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TMI Blog2012 (7) TMI 1001X X X X Extracts X X X X X X X X Extracts X X X X ..... n in imposing such a condition, while sanctioning the Scheme in connection with nonutilization of amalgamation reserve for the purpose of declaring dividend. Here, it is required to be noted that no objection was taken by the Regional Director to the said clause and even the shareholders have unanimously approved the Scheme with the original Clause-10.5. Considering the same, it cannot be said that incorporation of the said clause is in violation of public policy and as held by various Courts, such amalgamation reserve can be utilized for the purpose of declaring dividends. Even, the learned Single Judge of this Court has, earlier, taken the similar view. In view of the same, the direction given by the learned Single Judge that such amalgam ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... imilar in nature and they are engaged in the trade of various agricultural commodities/products. A public notice was advertised regarding amalgamation and, since, nobody came forward with an objection in this behalf, the scheme was approved unanimously. The learned Single Judge, accordingly, gave sanction to the said Scheme. However, while doing so and while interpreting Clause-10.5 of the Scheme, the learned Single Judge held that the amalgamation reserve fund shall not be used for declaring dividend. The learned Single Judge sanctioned the said Scheme, accordingly, subject to the aforesaid direction. The appellant-companies, after following the said procedure, have implemented the Scheme, but, have challenged the aforesaid direction of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... udge of this Court and had this aspect was brought to the learned Counsel for the appellants, he could have pointed out various case laws on the point, but, the appellants were taken by surprise, since, for the first time they found such directions in the judgment. 5.4 Mr. Soparkar, learned Counsel also argued the aspect of accounting standards(AS-14). 6.0 Mr. P.S. Champaneri, learned Counsel for the respondent-Regional Director, submitted that it is true that no specific objection was taken nor there is anything on the record to show that any argument was advanced in regard to the said condition, at the time of hearing. He, further, submitted that the learned Single Judge might have, on his own, keeping in mind the provisions of Sections- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... herein, it was found that Article- 182 authorized the company to issue bonus shares out of reserve, arising from revaluation of capital assets. Therefore, in the said case, it was held that the company was entitled to issue bonus shares out of revaluation reserve. 7.2 The learned Counsel for the appellants has next relied on a decision of the learned Single Judge of this Court rendered in Company Petition Nos.59 & 60 of 2009, dated 08.05.2009. In the aforesaid case, the learned Single Judge held that any profit arising out of capital transaction, such merger or demerger, which can be treated as capital profit, and hence, the same can be transferred to capital reserve and not to general reserve. In the aforesaid case, the learned Single Jud ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... j.), wherein in Para-19, it is held as under: "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 T.V. Private Limited reported in 2009 90 SCL 138 has taken the view that with regard to accounting Standard - 14, a Statement was given in 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 Bhagwati Developers Vs. Peerless General Finance and Investment Co. and Others reported in 2005 5 CLJ 377 (SC) wherein the Court was concerned with the question of bonus ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s, scheme was to be sanctioned. 7.5 The learned Counsel for the appellant, next, relied upon a decision of the Punjab & Haryana High Court in "MOTOROLA INDIA (P.) LTD.", reported in [2006] 71 SCL 444, "31. The objection that the surplus arising out of the scheme of amalgamation, i.e., 'amalgamation reserves' is of capital nature and cannot be considered as general reserve as the general reserve, is free for distribution to the shareholders of a company in the form of dividends, bonus shares, whereas amalgamation reserve cannot be utilized for distribution to the shareholders. In respect of the said objection of the Regional Director, it is pointed out that the accounting standard issued by the Council of Institute of Chartered Ac ..... X X X X Extracts X X X X X X X X Extracts X X X X
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