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TMI Blog2009 (1) TMI 477X X X X Extracts X X X X X X X X Extracts X X X X ..... ik for the Respondent. JUDGMENT 1. The company petition has been filed by M/s. Mysore Cements Ltd. (hereinafter referred to as the "transferee company") having its registered office in the State of Karnataka, seeking sanction of a scheme of amalgamation with two other companies. 2. The petitioner, a transferee company which is sought to be amalgamated with two other companies, viz., M/s. Indo Rama Cement Ltd. (transferor company No. 1) and M/s. Heidelberg Cement India (P.) Ltd. (transferor company No. 2). The scheme of amalgamation is annexed as annexure A to this petition. 3. According to the petitioner, transferor company No. 1 has its registered office in the State of Maharashtra and has filed separate petition under section 394 of the Companies Act, 1956, before the High Court of Judicature at Bombay and transferor company No. 2 having its registered office in the State of Haryana, has filed a separate petition under the said section before the High Court of Punjab and Haryana seeking approval and sanction of the scheme. 4. The petitioner, which is a transferee company, was incorporated on 13-5-1958, having its registered office at Ammasandra, Tumkur Di ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1-2000, by the Registrar of Companies, Maharashtra. The registered office of the transferor company No. 1 is situated at village Khar Khavari, P.O. Gadab, Taluka-Pen, District Raigad-402 107, Maharashtra and annexure D is the certified copy of the memorandum and articles of association of the transferor company No. 1. 8. The details of the share capital structure of the transferor company No. 1 as on 30-6-2007, is as under : Share capital Amount in Rs. Authorised : 50,00,00,000 5,00,00,000 equity shares of Rs. 10 each 50,00,00,000 Issued, subscribed and paid-up : 50,00,00,000 5,00,00,000 equity shares of Rs. 10 each 50,00,00,000 9. It is stated that there is no material change in the share capital structure of transferor company No. 1 and at present, the entire paid-up share capital of the said company is held by Cementrum IBV which holds 4,99,99,930 equity shares and the balance 70 shares are being held by the resident Indian individuals. The certified copy of the latest audited balance-sheet of transferor company No. 1 as on 30-6-2007, is produced as annexure E to the company petiti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... one equity share as nominee of Cementrum IBV. The certified copy of the latest audited balance-sheet of transferor company No. 2 as on 31-12-2007, is produced as annexure G. 15. According to petitioner the transferee company, its board of directors as well as the board of directors of transferor company No. 1 and transferor company No. 2 have approved and adopted the scheme of merger (annexure A) at their respective meetings held on 9-5-2008, by virtue of which, the entire business and undertaking of the transferor companies shall be transferred to and vest in the petitioner-company, subject to approval and sanction of this court within whose jurisdiction the transferee company is situated as well as the approval and sanction of the High Court of Judicature of Bombay and High Court of Punjab and Haryana within whose jurisdiction the registered offices of transferor company No. 1 and transferor company No. 2, respectively, are situated, i.e., the State of Maharashtra and Haryana. Annexures H, J and K are the board resolutions of the said companies, respectively, dated 9-5-2008. 16. According to the petitioner, transferor company No. 1 is a subsidiary of Cementrum IBV, a c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in transferor company No. 1. ( ii )Every equity shareholder of transferor company No. 2 as on the record date (as defined in the scheme) shall receive 0.1469 equity shares of the face value of Rs. 10 each of the transferee company for every one fully paid equity share of Rs. 10 each held in transferor company No. 2. In terms of the above exchange ratio, 6,77,21,681 and 8,81,670 equity shares of the face value of Rs. 10 each of the transferee company shall be issued in total to the equity shareholders of transferor company No. 1 and transferor company No. 2, respectively." 19. That the issue and allotment of equity shares to the shareholders of the transferor companies would be in accordance with the procedure laid down under the Companies Act and the said shares shall be on par with the shares of the transferor company insofar as declaration of dividend, voting rights, etc., is concerned. 20. In Company Application No. 611 of 2008, this court by its order dated 26-6-2008 Mysore Cements Ltd., In re [2009] 149 Comp. Cas. 50, dispensed with the meetings of the preference shareholder and unsecured creditors of the petitioner-company and directed it to convene and hold me ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion amounting to Rs. 6,238.32 lakhs which forms part of the debit balance of the profit and loss account of the petitioner-company for the period ending 31-3-2008, is to stand adjusted against the amount lying to the credit of the securities premium account of the transferee company as on that date which has been approved by the body of the shareholders of the transferee company. Though there would be a reduction of the securities premium account as per section 100 of the Companies Act, 1956, the same has been approved by the shareholders of the transferee company and is further subject to the order of sanction by this court. That the deemed reduction is only by way of set-off against the equivalent amount from the securities premium amount of the transferee company and that the transferee company has no secured creditor and the rights of the unsecured creditors is adequately safeguarded and protected. That according to the petitioner from the effective date, the petitioner-company is to have a changed name of "Heidelberg Cement India Ltd." Under the circumstances, the petitioner has sought for sanction of the scheme of amalgamation and other ancillary reliefs. 23. I have hear ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iability like other liabilities, which are to be returned or refunded. Hence, the authorised capital will not come within the purview of transfer of liabilities under the scheme of amalgamation. ( c )The transferor company and the transferee company are separate legal entities. On amalgamation, the transferor company will be dis-solved and only the transferee company exists. At this stage, if the transferee company on account of the scheme of amalgamation increases its authorised capital, it has to comply with the provisions of sections 94 and 97 of the Companies Act, 1956, by filing relevant returns with the Registrar of Companies with registration fee/filing fee. ( d )The Companies Act does not specifically exempt the transferee company on account of scheme of amalgamation from payment of registration fee for increase of its authorised capital pursuant to the scheme of amalgamation. Hence, if the transferee company is allowed to increase its authorised capital by clubbing the authorised capital of the transferor company without any further act or deed as contemplated in the scheme, it will be not only against the provisions of the Companies Act, 1956, but it will also involve ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... overwhelming majority of shareholders of the petitioner-company and when this court which is vested with wide powers accords its sanction to the scheme, there cannot be a separate compliance under section 21 of the Act and, therefore, the said objection raised is futile. 30. In support of this contention reliance is placed on the decision of the Bombay High Court in the case of PMP Auto Industries Ltd., In re [1994] 80 Comp. Cas. 289 , wherein it has been held that sanction of the scheme of amalgamation under sections 391 and 394 is a single window clearance for all changes necessary for implementing the scheme and that the company need not carry out each change separately, after referring to several decisions and particularly, Maneckchowk Ahmedabad Mfg. Co. Ltd., In re [1970] 40 Comp. Cas. 819 (Guj.) wherein, it has been held that the whole purpose of section 391 is to reconstitute the company without the com- pany being required to make a number of applications under the Companies Act for various alterations which may be required in its memorandum and articles of association for functioning as a reconstituted company under the scheme. If there is any other thing to be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... th the Registrar of Companies. It was held that furnishing of the notice to the Registrar of Companies of the scheme as sanctioned will any way constitute the substantial compliance with the provisions of section 21 of the Act. Similarly, in the case of Norfolk Infotech (P.) Ltd., In re [2008] 142 Comp. Cas. 752 (Guj.), the decision in PMP Auto Industries Ltd. s case ( supra ) was relied upon to hold that a separate formality need not be followed under section 21 of the Act for change of name or the objection clause of the memorandum of association of the resulting company. However, a direction was given to file necessary forms as prescribed under law in the office of the Registrar of Companies to place on record these changes. In the case of Sun Metals Alloys (P.) Ltd., In re [2008] 141 Comp. Cas. 82 1 (Mad.), the objection of the Regional Director that the change in the name of the company in the proposed scheme of amalgamation could not be given effect to without obtaining necessary approvals from the Registrar of Companies as required under section 21 of the Act were held to be only formal in nature and the same could not come in the way of sanctioning of the scheme. A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... order of the court is to be filed before the Registrar within 30 days from the date of the order which would operate as a notice contemplated under sub-section (1) of sections 95 and 97 of the Act and that sections 391 to 394 which deal with amalgamation do not provide for compliance of sections 94 to 97 separately, and, therefore, there is no infraction of the said provisions. Similarly, in the case of Areva T D India Ltd. v. Union of India [2008] 144 Comp. Cas. 311 (Cal.), it is held that it is not necessary to pay any fee for giving effect for increase in the share capital of the transferee company pursuant to the scheme. In the case of Regional Director v. Cavin Plastics Chemicals (P.) Ltd. [2008] 141 Comp. Cas. 475 1 (Mad.), it is stated that section 391 is a complete code in itself, but it is intended to be in the nature of a "single window clearance" and, therefore, what is intended under section 391 is to reconstitute the company without the company being required to make a number of applications under the Companies Act for various alterations and once the sanction is accorded by the High Court, it would be a comprehensive clearance and therefore, no separate ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... into and with MCL in accordance with the terms thereof. 1.2-2 Amalgamation of the amalgamating companies into the amalgamated company shall result in : ( a )consolidation of the cement business presently being carried on by the amalgamating companies and the amalgamated company which shall be beneficial to the interests of the shareholders, creditors and employees of such companies and to the interests of the public at large, as such amalgamation would create greater synergies between the businesses of all such companies and would enable them to have access to better financial resources, as well as would increase the managerial efficiencies, while effectively pooling the technical, distribution and marketing skills of each other; and ( b )this scheme would also enable Cementrum to consolidate its cement business in India." 38. The broad terms of the scheme as per clause 3 are that the entire business of amalgamating companies, viz., transferor company No. 1 and transferor company No. 2 shall be transferred and vested with the transferee company, i.e., the petitioner herein. By virtue of which the share capital of the petitioner-company would be enhanced and the intere ..... X X X X Extracts X X X X X X X X Extracts X X X X
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