TaxTMI 
TaxTMI 
2012 (12) TMI 269
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....Petitioner Company, as set out in its Memorandum of Association, have also been mentioned. It is stated that the Petitioner Company is carrying on the business of promoters, developers, builders, suppliers, creators, operators, owners, contractors, organizers of all and any kind of infrastructure facilities and services including, but not limited to Special Economic Zones, etc. The Petitioner Company is stated to be presently developing and operating a Special Economic Zone in Jamnagar ("Jamnagar SEZ") and related infrastructure facilities. 3. The details of Reliance Industries Ltd. ("RIL" for short), the Transferee Company, have been given in the petition. The latest Audited Annual Accounts of the Transferee Company as on 31-3-2011, its authorised Share Capital and the issued, subscribed and paid-up Share Capital have also been stated. The objects of the Transferee Company, as set out in its Memorandum of Association, have also been detailed in the petition. It is stated that the Transferee Company is India's largest Private Sector Enterprise, with businesses in the energy and materials value chain and is a Fortune Global 500 Company. The activities of the Transferee Company sp....
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....y order dated 03.04.2012 (Annexure-H) passed by this Court in the said application, the meetings of Equity Shareholders and Preference Shareholders and Secured Creditors were dispensed with, whereas, the meeting of Unsecured Creditors was ordered. The meeting of the Unsecured Creditors was held on 05.05.2012. Thirty two Unsecured Creditors attended the meeting out of which twenty six have approved the Scheme of Amalgamation. The Chairman of the said Meeting has filed a Report dated 06.05.2012 which has been produced on record and has also filed an affidavit in support of the Report. 8. In the present petition, on 09.05.2012, this Court passed the following order: "It is Ordered: 1. Leave under Rule 21 of the Companies (Court) Rules, 1959 is granted. 2. Petition admitted. 3. Petition is fixed for hearing and final disposal on 22.06.2012. 4. At least 28 clear days before the date fixed for hearing of the Petition, the Petitioner to serve the notice of hearing of petition to the Regional Director, Western Region, Ministry of Corporate Affairs, Registrar of Companies and Official Liquidator pursuant to Section 394A o....
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....gs under Sections 391 to 394 of the Act by the Transferee Company and is also entitled to dispense with such a requirement. It is further stated that in cases such as the present one, the concerned High Court exercising jurisdiction over the Transferor Company can adjudicate and declare upon the requirement of the Transferee Company to apply under Sections 391 to 394 of the Act and it is entitled to pass an order dispensing with the requirement. Thus, the High Court exercising jurisdiction can hold that an application or petition by the Transferee Company seeking sanction from the High Court having jurisdiction over it, is not necessary. In doing so, the concerned High Court would not be exercising jurisdiction over the Transferee Company but would be deciding an issue arising in the petition filed by the Transferor Company. Alternatively, it has been submitted in the affidavit that in a Scheme involving Amalgamation of a wholly owned Subsidiary Company with its holding Company, the Transferee Company is not obliged to seek sanction. Certain decisions of different High Courts have been relied upon and enumerated in support of the submission. 13. This Court has heard Mr. S.N. Sop....
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....t Hardware Industries (P.) Ltd. (Supra) and the judgment of the Bombay High Court in Mahaamba Investments Ltd. (Supra). (C) That this Court has held in order dated 03-04-2012 passed in Company Application No. 120 of 2012 that separate proceedings by the Transferee Company, being the Holding Company, are not required to be taken out under Section 391 of the Act. In support of this submission, reliance has been placed upon the following judgments. (a) Jindal Agro Processing (P.) Ltd., [Company Application No. 249 of 2012, decided on 08.08.2012]. (b) TML Industries Limited, [Company Application No. 202 of 2011, decided on 09.02.2011] (c) Azure Knowledge Corporation (P.) Ltd., [Company Application No. 146 of 2010, decided on 14.06.2010] (d) Shilchar Electronics Limited, [Company Application No. 619 of 2006, decided on 04.12.2006] (e) Banyan Chemicals Limited, [Company Application No. 43 of 2004, decided on 19.02.2004] (f) Transpek Marketing Limited, [Company Application No. 139 of 2004, decided on 27.04.2004] (g) Arvind Clothing Limited, [Company Application No. 176 of 2005, decided on 11.05.2005] (h) N....
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....rders for dispensation of, or for convening the meetings of the members and Creditors. In the present case, the Transferee Company falls under the jurisdiction of the High Court of Bombay, therefore, it is only that Court which can pass appropriate orders. The Transferee Company has not held even a general meeting for passing a Special Resolution which is required to be passed and approved by the Shareholders of the said Company. As such, the Registrar of Companies, Mumbai would have no information of such Amalgamation on his record. It is contended that neither the Shareholders nor the Creditors nor the Registrar of Companies, Mumbai and Regional Director, Western Region, Mumbai are aware of the Amalgamation and any order passed in the present Scheme would not be binding on the Shareholders and Creditors of the Transferee Company. It is further submitted that if the Scheme of Amalgamation is allowed, it would become a binding precedent and would have impact on similar cases that may be filed in the future. No other contentions have been raised on behalf of the Union Government. 16. Having heard learned counsel for the respective parties and upon consideration of the material....
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....harat Hardware Industries (P.) Ltd. (Supra), the petitioner Transferor Company, a wholly owned subsidiary Company of the Transferee Company had its registered office at Delhi whereas the Transferee Company, M/s.Choudhari Metal Industries (P) Ltd., had its registered office in West Bengal. The Transferor Company had applied to the High Court of Delhi for sanction of the Scheme of Amalgamation whereby all its assets and liabilities were to be transferred to the Holding Transferee Company. The High Court of Delhi held as below: "I had noticed in the order dated 19th April, 1976, that a question had been urged before me whether the scheme had to be sanctioned by the transferee-Company, M/s.Choudhari Metal Industries (P.) Ltd., as well as by the petitioner-Company. No doubt, the proposed scheme has been passed by the requisite majority of the shareholders of the petitioner-Company. In fact, it has been unanimously passed. The question which was raised was whether a similar requirement is necessary qua the shareholders of M/s. Choudhari Metal Industries (P.) Ltd., i.e., the transferee-Company. I had noticed a decision of the Bombay High Court, Bank of India Ltd. v. Ahmedabad Manufactu....
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....n followed or not and then to examine the scheme of amalgamation. The scheme would be the same invariably whereunder the proposed amalgamation of transferor Company with the transferee Company is contemplated. In the event of both the transferor Company and the transferee Company are coming within the territorial jurisdiction of two different High Courts and thereby necessitating both the companies to file separate petitions before the respective High Courts, both the courts would be examining the self-same scheme. After such examination, both the Courts may agree or may differ on the aspect of sanctioning the scheme. The probable question is that it required to be examined by the concerned High Court within whose territorial jurisdiction the transferee Company is situate so as to ultimately consider whether sanction can be accorded or not and, therefore, the High Court in whose territorial jurisdiction the transferee Company is situate cannot validly express its view that such an application need be filed before the High Court within whose territorial jurisdiction the transferee Company is situate or not, is of no consequence inasmuch as the court can examine the scheme and for th....
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.... Transferee Holding Company. There is no doubt that the net worth of the Transferee Company is positive and it has an excess of assets over liabilities. As the Scheme does not envisage issuance of any Shares of the Transferee Company, the capital structure of the Transferee Company would remain unaltered. Upon the Scheme being sanctioned, the entire shareholding of the Petitioner Subsidiary Company would stand cancelled. Further, the Scheme of Amalgamation does not involve any compromise or arrangement with the Shareholders or Creditors of the Transferee Company. 25. In view of the above discussion, this Court is of the considered view that, in the present case, there is no requirement for the Holding Transferee Company to initiate separate proceedings under Sections 391 to 394 of the Act. 26. As regards the second issue regarding whether the High Court considering the application by the Transferor Company can observe that the Transferee Company is not required to file a separate application for approval of the Scheme, the High Court of Andhra Pradesh has held in Nebula Motors Ltd. (Supra) as below: "20. Having regard to the parameters enunciated by the Apex Court in Mihee....
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....as the transferee Company is concerned. Having regard to the same, I am of the considered view that it is not trenching upon the jurisdiction of any other Court by the sanctioning Court which has been approached by the transferor Company and it is well within its purview." (Emphasis supplied) 27. In the present case, the material on record demonstrates that upon Amalgamation of the Petitioner Subsidiary Company, with the Holding, Transferee Company, no reorganisation of the share capital of the Transferee Company is involved. The Scheme, if sanctioned, would not be detrimental to the interests of the members or creditors of the Transferee Company or to the public interest at large. Further, the Regional Director has not made any observations in his affidavit, to this effect. In these circumstances this Court, while examining the application of the Transferor Company, can observe that there is no requirement for the Transferee Company to initiate separate proceedings. 28. This Court, in order dated 3-4-2012 passed in Company Application No. 120 of 2012 has already observed that the Transferee Company is not required to file a separate application/petition for obtaining sanc....
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....case where the Scheme does not envisage issuance of any shares of the Transferee Company and the capital structure of the Transferee Company remains unaltered. In the present case the proposed Scheme does not involve any compromise or arrangement with the Shareholders or Creditors of the Transferee Company. It is clear from the material on record, and not denied by the Regional Director in his affidavit, that the net worth of the Petitioner Subsidiary Company is positive and it has an excess of assets over liabilities. Similarly, the net worth of the Transferee Company is positive and it has an excess of assets over liabilities. There is, therefore, no question of the Scheme being detrimental to the public interest. 31. Further, the judgment in Kirloskar Electric Co. Ltd., In re, (Supra) has been distinguished by the Karnataka High Court in Vibank Housing Finance Ltd., In re [2006] 130 Com. Cas. 705 (Kar.). The relevant extract of the said judgment is reproduced below: "31. There is considerable force in the submission of learned senior counsel that the judgment in Kirloskar Electric Co. Ltd.'s case (2003) 113 Comp Cas 670 is distinguishable on the facts, since that was not a....