TaxTMI 
TaxTMI 
2013 (4) TMI 508
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....ree company. It dispensed with the holding of the meetings of the shareholders and unsecured creditors of the Transferee company as they had given their consent to the Scheme. There was no secured creditor of the Transferee company. The Court, however, clarified that "the issues of conversion of loan given by Bajaj Hindusthan Limited as well as the approval/No Objection certificate by the Delhi Stock Exchange ('DSE') are left open to be considered at the second motion stage." 4. Pursuant to the above directions, the meetings of the shareholders, secured creditors and unsecured creditors of the Transferor company were held on 12th May 2011 wherein approval was granted to the Scheme. 5. After the meetings were held, an application CA No. 909 of 2011 was filed in CA (M) No. 71 of 2011 by Mr. Harinder Kumar Chadha ('H.K. Chadha') for impleadment as well as for stay or the cancellation of the meetings of the shareholders. By an order dated 18th May 2011 the said application was disposed of noting that the meetings of the shareholders had already been held on 12th May 2011. Mr. H.K. Chadha was given the opportunity to raise objections at the second motion stage and also forward his....
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....BSMCL under Section 209 A of the Act. The inspection was carried out by Mr. R.V. Dani, the then Deputy Director, during March and April 2007. It was stated that according to the annual returns filed with the ROC by BSMCL on 27th October 2005, it was noted that the Annual General Meetings ('AGMs') of BSMCL for the financial year 2003-2004 and 2004-2005 were held on 29th September 2004 and 30th September 2005 respectively. Since the inspection report dated 15th June 2007 did not refer to the holding of the said AGMs it was stated by the RD that BSMCL should clarify by filing an affidavit before the Court. It was pointed out that even if the AGMs had not been concluded then BRS would continue as statutory auditors. For removal of the statutory auditors, approval of the Central Government under Section 224 (7) of the Act was required. It was stated that BSMCL should clarify this and produce a copy of the approval under Section 224 (7) of the Act. 9. The RD termed the allegations made by Mr. H.K. Chadha as "very-very serious and the matter is not free from doubt" and prayed that "BSMCL may be directed to file an affidavit with details and reply to each of the points as alleged by the....
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....ditor. It was also pointed out that Mr. H.K. Chadha had deliberately not completed the audit for the years 2003-2004 and 2004-2005. Consequently on 30th December 2006, 99% of the shareholders of BSMCL appointed a new auditor in place of Mr. H.K. Chadha. 12. It was pointed out by BSMCL that by an order dated 16th May 2007 in RFA (OS) No. 133 of 2006, this Court disposed of the appeal filed by BRS against an order passed by the learned Single Judge in CS (OS) No. 2369 of 2006 filed by one Mr. Madhu Sudan Ladha, shareholder of BSMCL against the re-appointment of BRS as statutory auditors. That suit had been disposed of by order dated 19th December 2006 by the learned Single Judge recording the statement of BSMCL that it had no intention to re-appoint BRS as a statutory auditor. The allegation in the appeal by BRS was that the suit was a collusive one and an attempt to oust BRS as statutory auditors could not be done except under Section 224 (7) of the Act. The Division Bench which heard the appeal noted that the AGM was to be held on 30th December 2006 and that it was "open to the members voting in the AGM to appoint any statutory auditor in accordance with law". In its order dated....
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....editor of the company to the Scheme. The ROC enclosed with the said report an earlier report dated 8th December 2011 sent to the RD. This will also be referred to in due course while dealing with the objections of Mr. H.K. Chadha. 16. This Court has heard the submissions of Mr. Amit S. Chadha, learned Senior counsel appearing for the Transferor and Transferee companies i.e., BSMCL & PSPL, respectively. The submissions of Dr. Manmohan Sharma, learned counsel appearing for Mr. H.K. Chadha, have been heard. Mr. K.S. Pradhan, Deputy Registrar of Companies appeared on behalf of the ROC and Mr. Rajiv Bahl, learned counsel appeared for the OL. 17. Dr. Sharma submitted that BRS had in the qualified audit report dated 9th October 2006 of the accounts of BSMCL for the financial year ending 31st March 2004 stated that they did not give a true and fair view of the statement of affairs of BSMCL. Consequently the statement of accounts for the years 31st March 2004 and 31st March 2005 could not be taken as correct unless the corrective adjustment entries were recorded in the books of accounts "in respect of the fraudulent acts of misfeasance of the funds of the company by its directors whic....
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....ovisions of section 166 r/w section 173(1)(a) by way of not conducting the AGMs as contemplated and is liable for prosecutions under Section 168 of the Act." c. The company has moved compounding application under Section 621A of the Act for composition of default committed under Section 166 r/w 173(1)(a) of the Act mentioning therein that the offence was committed due to the fact that the then M/s. Basant Ram & Sons did not submit their Auditors Report in time and as a consequence, the Board of Directors of the company was constrained to place the unaudited accounts before the AGMs of the company held on 29.09.2004, 30.09.2005 and 30.12.2006 respectively. In the 80th AGM of the company held on 30.07.2007, the company placed audited accounts for the financial year ended on 31.03.2004, 31.03.2005, 31.03.2006 & 31.03.2006 thereby making the default good regarding unaudited balance sheet. Copy of Hon'ble CLB order dated 31.03.2010 compounding the offence u/s 216 read with sec.220 of the Companies Act, 1956 is attached." 19. It has further been stated in para 8 as under: "As regards the facts raised in para 5, 6 & 7 of the Direc....
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....not, in the above circumstances, be countenanced. No material has been placed on record by Mr. H.K. Chadha to substantiate the plea of non-preparation of the audited accounts of the above financial years. 21. As pointed out in the report of the ROC, Mr. H.K. Chadha either by himself or as representing BRS appears to be a chronic litigant. Earlier BRS had filed Civil Writ Petition No. 3141 of 1999 in this Court assailing the order of the Central Government dated 12th April 1999 under Section 224 (7) of the Act granting approval to the removal of BRS as statutory auditor of Gangeshwar Ltd. The ROC has noted that similar complaints were repeatedly made by Mr. H.K. Chadha. 22. There is also no merit in the contention that the orders dated 16th May 2007 and 5th October 2007 of the Court have not been complied with. Those orders in fact only permitted Mr. H.K. Chadha to raise objections to the Scheme while not interfering with his removal as auditor. In any event, since it is stated that there is a writ petition filed by him challenging his removal, the said issue will be decided in those proceedings in accordance with law. For the purpose of the present proceedings, the Court has ....
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....ain about any alleged illegal transfer of their shares to PSPL. The annual returns of BSMCL for the last seven years show that 99.04% shares of BSMCL is held by PSPL. Neither the wife of Mr. Sudhir Avdhoot nor Mr. Vivek Sahgal or Mrs. Usha Sahgal have come forward to make any complaint of illegal transfer of their shares. The allegation by Mr. H.K. Chadha that the Scheme raises a strong apprehension that the Sahgals were paid consideration illegally is not substantiated by any material whatsoever. Consequently this Court is unable to find any merit in this objection. Similar complaints made earlier by Mr. H.K. Chadha have been examined by the ROC and found to be without any basis. 26. It is next contended by Dr. Sharma on behalf of Mr. H.K. Chadha that BHL has siphoned off funds of Rs.500 crores whereas it had given a loan of only Rs.250 crores. It must be recalled that BSMCL gave its approval to the Scheme as a secured creditor. The RD has carried out the inspection of the statutory accounts and records. Nothing objectionable has been found in any of these transactions. The allegations of Mr. H.K. Chadha are thus unsubstantiated. 27. Mr. H.K. Chadha relies on a letter dated ....
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.... of arrangement/amalgamation/merger/reconstruction/reduction of capital etc., to be presented to any Court or Tribunal does not violate, override or circumscribe the provisions of securities laws (as mentioned in the explanation appended thereto) or the stock exchange requirements, and also agreed to disclose the pre and post-arrangement or amalgamation (expected), capital structure and shareholding pattern......." 30. Consequently, both the issues referred to by the Court in its order dated 5th April 2011 in the first motion petition have been accounted for. 31. It is repeatedly urged by Dr. Sharma on behalf of Mr. H.K. Chadha that the matter required investigation by the Central Government under Section 237 of the Act and by the Serious Fraud Investigation Office. This Court does not find any material placed on record by Mr. H.K. Chadha to substantiate the above plea. In Miheer H. Mafatlal v. Mafatlal Industries Ltd. [1996] 10 SCL 70, the Supreme Court explained the basic requirements that have to be satisfied before a scheme presented under Sections 391 and 394 of the Act can be approved by the Company Court as under: "In view of the aforesaid s....
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....ing a commercial decision beneficial to the class represented by them for whom the scheme is meant. 9. Once the aforesaid broad parameters about the requirements of a scheme for getting sanction of the Court are found to have been met, the Court will have no further jurisdiction to sit in appeal over the commercial wisdom of the majority of the class of persons who with their open eyes have given their approval to the scheme even if in the view of the Court there would be a better scheme for the company and its members or creditors for whom the scheme is framed. The Court cannot refuse to sanction such a scheme on that ground as it would otherwise amount to the Court exercising appellate jurisdiction over the scheme rather than its supervisory jurisdiction. The aforesaid parameters of the scope and ambit of the jurisdiction of the Company Court which is called upon to sanction a Scheme of Compromise and Arrangement are not exhaustive but only broadly illustrative of the contours of the Court's jurisdiction." 32. In light of the above principles, this Court finds that apart from the objections of Mr. H.K. Chadha, the holder ....