9911796707
TMI Blog1976 (4) TMI 134X X X X Extracts X X X X X X X X Extracts X X X X ..... medabad (hereinafter called for the sake of convenience as "the transferee-company") under section 391 read with section 394 of the Companies Act, 1956, on the terms and conditions detailed in the scheme of amalgamation, the broad features of which are set out hereinbelow, with effect from January 1, 1974, subject to the liabilities, duties and covenants in the said scheme, inter alia , for vesting the assets of the transferor-companies in the transferee-company without further act or deed, and for the dissolution of the transferor-companies without winding-up. ****** The transferee-company has still to commence its activities and since none of the transferor or transferee-companies is an undertaking within the meaning of the Monopolies and Restrictive Trade Practices Act, 1969, inasmuch as they are investment companies and because the beneficial ownership of the shares of all the five companies are held by common shareholders, the merger of the transferor-companies with the transferee-company is considered desirable in order to have economic and efficient functioning of one investment company only with a view to avoid multiplicity of administration, accounting, secretarial an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hemicals; Sarabhai Common Services and Sarabhai Marketing Services; (2) Swastik Oil Mills; (3) Sarabhai Engineering Group (Sarabhai Machinery) and (4) Sarabhai Glass. Sarabhai Chemicals, Sarabhai Common Services and Sarabhai Marketing Services of division (1) and Sarabhai Engineering Group of division (3) and Sarabhai Glass of division (4) were initially started to supplement and augment the manufacturing activities carried on by Sarabhai Chemicals of Division (1). But in course of time the aforesaid former divisions built up separate industrial activities for themselves. Apart from catering to the needs of Sarabhai Chemicals and working as a workshop thereof, these divisions started catering to the needs of other industries and supplying products to others. With a view to achieving maximum operating efficiency, economy and optimum utilisation of Government resources through more concerted efforts, in the meeting of the board of directors of Karamchand Premchand Pvt. Ltd. held on June 29, 1973, it was proposed to transfer the following business of the company to its wholly-owned subsidiaries as going concerns : (1)The business of Sarabhai Chemicals, Sarabhai Common Services and S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... known as "Ambernath Group of Companies". Transferor* company, Karamchand Premchand Pvt. Ltd., transferred its certain investments of the value of Rs. 9,97,77,716 to this Ambernath Group of companies which included 30,00,000 equity shares of Sarabhai Chemicals Pvt. Ltd., 1,50,000 equity shares of Swastik Household and Industrial Products Ltd., 50,000 equity shares of Fabriquip Ltd. and 30,000 equity shares of Packart Pvt. Ltd., of Rs. 100 each, besides 1,08,478 equity shares of Calico Mills of Rs. 125 each and 10,000 equity shares of Sarabhai Research Ltd., of Rs. 100 each. Transferor-company, Karamchand Premchand Pvt. Ltd., also assigned a book debt amounting to Rs. 10,98,88,920 to this Ambernath Group of companies. In other words, Karamchand Premchand Pvt. Ltd. sold to Ambernath Group of companies the assets amounting to Rs. 2,08,66,636 in lieu of which Ambernath Group of companies allotted to Karamchand Premchand Pvt. Ltd. Rs. 20,92,996 equity shares of Rs. 100 each fully paid up. Again, in the same period, namely, July-August, 1973, the transferor-company, Karamchand Premchand Pvt. Ltd., formed another group of 22 wholly-owned subsidiary investment companies which is known as "C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ny - and transferee-companies by the learned counsel, Mr. Setalwad, that the official liquidator while making the report under the second proviso to section 394(1)( iv ) was not concerned with the scheme and its detailed provisions as appears to be clear from the comparison of the nature of the two fetters prescribed in the first and second provisos to section 394(1)( iv ). I do not think it necessary to go into this larger question canvassed by the learned counsel in view of the admitted position in the report of the chartered accountants appointed by the official liquidator which goes to show clearly that the grievance of the official liquidator that the affairs of the transferor-company, Karamchand Premchand Pvt. Ltd., have been prejudicially conducted either from the standpoint of the shareholders or public at large ( sic ) . ****** In view of the unequivocal opinion of the chartered accountants appointed by the official liquidator himself, I do not think that it can be established successfully that the directors of the transferor-company, Karamchand Premchand Pvt. Ltd., had conducted the affairs of the company in a prejudicial manner from the standpoint of the shareholde ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... value of the shares under section 7 of the Wealth-tax Act. The High Court of Assam and Nagaland had taken the view that the Tribunal was not justified in adopting the break-up value method as the basis of the valuation. In that context Jaganmohan Reddy J., speaking for the court, observed as under at page 633 : "An examination of the various aspects of valuation of shares in a limited company would lead us to the following conclusion : (1)Where the shares in a public limited company are quoted on the stock exchange and there are dealings in them, the price prevailing on the valuation date is the value of the shares. (2)Where the shares are of a public limited company which are not quoted on a stock exchange or of a private limited company, the value is determined by reference to the dividends, if any, reflecting the profit- earning capacity on a reasonable commercial basis. But, where they do not, then the amount of yield on that basis will determine the value of the shares. In other words, the profits which the company has been making and should be making will ordinarily determine the value. The dividend and earning method or yield method are not mutually exclusive ; both sh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ve adopted the break-up value method is not well-founded merely because this is a private limited company. It appears that after the report of the official liquidator making a grievance about the unreal exchange ratio fixed between the transferor and transferee-companies, as in the opinion of the official liquidator there is an undervaluation of the assets of the Ambernath Group of companies, the transferor-company, Karamchand Premchand Private Limited, referred the matter to M/s. S. V. Ghatalia Co., a leading firm of accountants and valuers. The said firm has also valued the shares of Karamchand Premchand Private Limited on the basis of profit earning capacity thereof, and on the basis of earning power they worked out the value of equity shares at Rs. 2,537.05 per share. The said firm has expressed the view that the fair and reasonable ratio between the equity shares of Karamchand Premchand Private Limited and equity shares of the transferee-company, Shahibag Entrepreneurs Pvt. Ltd. is 40 equity shares of Rs. 100 each of the transferee-company for one share of Rs. 1,000 each of the transferor-company, Karamchand Premchand Pvt. Ltd. The official liquidator has also lost sight o ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
