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2015 (5) TMI 730 - HC - Companies LawApplication for Scheme of Amalgamation under Sections 391 to 394 of the Companies Act, 1956 - Observation of Official Liquidator regarding clerical error - Observation of Regional Director regarding FIPB approval duly addressed - Held that - It is submitted that before incorporation of Petitioner Company, the parent company i.e. Acclipse Ltd. NZ had invested a sum of INR 18,82,617/- for the purchase of various assets and other day to day expenses of Indian office from October 2009 till the Company incorporation i.e. 21.12.2009. On incorporation of the company, the same were duly accounted in the books and the parent company was shown as the creditor for the same. Since due to FEMA regulations the funds could not be returned to the parent company and therefore it was reflected as creditors in the books. Further in October, 2013, due to shifting of office, most of these assets were sold at scrap value. Therefore, in order to knock off the outstanding amount of parent company this loss was transferred to the account of the parent company instead of claiming the same as a loss in the Income Tax Return. The Regional Director has made an observation with regard to securing the necessary FIPB approval on account of M/s Acclipse Limited being a foreign Company. That in response it is submitted that investment of M/s Acclipse Limited (Foreign Company) in Acclipse India Private Limited (Petitioner Company) does not required any approval from FIPB. As per the Clause 3.7 read with Clause 6.2 of Consolidated FDI Policy of 2014, if the sector/activities of Indian Company are not mentioned in the specified list, then it is permitted for a foreign entity to invest in Indian entity upto 100% of capital under automatic route. The Petitioner-Company is engaged in software services which does not fall under any of the sectors mentioned in aforesaid clause and hence does not require approval from FIPB. A copy of the relevant provision Consolidated FDI Policy of 2014 is annexed as Annexure P-B. For the reasons aforementioned and keeping in view the procedural requirements under Section 391 to 394 of the Companies Act, 1956 and as well as relevant affidavits and rules and due consideration to the report of the Regional Director, Ministry of Corporate Affairs, Noida and the Official Liquidator coupled with the affidavits filed by the authorized representative of the petitioner/Transferor Company No.1, the Scheme of Amalgamation of the petitioner-Transferor Company No.1 with the Transferee Company is hereby sanctioned and all the assets and liabilities of the of petitioner-Transferor Company shall merge into Transferee Company subject to the sanctioning of the Scheme filed by the Transferee Company in this Court. The Transferor Company No.1 shall be dissolved without being wound up. - Application for Scheme of Amalgamation approved.
Issues:
1. Sanction of Scheme of Amalgamation under Sections 391 to 394 of the Companies Act, 1956. 2. Clerical errors in the balance sheets of the companies involved. 3. Reports and objections filed by the Official Liquidator and Regional Director. 4. Compliance with procedural requirements and legal considerations. 5. Dissolution of Transferor Company without winding up. Analysis: 1. Sanction of Scheme of Amalgamation: The petition was filed for the sanction of the Scheme of Amalgamation of Transferor Companies with the Transferee Company under Sections 391 to 394 of the Companies Act, 1956. The court considered the details of the companies involved, their registered offices, resolutions of the Board of Directors, and the necessity of dispensing with certain meetings as per the order dated 7.8.2014. The court reviewed the scheme and relevant documents, including the Memorandum and Articles of Association, and sanctioned the amalgamation, subject to compliance by the companies. 2. Clerical Errors: The Official Liquidator identified clerical errors in the balance sheets of the companies involved. Discrepancies in totaling were noted in the balance sheets of Transferor Companies No. 2 and 3, as well as the Transferee Company. However, it was clarified that these errors did not affect the conduct of the companies' affairs prejudicially. The petitioner responded to these observations, providing explanations for the discrepancies and actions taken regarding the same. 3. Reports and Objections: Reports were filed by the Official Liquidator and the Regional Director, Ministry of Corporate Affairs, highlighting certain objections. The Regional Director raised concerns regarding the treatment of assets and liabilities, communication with tax authorities, FIPB approval, and the dissolution process of the Transferor Companies. The petitioner addressed these objections in detail, clarifying the compliance with accounting standards, communication with tax authorities, and the necessity of FIPB approval. 4. Compliance and Legal Considerations: The court considered the compliance with procedural requirements under the Companies Act, 1956, the reports of the Regional Director and Official Liquidator, and the responses provided by the petitioner. After thorough review and ensuring that all legal aspects were met, the court sanctioned the Scheme of Amalgamation, binding the companies, shareholders, and creditors. The court emphasized the importance of compliance for the scheme to be deemed sanctioned. 5. Dissolution of Transferor Company: The judgment ordered the dissolution of Transferor Company without winding up, subject to the compliance undertaken by the companies. The formal order of sanction was directed to be drawn in accordance with the law, and a certified copy was to be filed with the Registrar of Companies within 30 days. The order was to be published in designated newspapers and the official gazette. Any interested party was granted the liberty to apply for directions as per the law, and a voluntary deposit by the petitioner into the Common Pool Fund Account of the Official Liquidator was accepted. The Company Petition was disposed of accordingly, concluding the legal proceedings related to the Scheme of Amalgamation.
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