AI Drafter 
TaxTMI 
TaxTMI 
2021 (7) TMI 1017
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....with Prarthana Sales Private Limited, the Transferee Company, wherein all the assets, properties, rights and claims whatsoever of the Transferor Company and their entire undertaking together with all their rights and obligations relating thereto are proposed to be transferred to and vested in the Transferee Company and on the terms and conditions fully stated in the Scheme of Amalgamation, which has been annexed with the petition. 3. From the records it is seen that the First Motion application seeking directions for dispensing of the meeting of the equity shareholders and creditors were filed before the Tribunal in CA(CAA)914/KB/2018. Based on such application moved under the provisions under sections 230-232 of the Companies Act, 2013, directions were issued by the Tribunal on 5th February, 2019 wherein the meetings of the Equity Shareholders and creditors of the Petitioner Companies were dispensed with, in view of the receipt of the consent letters from the Equity Shareholders and the Creditors, along with the affidavits, for the approval of the Scheme of Amalgamation or there being none which obviated the necessity of convening of the meeting. 4. In compliance with the Or....
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....in greater facilities possessed and enjoyed by one large company compared with a number of small companies for raising capital, securing and conducting trade on favorable terms and other benefits; g) The said Scheme of Amalgamation will contribute in furthering and fulfilling the objects of the companies concerned and in the growth and development of these businesses. h) The said Scheme of Amalgamation will strengthen and consolidate the position of the amalgamated Company and will enable the amalgamated Company to increase its profitability. i) The said Scheme of Amalgamation will enable the undertakings concerned to pool their resources and to expand their activities; j) The said Scheme of Amalgamation will enable the Companies concerned to rationalize and streamline their management, business and finances and to eliminate duplication of work to their common advantages; k) The said Scheme of Amalgamation will have beneficial results for the Companies concerned, their shareholders, employees and all concerned. 9. The Regional Director, Eastern Region, Ministry of Corporate Affairs, Kolkata has filed three affidavits, first one affirm....
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....eneral reserves. Hence the scheme contains distorted accounting treatment contrary to the Accounting Standard arid hence is defective. d) In continuation of the submission in point No. 2(c) hereinabove it is submitted that whereas in terms of the proviso to sub-section (3) of section 232 of the Companies Act 2013 the "Auditor" of the company is required to give a certificate before Hon'ble Tribunal to the effect that the accounting treatment proposed in the scheme of compromise or arrangement is in conformity with the accounting standards prescribed in section 133 of the Act, the applicant, in Annexure-L of the Petition, has provided a certificate a Chartered Accountant, Shri Amit N Sheth for Amit Sheth and Associates, who is/was not the "Auditor" of the Transferee Company. From 01.04.2014 to 18.03.2019, "Agarwal & Associates", Chartered Accountants were Auditor of the Transferee Company and on 29.05.2019, Krishna Kumar & Company were appointed Auditors. In view thereof the applicant company has attracted penal consequences in terms of the provisions of section 232(8) of the Companies Act 2013, in respect of which Hon'ble Tribunal may kindly issue instruction for t....
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....cy in filing the application before the Hon'ble Tribunal, Kolkata Bench. Subsequent company submitted the certificate from the company's statutory auditor with respect to the accounting treatment. e) That as per the paragraph 3(v) of Rejoinder dated 26.12.2019 in respect of 2(e) it is stated that the disposal of fraction shares which would not, even come to one share and hence the contents of clause 11.2 of the scheme doesn't tantamount to buy back of shares and therefore nothing has been stated in the scheme of amalgamation about the compliance of section 68 of the Companies Act, 2013. There is no clarity in the said contention under supporting is provided regarding how many fractional shares are involved, how many resultant consolidated shares would emerge and how the disposal of said shares and distribution of process do not tantamount to section 68 of the Act." The observations of the Regional Director in the affidavit affirmed on 12th February 2020, are as below: "a) That as per the paragraph 3(ii) of Rejoinder dated 17.01.2020 in respect of 2(b) of earlier affidavit relating to appointed date it is stated that the appointed date as mentioned i....
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....nd rejoinder on 17th January 2020 and third rejoinder on 13th February 2020 to the reply affidavit filed by the Central Government, as on 05th August 2019, 06th January 2020 and 12th February 2020, respectively, as mentioned below: "With regard to observations of the Central Government, as stated in the said affidavit dated 05th August 2019, we hereby submit as follows: a) With regard to statements in Paragraph 2(a), we say that the transferee company is not required to pay any fee for the increase in authorized capital by way of clubbing of the authorized capital of the transferor company. Both the applicant companies have duly paid the fees whenever there is increase in their authorized capital since incorporation, the receipt of the same is annexed herewith and marked as Annexure A. Further, a statement showing clubbing of authorized capital is annexed herewith and marked as Annexure B. b) With regard to the statements in Paragraph 2(b), we say that the Appointed Date as mentioned in the scheme is 01st April, 2017. As clarified by the Ministry of Corporate Affairs in respect to the provision of Section 232(6), 'appointed date' may either be a s....
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.... Limited had provided the certificate from the Practicing Chartered Accountant firm i.e., Amit Sheth and Associates due to non-availability of the company's statutory auditor in the city and urgency in filing the application before the Hon'ble National Company Law Tribunal, Kolkata Bench. However, now we have rectified our mistake and have attached the certificate from the company's statutory auditor with respect to the accounting treatment proposed, that the Scheme of Amalgamation is in conformity with the prescribed Accounting Standards; the same is annexed and marked as Annexure E. e) With regard to the statements in Paragraph 2(e), we say that we have read clause 11.2 of the scheme of Amalgamation again and on thorough analysis of the same, we conclude that clause 11.2 deals with disposal of fraction shares which would not even come to one share and hence we may say that the contents of the clause 11.2 of the scheme doesn't tantamount to buy back of shares and therefore nothing has been stated in the scheme of Amalgamation about the compliance of section 68 of the Companies Act 2013. f) With regard to the statements in Paragraph 2(f), we say th....
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....f shares would come in fraction, would be settled in cash. Detailed calculation of shares to be issued to Transferor Company, subsequent to sanctioning of scheme of Merger is enumerated herein below for your quick reference: Number of Shares to be allotted to the shareholders of Transferor Company post Merger: "With regard to observations of the Central Government as stated in the said affidavit dated 12th February 2020, we hereby submit as follows: a) With regard to the statements in Paragraph 2(b), we undertake that, in case any shareholder's holding in the Transferor Company is such that the shareholder becomes entitled to a fraction of an equity share of the Transferee Company, the Transferee Company shall round off all fractional entitlements to the next whole number above the fractional entitlement and issue such number of securities to the relevant shareholders......" 11. The Official Liquidator attached to the High Court, Calcutta submitted its Report on 18th July, 2019, wherein he has stated that he is of the opinion that the affairs of the Transferor Companies do not appear to have been conducted in a manner prejudicial to the interest of....