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TMI Blog2009 (5) TMI 540X X X X Extracts X X X X X X X X Extracts X X X X ..... work of manufacturing of semi-finished castings for AIA Engineering Ltd. 3. The petitioner in Company Petition No. 24 of 2009 is Reclamation Welding Ltd. It was incorporated on 10-4-1981, in the name of Grey Casting Ahmedabad (P.) Ltd., and its name was changed to Reclamation Welding (P.) Ltd., with effect from 22-11-1990 and was further changed to Reclamation Welding Ltd., with effect from 11-5-2005. This company is also a wholly-owned subsidiary of AIA Engineering Ltd., and it is doing the job work of manufacturing of semi-finished castings for AIA Engineering Ltd. 4. The petitioner of Company Petition No. 25 of 2009 is AIA Engineering Ltd. It was incorporated on 11-3-1991, in the name of Magotteaux (India) (P.) Ltd., and its name was changed to AIA Engineering (P.) Ltd., with effect from 11-5-1992 and became a deemed public company with effect from 30-11-1992. The name was changed to AIA Engineering Ltd., with effect from 2-5-2000 and, therefore, the word 'private' was added under section 43A(2A) of the Act with effect from 1-3-2001. The name was further changed to AIA Engineering Ltd., with effect from 30-3-2005. This company is presently engaged in the business of manufactu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 24-11-2008, passed by this Court in the said company application, this Court dispensed with the requirement of holding of meetings of the equity shareholders of this company. This company has also prayed for dispensing with the meeting of the creditors secured and unsecured of the company in the light of the fact that no compromise was offered to any of the creditors and neither any liability of the creditors under the scheme is being reduced or extinguished. This Court vide its order dated 24-11-2008, dispensed with the said meeting, however, this Court directed to inform all the secured and unsecured creditors having the amount due to them by the company exceeding Rs. 10,00,000. The company has thereafter filed another application being Company Application No. 617 of 2008 seeking modification of the order dated 24-11-2008. This Court vide its order dated 5-12-2008, passed in the said application modified the order dated 24-11-2008 and directed the company to intimate to the unsecured creditors having their outstanding dues from the company exceeding Rs. 1,00,000. 7. Similarly, the petitioner of Company Petition No. 24 of 2009, i.e., Reclamation Welding Ltd., has filed an applic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ght of the fact that the rights and interests of the creditors of the company are not affected by the scheme. This Court vide its order dated 24-11-2008, dispensed with the holding of meetings of the secured and unsecured creditors of the company. 9. Notices of meetings were sent individually to the equity shareholders of the company, pursuant to the order dated 24-11-2008, together with a copy of the scheme and the explanatory statement required under section 393 of the Act and the form of proxy. Notice of the meeting was also advertised as directed by this Court in The New Indian Express, Ahmedabad edition and Sandesh, Ahmedabad edition, on 19-12-2008. Mr. Sanjay Mazumdar, the chairman of the meeting has already filed the requisite affidavit under rule 76 of the Companies (Court) Rules, 1959, dated 6-1-2009, in respect of service and appearance of advertisement of the said notice. The arrangement embodied in the scheme was approved by the requisite majority of the equity shareholders at the meeting held on 16-1-2009. 10. The petitioner thereafter filed the company petitions, namely, Company Petition Nos. 23 of 2009, 24 of 2009 and 25 of 2009, seeking sanction of the scheme of a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... el appearing for the petitioner-companies, has submitted that simply because the Court has granted its sanction to the scheme, it would not absolve the transferee-company from any liability that may arise in future on violation of any statutory provisions or the scheme would not affect the pending proceedings either before the civil or criminal court and the liability that may be inflicted upon the petitioner or petitioners or the directors would not be affected simply by virtue of the scheme of amalgamation. As a matter of fact, the transferee-company made compounding application under section 621A of the Companies Act, 1956, on 14-4-2009. The Court finds substance in the submission made by Mr. Joshi. Even otherwise, this issue has been examined at length by this Court vide its order dated passed in - Nirmay Properties (P.) Ltd., In re [2009] 150 Comp. Cas. 538, wherein after consi-dering the earlier decisions on the subject, the Court took the view that grant of sanction to the scheme would not absolve the company or its directors and, hence, the transferee-company is liable to face all necessary proceedings which are pending and/or to modify the application for compounding of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ged together. No goodwill account should be accounted for. (b)If at the time of amalgamation, the transferor and transferee-companies have conflicting accounting policies, a uniform set of accounting policies should be adopted following the amalgamation. The effects on the financial statement of any changes in the accounting policies should be appropriately disclosed. (c)The difference between the amount recorded as the share capital issued (plus any additional consideration in the form of cash or other assets) and the amount of share capital of the transferor-company should be adjusted in the reserves of the transferee-company. (ii) Purchase method - This method of amalgamation is applicable for amalgamation in the nature of purchase. The application of this method involves the following :- (a)In the books of the transferee-company, the assets and liabilities of the transferor-company should be incorporated either at their existing carrying amounts or the consideration should be allocated to individual identifiable assets and liabilities on the basis of their fair values at the date of amalgamation. The identifiable assets and liabilities may include the assets and liabilities ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vernment and having considered the observations made by the Regional Director as well as the reply affidavit filed on behalf of the petitioner-companies, the Court is of the view that none of these two observations have any bearing in the eye of law. As far as the first observation is concerned, the Court has made it very clear while disposing of the earlier petitions involving the same issue and the Court took the view that grant of sanction to the scheme would not absolve the company or its directors and, hence, the transferee-company is liable to face all the necessary proceedings which are pending and/or prefer an application for compounding of the offences. 19. With regard to the Accounting Standard 14 as discussed above, the legal position is also very clear. The Allahabad High Court in the case of Jagran TV (P.) Ltd., In re [2009] 150 Comp. Cas. 5321 has taken the view that with regard to Accounting Standard 14, a statement was given in the Delhi High Court that since the transferor-company will merge into the transferee-company, the Accounting Standard 14 will be followed. The Court further derived support from the decision of the hon'ble Supreme Court in the case of Bhagw ..... X X X X Extracts X X X X X X X X Extracts X X X X
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