with the said requirement, the same can be considered as not in conflict with such aspects. But if the scheme is to be brought about which results into creating conflict with the period provided for a particular accounting year, it may come in conflict therewith. Such conflict may further ensue on taxation liability and other statutory liability which normally is to b....
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....e observations made on pp. 234 and 235 and contended that the scope of appointed date and the scope of effective date is different in the scheme. It was submitted that the appointed date has the relevancy for accounting purpose so as to assess the valuation of the assets of the company and to have the share exchange ratio and the effective date will be the date from which the scheme shall be given effect. It was, therefore, submitted that even if this court sanctions the scheme as on today, the effective date will be only when such a declaration is filed as per the Act with the Registrar of Companies and the same will be the effective date. It was submitted that, therefore, keeping in view the distinction between the appointed date and the effective date, the appointed date as mentioned in the present scheme may not be altered by this court. 17. The aforesaid decision nowhere rules that whatever may be the appointed date, the court has to accept it. Further the aspects, of alteration of the appointed date on account of expiry of the accounting year and no statutory process initiated during the said period, were not before the Delhi High Court. Therefore, the said decision, would n....
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....ax Department cannot take a view de hors the scheme which is to create a statutory fiction once the scheme is sanctioned by the court. 22. Mr. Soparkar, learned counsel for the petitioner, had relied upon the unreported decision of Madras High Court in Company Petition No.32 of 2001 decided on 19th April, 2001 and more particularly the observations made at para 6 of the said order and he contended that it was observed that there is no prohibition for giving transfer date to have retrospective effect and, therefore, he submitted that there is nothing wrong if the appointed date is kept of an earlier period than the process initiated for seeking sanction to the scheme. 23. Perusal of the order of Madras High Court shows that in the very paragraph, the court found that there is cause for delay and for condonation of the delay. Therefore, it cannot be accepted as an absolute proposition that court shall accept the cause for delay in every case or shall condone the delay in every case. 24. Mr. Soparkar also drew the attention of this court to the decision of this court reported in case of Sidhpur Mills Co. Ltd., In re. AIR 1962 Guj. 305 and contended that the approach of the court wo....
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....duct of such company nor any additional right can be read therefrom. 28. Moreover, even if it is considered for the sake of examination that such a situation may arise, then also it would be required for the concerned company to take necessary action for approval, auditing of books of account, etc., as may be required for giving effect to the order of this court. In any case neither company nor its shareholder or creditor can plead ignorance of laws for the power of this court under the Act for sanctioning of a scheme. Hence, such contentions cannot be countenanced. 29. In view of the aforesaid, it appears that if the scheme is moved for sanction in case where the company has allowed the relevant accounting year to be over and no action whatsoever has been initiated for statutory process of convening of the meeting, such an approach deserves to be deprecated and the complications, which may ensue on account of back dating of the appointed date prior to the period during which the statutory process is initiated in the said accounting year under the fiscal law, are also required to be taken care of. Further, in any event even on equitable consideration the power cannot be invoked b....