9911796707
TMI Blog2015 (4) TMI 307X X X X Extracts X X X X X X X X Extracts X X X X ..... gement is prejudicial to the interest of revenue and public at large, as the Scheme is designed to set off “Carry Forward and Set Off Accumulated Losses and Unabsorbed Depreciation” of the Transferor Company against profits of the profit making Transferee Company. The Scheme was sent to the Income Tax Department. No comments have been received. In case it is legally permissible for the Transferor Company to carry forward and set off all the losses, it shall be entitled to the benefit in case the law does not put a restriction thereon. In response to observation made by Regional Director it was submitted that scheme has been prepared in terms of Accounting Standard-14. Copy of the Scheme was sent to the Chief Commissioner of Income Tax, Chandigarh. How ever, no comments have been received.Also all legal formalities required shall be complied with by the Transferor Company. A perusal of the order passed by the Commission shows that exhaustive exercise was carried out to find out the effect of merger on the public at large. The Commission has issued comprehensive directions in consonance with the provisions of the Competition Act, which are to be complied with by the Transferor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he petitioner-Transferor Company and the Transferee Company are detailed in their respective Memorandum and Articles of Association annexed with the first motion petition. 6. Vide order dated 7.8.2014, the prayer to dispense with convening of the meetings of the secured and unsecured creditors was allowed by this Court considering the fact that the petitioner Transferor company has 18 secured creditors, out of which 16, constituting 93.39% in value, had given their consent/no objection to the Scheme. Out of 7428 unsecured creditors, 65 constituting 88.79% in value, had also given no objection and consent to the scheme. Mr. Harkesh Manuja, and Ms. Puneeta Sethi, Advocates were appointed, as Chairman and Co- Chairperson, respectively, to convene the meeting of the equity shareholders of the Transferor Company. In the report dated 26.9.2014, it has been stated that on 19.9.2014 the meeting was attended either personally or through proxy /authorised representatives by 236 equity shareholders of the Petitioner Transferor Company, holding 28,57,64,027 shares of ₹ 5 each, value of the shares being ₹ 1,42,88,20,135/-. Total 203 ballots involving 28,56,77,507 votes having val ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as complied with and an affidavit to this effect has been placed on record. 9. Vide CA Nos. 963-964 of 2014 and CA No. 64 of 2015, two objections have been filed, which are being dealt with first before dealing with the case of the petitioner on merits. OBJECTIONS FILED AGAINST ACCEPTANCE OF SCHEME OF ARRANGEMENT . CA Nos. 963-964/2014 10 The present applications have been filed by Sales Promotion Employees working with the Transferor Company through the Federation of Medical and Sales Representatives' Associations of India. 11. Learned counsel for the objectors claimed the the Sales Promotion Employees are the workmen, hence, they have the locus to file objections. He further submitted that the objectors are aggrieved against clauses 13(a) and 13(b) of the Scheme of Arrangement whereby terms and conditions of the employees already working are sought to be changed to their detriment. Further in clause 13(c) of the Scheme of Arrangement, it has been mentioned that the Transferor Company means M/s Ranbaxy Laboratories Limited only and not its subsidiary or associates. Same is the position with the Transferee Company, still in clause 13(b) of the Scheme of Arrangeme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... enior counsel appearing for the Transferee Company submitted that the Transferee Company had undertaken all the liabilities of the Transferor Company, especially with regard to the employees. It is only that as against the Transferor Company, the name of the Transferee Company shall be substituted. Conditions of service of all the employees will remain the same. All agreement already executed are to be honoured. In terms of Section 19 of the Industrial Disputes Act, there could be wage reduction as well, however, that right has been foregone by the Company for a period of one year. The Scheme is to be read in totality and no provision has to be read in isolation. There is no intention to reduce the wages of any of the employee. He has even filed affidavit dated 11.2.2015 of Ashok I. Bhuta, authorised person of Sun Pharmaceutical Industries Limited stating that if either Clause 13 (a) of the Scheme of Arrangement or the law does not permit, there will not be any reduction in the base salary or base wage of the objectors even after expiry of the period as mentioned in Clause 13 (b) of the Scheme of Arrangement. It has been further stated in the affidavit that Clause 13 (b) of the Sch ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Gujarat, India; (v) 'Undertaking' shall mean the entire business and the whole of the undertakings of the Transferor Company as a going concern, all its assets, rights, licenses and powers, and all its debts, outstandings, liabilities, duties, obligations and employees as on the Appointed Date including, but not limited to, the following: (i) All the assets and properties (whether moveable or immoveable, tangible or intangible, real or personal, in possession or reversion, corporeal or incorporeal, present, future or contingent) of the Transferor Company, whether situated in India or abroad, including, but not limited to manufacturing facilities, laboratories, land (whether leasehold or freehold), processing plants, plant and machinery, computers, equipment, buildings and structures, offices, residential and other premises, diesel generator sets, stock-in-trade, packing material, raw materials, formulations, tablets, capsules, vials, ointments, active pharmaceutical ingredients and drugs intermediaries, capital work in progress, sundry debtors, furniture, fixtures, interiors, office equipment, vehicles, appliances, accessories, power lines, depots, deposits, all stoc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... power, possession or the control of or vested in or granted in favour of or held for the benefit of or enjoyed by the Transferor Company, in each case, whether in India or abroad. (ii) All agreements, rights, contracts, entitlements, licenses, permits, permissions, incentives, approvals, registrations, tax deferrals and benefits, subsidies, concessions, grants, rights, claims, leases, tenancy rights, liberties, special status and other benefits or privileges and claims as to any patents, trademarks, designs, quotas, rights, engagements, arrangements, authorities, allotments, security arrangements, benefits of any guarantees, reversions, powers and all other approvals of every kind, nature and description whatsoever relating to the Transferor Company business activities and operations. xx xx xx (v) Rights to any claim not preferred or made by the Transferor Company in respect of any refund of tax, duty, cess or other charge, including any erroneous or excess payment thereof made by the Transferor Company and any interest thereon, under any law, act, rule or scheme, and in respect of set-off, carry forward of un-absorbed losses, deferred revenue expenditure, deduction, exemp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... provisions of this Scheme and the rights and obligations of the Transferee Company under applicable law, for a period of 12 months after the Scheme comes into effect, (the Relevant Period ), the Transferee Company shall provide (or cause its subsidiaries to provide each such employee of the Transferor Company whose employment was transferred to the Transferee Company pursuant to this Scheme (each, a Transferred Employee ) with compensation and benefits that are substantially comparable in the aggregate economically to the compensation and benefits provided to such Transferred Employee immediately prior to the Scheme coming into effect; provided, however, that during the Relevant Period there shall be no decrease in a Transferred Employee's base salary or base wage rate in effect immediately prior to the Scheme coming into effect. To the extent that: (i) the applicable law of any jurisdiction; (ii) any collective bargaining agreement, works council agreement or similar agreement; or (iii) any employment agreement would require the Transferee Company to provide any more favorable terms of employment to any Transferred Employee than those provided in the preceding sentence, the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e misused by the Transferee Company to reduce their base salary or base wage rate after the Relevant Period. 4. The Transferee Company submits and undertakes that it shall not use the Hon'ble Court's sanction to the Scheme including clause 13(b) of the Scheme as an instrument to reduce the base salary or base wage rate of the Transferred Employees, and any variation (increase or reduction) in the base salary or base wage rate of Transferred Employees after the Relevant period will be in accordance with the terms and conditions of employment, and subject always to all the extant laws including labour laws in this regards. 23. As far as transfer of the employees to the other associated or subsidiary is concerned, even in the letter of appointment of the applicants such a condition is existing. In Clause 13(a) of the Scheme of Arrangement, all such rights and liabilities have been protected, hence, apprehension is baseless. 24. As regards the issue of subsidiary of the Transferor Company is concerned, once the Transferor Company is being merged in the Transferee Company with all its assets and liabilities, the entire share holding of the Transferor Company in other c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er Party without the prior written consent of the other, such consent may not to be unreasonably withheld or delayed. 16.6 This Agreement will be binding, despite of any change of management control on either party. 21. DISPUTE RESOLUTION AND ARBITRATION 21.1 This Agreement shall be governed by and interpreted in accordance with English law. Any dispute, controversy or claim arising out of this Agreement, or the breach, termination or invalidity thereof, shall be discussed between the senior management of the Parties who will attempt to resolve the matter amicably. Any disputes which cannot be resolved in this way within sixty (60) days of one Party notifying the other of the existence of a dispute shall be finally settled under the Rules of Arbitration of the International Chamber of Commerce by one or more arbitrators appointed in accordance with the said Rules. The arbitration shall be conducted in English in London. 28. Similar Clauses are there in the agreement signed by Ranbaxy (U.K.) with the applicant. Clause 14 of the Agreement provides that the same may not be assigned by either party without prior written consent of the other. However, such consent was not t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o its name and to have the same continued, prosecuted and enforced by or against the Transferee Company. The Transferee Company is bound by the result thereof, even if the cause of action arose to a party prior to the effective date. 31. For the reasons mentioned above, the objections raised by the applicants to the Scheme of Arrangement are not tenable. Hence, the same are dismissed. CP No. 165/2014 ON MERITS 32. Pursuant to the notice of second motion petition, the Official Liquidator has placed on record the report dated 16.1.2015 by way of affidavit of A. K. Chaturvedi, Regional Director, Northern Region, Ministry of Corporate Affairs, Noida. The issues raised by the Regional Director in his affidavit are as under:- 4. That the Deponent craves leave to submit that as per clause 10.1 of the scheme it has been stated that the amalgamation is to be considered as an Amalgamation in the nature of merger in accordance with the provision of Paragraph 29 of Accounting Standard 14 - Accounting for Amalgamation (AS-14) as notified under the Companies Act, 1956 (which continue to be applicable in respect of section 133 of the Companies Act, 2013 in terms of General circul ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g observations as under: i. The merger is also subject to the approval/conditions to be imposed by Competition Commission of India. ii. As per Clause 9 of the scheme of Amalgamation i.e. REDUCTION OF CAPITAL AND RESERVES sub clause (9.1) An amount equal to the balance lying to the debit in statement of profit and loss in the books of the Transferor Company on the close of 31 day of March, 2014, shall be, in the books of the Transferor Company, adjusted/reduced as follows in accordance with provisions of section 391 to 394, section 78 and 100 to 103 of the Companies Act, 1956 and Section 52 of the Companies Act, 2013 and any other applicable provisions of law: (a) Firstly, against reduction of Capital Reserve Account of the Transferor or Company amounting to INR 176.20 Crore. (Rupees One hundred Seventy Six corers and twenty lacs only). (b) Secondly, against reduction of Securities Premium Account of the Transferor Company amounting to INR 3501.48 Crores. (Rupees Three Thousand Five Hundred One Crore and Forty Eight lacs only); (c) Thirdly, against reduction of the General Reserve of the Transferor Company amounting to INR 551.92 (Rupees Five Hundred and Fifty one ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ies and perused the paper book. 39. As far as the issue raised by the Regional Director in his affidavit, the Transferor Company has clarified that the Scheme has been prepared in terms of Accounting Standard-14. Copy of the Scheme was sent to the Chief Commissioner of Income Tax, Chandigarh. However, no comments have been received. 40. It has further been undertaken by the Transferor Company that all legal formalities required shall be complied with by the Transferor Company. 41. In the report of the Official Liquidator, it has been stated that the Scheme of Arrangement is prejudicial to the interest of revenue and public at large, as the Scheme is designed to set off Carry Forward and Set Off Accumulated Losses and Unabsorbed Depreciation of the Transferor Company against profits of the profit making Transferee Company. The Scheme was sent to the Income Tax Department. No comments have been received. In case it is legally permissible for the Transferor Company to carry forward and set off all the losses, it shall be entitled to the benefit in case the law does not put a restriction thereon. 42. Certain other issues have been raised in the report of the Official Liqu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Director, Northern Region, Ministry of Corporate Affairs Noida; the Official Liquidator and the replies submitted by the Transferor Company, the Scheme of Arrangement is hereby sanctioned. The Transferor Company shall be dissolved without being wound up. The Company shall be required to comply with the procedural requirements in accordance with law. 48. The Scheme shall be binding on the Transferor and Transferee Companies, their respective Shareholders, Creditors and all concerned. 49. Let formal order of sanction of the Scheme of Arrangement be drawn in accordance with law and its certified copy be filed with the Registrar of Companies within 30 days from the date of receipt thereof. 50. Learned counsel for the petitioner company states that the petitioner company would voluntarily deposit a sum of ₹ 1,00,000/- in the Common Pool Fund of the Official Liquidator within four weeks from today. The statement is accepted. 51. A notice of the order be published in the 'Financial Express' (English) and 'Dainik Bhaskar' (Hindi), and in the official Gazette of the Government of Punjab. It shall be uploaded on the website as well. 52. Any person interes ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
