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TMI Blog2014 (1) TMI 1166X X X X Extracts X X X X X X X X Extracts X X X X ..... shall stand extinguished. Subsequently the petitioner transferee company filed present petition i.e. company petition No. 123 of 2011 which came to be admitted under order dated 2.9.2011. 3. It is claimed that indirectly present petitioner - transferee company is the holding company of the transferor company. The petitioner transferee company has submitted a scheme of arrangement in the nature of amalgamation for merger of the Mauritius based transferor company i.e. United Phosphorus Limited (Mauritius). The scheme is presented for sanction by the Court under the provisions contained in Section 391 read with Section 394 of the Act. It is claimed that the entire share capital of the transferor company is held by a company viz. Bio Win Corporation Limited, Mauritius which is the wholly owned subsidiary of the petitioner transferee company. Thus, the transferor company is indirectly wholly owned subsidiary of the petitioner company and that under clause 5 of the scheme, no shares of the petitioner company shall be issued as consideration for the said transfer or undertaking of the transferor company. It is also claimed that it was not required to take out separate proceedings for th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ansferor company shall be removed from the register of companies, in accordance with section 250 of the Mauritius Act." The deponent further humbly submits that the transferor company is registered under the law of Mauritius, is not liable to be dissolved without winding up by this Hon'ble Court. The Hon'ble Court, may, therefore be pleased to direct the transferee company namely United Phosphorus Limited to ensure the striking off / removal of the name of said transferor company situated in Mauritius upon sanctioning of the scheme of amalgamation / arrangement by this Hon'ble Court. (b) That, the Registrar of Companies, Gujarat has submitted his report vide letter No.ROC/United Phosphorus/STA/(K)/2010-11/1268 dated 30.9.2011 and as per the said report, no complaint and / or representation has been received in respect of the proposed scheme of amalgamation. Amalgamation of M/s. United Phosphorus Limited (Mauritius) with the petitioner transferee company here in this present petition and registered in India and the scheme does not, prima facie appear to be prejudicial to the interest of the shareholders of the petitioner transferee company and the public at large." 5. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 7. Now, so far as the objections raised by the respondent Regional Director in para 2(a) of his affidavit is concerned, it is necessary and appropriate to note that the respondent Regional Director has claimed that since the transferor company is registered under the laws of Mauritius it is not liable to be dissolved without winding up order by this Court. A similar objection had come up for consideration before the Court on earlier occasion in the case of Adani Enterprises Limited in Re wherein this Court, in the decision dated 12.8.2010 in Company Petition No.80 of 2010 in Company Application No.136 of 2010, after taking into account the details mentioned in the affidavit filed by the company, observed that the objection raised by the Regional Director would not come in the way of sanctioning the Scheme by the Court as the Scheme did not violate the provisions of RBI Act or FEMA. The Court also noticed that the scheme ultimately provided that it was subject to it being approved by the respective requisite majorities from the shareholders and the creditors and such other provisions as may be required under the provisions of the Foreign Exchange Management Act, 1999. The Court with ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n 394 of the Act inter alia, makes provision for facilitating, reconstruction and amalgamation of the company and sub-section (4) (b) thereof provides that though the term "transferee company" does not include any company other than a company within the meaning of the Act but the expression "transferor company" includes any "body corporate", whether a company within the meaning of the Act or not. 8.6 Thus, according to the provision contained under Section 394(4)(b), for the purpose of said section it is not necessary that transferor company also should be a company within the meaning of the Act but it would include any "body corporate" though it may not be a company within the meaning of the Act. 8.7 So long as transferee company is incorporated and registered in India, a "body corporate" as contemplated under sub-clause (b) of sub-section (4) of Section 394 of the Act being the transferor which is not incorporated and registered in India and is not a company as defined and contemplated under Section 2(10) of the Act, can be amalgamated with such transferee company, provided such amalgamation does not violate any statutory restriction and fulfills the requirements contained unde ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... with the transferee company so long as the transferee company is incorporated and registered in India. However, it would be subject to the condition that such amalgamation must not be in violation of the provision contained under Reserve Bank of India Act, 1934 and / or Foreign Exchange Management Act, 1999 and also the provision of the Act or any other law. Such amalgamation also should not be in violation of any provision applicable to the transferor company i.e. should not be in violation of the laws applicable to the companies in the Country where the transferor company is formed and registered and situate. Hence, it is necessary to examine and ascertain whether the said aspects exist and are complied with in present case, or not. 8. When the facts of present case are considered, it is noticed, as mentioned hereinabove, that the transferor company is incorporated, registered and situated outside India i.e. in Mauritius and under the provisions of the laws prevailing and applicable in Mauritius. From the proposed scheme and the details mentioned in present petition it comes out that the said transferor company fall within the purview of the terms "body corporate" which is def ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... son as will be acceptable to the ROC Mauritius as its agent to accept service of process in respect of proceedings for the enforcement of any claim, debt, liability or obligation of a dissenting member of the transferor company, respectively, against the transferee company. 4.5.3. An agreement that it shall promptly pay to the dissenting members, if any, of a constituent company incorporated under the Mauritius Act the amount,if any, to which they are entitled under the Mauritius Act with respect to the rights of dissenting members. Since the transferor company is indirectly, the wholly owned subsidiary of the transferee company, there is no dissenting member and therefore this provision does not apply; and 4.5.4 A certificate of merger or consolidation issued by the appropriate authority of the foreign jurisdiction (being the High Court) where it is incorporated. The transferee company shall furnish necessary orders / certificate on sanctioning the scheme. 4.6 As per paragraph 4(4) of the Fourteenth Schedule of the Mauritius Act, since the surviving company is incorporated under the laws of a jurisdiction other than that of Mauritius, the merger will be effective as provided f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... FEMA Act, 1999 and / or any applicable laws are not violated and in future also all provisions shall be diligently complied with. 8.6 It is also clarified and declared / stipulated by the learned Counsel that the transferor companies have also diligently followed and complied with all relevant provisions applicable in Mauritius i.e. applicable to the transferor company incorporated and registered in Mauritius. 9. Having regard to the above discussed aspects and also having regard to the provisions contained under Clauses 8.1 to 8.4, 10.1, 11.1, 15.1 to 15.3, 16.1 and 16.2 of the scheme, it would be necessary, so as to address and to eliminate the observation / objection raised by the Regional Director that the below mentioned clarifications and directions, are complied. Differently put, subjec to upon diligent compliance of the below mentioned directions, the cause or basis for the objection would not survive. Therefore, it is clarified and directed that:- (a) If necessary as per the relevant and applicable laws of Mauritius, the transferor company shall obtain appropriate orders sanctioning the proposed scheme from the competent Court. (b) Board of Directors, through one of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eive any objections from the shareholders or creditors of the transferor company. The said letter dated 25th may 2011 is placed on record. It has been further confirmed that there are no objections from the sole shareholder. Further, it is also claimed and asserted that the transferor company has no secured or unsecured creditors and hence there would be no objections from any creditors. 9.4 Moreover, the petitioner has undertaken to file the order passed by this Hon'ble Court, sanctioning the scheme, with the office of the Registrar of Companies, Mauritius in order to enable the said authority to dissolve the said transferor company without winding up and remove the company from its registrar. 9.5 It is specifically mentioned in the scheme that the scheme is conditional and is subject to (a) the scheme being approved by the respective requisite majorities of the members and the creditors of each of the amalgamating companies and the amalgamated company under Section 391 of the Act, and (b) such other provisions, if any, as may be required under the provisions of the Foreign Exchange Management Act, 1999. Thus, the company has undertaken to comply with the provisions of the F ..... 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