TaxTMI 
TaxTMI 
2014 (9) TMI 1086
X X X X Extracts X X X X
X X X X Extracts X X X X
....Transferee Company no.1/Transferor Company no.4.) and S.S.Group Private Limited (hereinafter referred to as the Transferee Company no.2). The proposed transfer envisages the vesting of the undertakings of the Transferor companies into Transferee Company no.2. The registered offices of Transferor and the Transferee companies are located at 4th Floor, the Plaza, IFFCO Chowk, M.G, Road, Gurgaon. The Board of Directors of petitioner Companies No. 1, 2 and 3 in their respective meeting held on 14.8.2013 approved the Scheme of Amalgamation. The respective resolutions are on record as Annexures P-2, P-3, P-4. The Board of Directors of the Transferee Company no.1/ Transferee Company no.2 also in their meeting held on 14.8.2013 approved the Scheme of Amalgamation of Sukh Realters Private Limited, Ma-Ganga Builders & Constructions Private Limited and Belisma Buildcon Private Limited with North Star Apartments Private Limited and the subsequent Amalgamation with S.S.Group Private Limited and their respective shareholders and creditors. A copy of the resolution to this effect is on record as Annexures P-5 and P-6. The Petitioner Company no.1 was incorporated on 4th August, 1994 ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....tock exchange. The Transferee Company no.1 was incorporated on 18th March, 1993 in the State of Delhi under the name of North Star Apartments Private Limited but its registered office changed to State of Haryana w.e.f 25.4.2013. The aims and objects of the Company as contained in the memorandum and articles of association are on record as Annexure P-13. The authorized, issued, subscribed and paid up share capital of petitioner Company 1 as existing on 31.3.2012 as per the audited financial statements have been set out in the petition alongwith certified copies of the audited balance sheets for the financial year ending on 31.3.2012 and unaudited balance sheet for year ending 31.3.2013 are on record as Annexure P-14. It has been stated that equity shares of the petitioner company no.4 are not listed on any stock exchange. The Transferee Company no.2 was incorporated on 22nd June, 2010 in the State of Punjab under the name of S.S.Group Private Limited but its registered office changed to State of Haryana w.e.f 5.4.2013. The aims and objects of the Company as contained in the memorandum and articles of association are on record as Annexure P-15. The authorized, issued, sub....
X X X X Extracts X X X X
X X X X Extracts X X X X
....g statutory dues of Income Tax Liability since more than 3 years:- That the Transferor companies are under default of not depositing the statutory dues of Income Tax liability since more than 3 years. The aggregate unpaid income tax liability as on 31/03/2013 was Rs. 58.69 crores & unpaid interest is Rs. 21.61 Crores, aggregating Rs. 80.30 Crores. The Companies wise details of income tax (unpaid) & interest payable are given as under:- Particulars M/s Sukh Realters Pvt. Ltd. M/s Ma Ganga Builders & Constructions Pvt. Ltd. M/s North Star Apartments Pvt. Ltd. Unpaid Income Tax (in crores) 23.6 3.14 31.95 Unpaid interest (in crores) 9.19 1.9 10.52 Total 32.79 5.04 42.47 4(1)(B) That Transferor Company 4 has filed the belated income tax return on 30/03/2013 for the Asstt. Year 2012-13, in which a cheque amounting to Rs. 13,72,83,210/- towards self-assessment tax deposited on 30/03/2013 was returned unpaid as dishonored due to insufficient funds. 4(1)(C ) That in response to this continuing default of non payment of statutory dues of income tax liability & due interest worth Rs. 80.30 crores, the management of ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....uation of properties of the Transferor Company 1, 2 & 3 is Rs. 1941.53 Crores out of total valuation of all properties Rs. 1949.10 Cr. The details of the gross share in the valuation of properties of these companies in tabular form are given as under:- Sr. No Name of the Company Share holding in the Transferor Co.4 Valuation of Properties ( In crores) Share in properties as holding Companies (in crores) Total share in the properties (in crores) 1 M/s Sukh Realters Pvt. Ltd. (Transferor Co.No.1) 26.08% 228.38 448.76 677.14 2 M/s Ma Ganga Builders & Constructions Pvt. Ltd. (Transferor Co.No.2) 47.83% 0 823.02 823.02 3 M/s Balisma Buildcon Pvt. Ltd. (Transferor Co.No.3) 25.65% 0 441.37 441.37 4 M/s North Star Apartments Pvt. Ltd. (Transferor Co.No.4) 0.44% 1720.72 7.57 Total 100.00% 1949.1 1720.72 1941.53 In this regard the management has informed that the Transferor Company 1, 2 & 3 which are going to merge with Transferor Company 4 & further the said Transferor Company 4 is merging with Transferee Company 2. Therefore they have not adopted ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....elopment rights only, in that event the entire valuation of the properties taken by the companies as on 01.04.2013 for determination of purchase consideration is not genuine & incorrect. The details of these companies in respect to its name of the project, nature of project, ownership, area/location, status, valuation etc are given as under:- S. No Property No Name & Nature of the Project The owner Company Areas (in Acres) Location Status of the property Valuation (Rs. In crores) 1 5 Primary school North Star Towers Pvt. Ltd. 0.98 Sector 48, Gurgaon Plot 4.41 2 6 Nursery school North Star Towers Pvt. Ltd. 0.2 Sector 48, Gurgaon Plot 0.94 3 7 Nursery Home North Star Towers Pvt. Ltd. 0.47 Sector 48, Gurgaon Plot 2.16 4 13 Sec 83 GH-I/Group Housing A & D Estates Pvt. Ltd. 11.45 Sector 83, Gurgaon Vacant Land 164.38 5 14 Sec 83 GH-II/ Group Housing A & D Estates More Build Tech Pvt. Ltd. Goldline Build Tech Pvt. Ltd. & Style Towers Pvt. Ltd. 11.42 Sector 83, Gurgaon Vacant Land 178.25 6 15 Sec 83-CI / Commercia....
X X X X Extracts X X X X
X X X X Extracts X X X X
....hange ratio is apparently suspicious. In our opinion the companies should obtain valuation report of the properties from an Independent Approved Valuer for the purpose of Amalgamation. The proper fair valuation approach to arrive at the swap ratio by using the combination of 3 methods namely; Asset Value Approach, Markeet Value Approach, Income Approach have to be applied following the directions of Hon'ble Supreme Court in the decision of Hindustan Lever Employees Union v/s Hindustan lever Ltd. & others (1995) 83 Company Case 30. The said valuation report should have been placed in the Board Meeting of the Companies as well as in the General Meeting for the approval of the members and same should be placed before the Hon'ble High Court of Punjab & Haryana while filing the petition of Amalgamation along with Scheme of Amalgamation. Therefore, in light of above said circumstances, this Scheme of Amalgamation is insufficient & incorrect to purpose the purchase consideration between the companies under Amalgamation. In the absence of Independent Valuation Report & basis of calculation of purchase consideration in the form of issuing of Equity & Preference shares in th....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... any basis of calculation of the purchase considerations/swap ratio for issuing the shares in the Scheme of Amalgamation, no uniformity in fixations of purchase consideration in First & Second Amalgamations and non-compliance of the provisions of section 391 to 394 of the Companies Act, 1956 before filing the petition of Amalgamation before the Hon'ble High Court of Punjab & Haryana. Therefore, the said Amalgamation is clearly prejudicial to the interest of members. 4(6) Legally Incorrect modification to the Scheme of Amalgamation (second motion petition) only filed by the companies In first motion petition (C.P.No.155 of 2013), the company has filed Scheme of Amalgamation, minutes of Board meetings, consent of the shareholders on affidavits, consents of creditors, approval/consent of the financial institutions & affidavits of the directors and all necessary documents for approval of the Scheme of Amalgamation. The said first motion petition was allowed by this Hon'ble High Court on 20/12/2013 with Purchase Consideration for issue of: 33,16,000 equity shares of the face value of Rs. 10/- each at a premium of Rs. 577/- each of Transferee Company no.2 credited as ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....alue of Rs. 1000/- each of Transferee Company no 2 (SS Group Pvt. Ltd.)credited as fully paid up to all the preference shareholders of the Transferor company no.4, as on Record date, in proportion of their holding in the Transferor company no.4 In our opinion the modification filed by the companies is legally incorrect as the first motion petition (C.P. 155 of 2013) has already been approved by the Hon'ble High Court therefore the modified second motion petition cannot be legally different from first motion petition which was already approved by the Hon'ble High Court on 20/12/2013. Moreover, the contentions of company in said modification that it is typographical error in the clause 23.1.1 of the Scheme of Amalgamation is also incorrect because no such basis of the said calculation of shares under purchase consideration has been given in the Scheme of Amalgamation from which this typographical error has been occurred under modified second motion petition with Hon'ble High Court. In our opinion, such typographical error has not been occurred while drafting the first motion & second motion petitions. However, it was a mistake in the calculation of purchase consi....
X X X X Extracts X X X X
X X X X Extracts X X X X
....reaching the trust of the creditors by diverting their funds worth Rs. 20.33 Crores and inconsistent criteria adopted for calculation of Purchase consideration under Amalgamation 1 & 2. 5. That M/S Anand Sabharwal & Associates., Chartered Accountant has stated in his report that in view of the contents of our Report, we are of the opinion that Affairs of the Transferor Companies have been conducted in a manner prejudicial to the interest of Revenue, Members & the public at large." It is evident that serious objections have been raised by the Official Liquidator to the Scheme of Amalgamation. The petitioner in turn has filed an affidavit assuring compliance of the statutory provisions of the Income Tax Act and adhering to the guidelines of the RBI. The Official Liquidator apart from raising objections to the Scheme which have been extracted hereinabove has opposed the motion as sought for by the Companies seeking Amalgamation. Learned counsel for the respondents responding to the objections of the Official Liquidator has placed reliance on judgment of the Hon'ble Supreme Court in case titled as Miheer H Mafatlal vs. Mafatlal Industries Ltd. reported as (1997) 1 SCC 579 ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....d 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." Reliance has also been placed upon a decision rendered by this Court in Company Petition no. 25 of 2014 connected with Company Petition no.166 of 2013 in the Scheme of Amalgamation between Ludhiana Holdings Limited with Oswal Woolens Mills where this Court observed as follows:- "19. Having go....