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TMI Blog2014 (9) TMI 1086X X X X Extracts X X X X X X X X Extracts X X X X ..... any no.4.) and S.S.Group Private Limited (hereinafter referred to as the Transferee Company no.2). The proposed transfer envisages the vesting of the undertakings of the Transferor companies into Transferee Company no.2. The registered offices of Transferor and the Transferee companies are located at 4th Floor, the Plaza, IFFCO Chowk, M.G, Road, Gurgaon. The Board of Directors of petitioner Companies No. 1, 2 and 3 in their respective meeting held on 14.8.2013 approved the Scheme of Amalgamation. The respective resolutions are on record as Annexures P-2, P-3, P-4. The Board of Directors of the Transferee Company no.1/ Transferee Company no.2 also in their meeting held on 14.8.2013 approved the Scheme of Amalgamation of Sukh Realters Private Limited, Ma-Ganga Builders & Constructions Private Limited and Belisma Buildcon Private Limited with North Star Apartments Private Limited and the subsequent Amalgamation with S.S.Group Private Limited and their respective shareholders and creditors. A copy of the resolution to this effect is on record as Annexures P-5 and P-6. The Petitioner Company no.1 was incorporated on 4th August, 1994 in the State of Delhi under the name of Sukh Real ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ted on 18th March, 1993 in the State of Delhi under the name of North Star Apartments Private Limited but its registered office changed to State of Haryana w.e.f 25.4.2013. The aims and objects of the Company as contained in the memorandum and articles of association are on record as Annexure P-13. The authorized, issued, subscribed and paid up share capital of petitioner Company 1 as existing on 31.3.2012 as per the audited financial statements have been set out in the petition alongwith certified copies of the audited balance sheets for the financial year ending on 31.3.2012 and unaudited balance sheet for year ending 31.3.2013 are on record as Annexure P-14. It has been stated that equity shares of the petitioner company no.4 are not listed on any stock exchange. The Transferee Company no.2 was incorporated on 22nd June, 2010 in the State of Punjab under the name of S.S.Group Private Limited but its registered office changed to State of Haryana w.e.f 5.4.2013. The aims and objects of the Company as contained in the memorandum and articles of association are on record as Annexure P-15. The authorized, issued, subscribed and paid up share capital of petitioner Company 1 as exis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sferor companies are under default of not depositing the statutory dues of Income Tax liability since more than 3 years. The aggregate unpaid income tax liability as on 31/03/2013 was Rs. 58.69 crores & unpaid interest is Rs. 21.61 Crores, aggregating Rs. 80.30 Crores. The Companies wise details of income tax (unpaid) & interest payable are given as under:- Particulars M/s Sukh Realters Pvt. Ltd. M/s Ma Ganga Builders & Constructions Pvt. Ltd. M/s North Star Apartments Pvt. Ltd. Unpaid Income Tax (in crores) 23.6 3.14 31.95 Unpaid interest (in crores) 9.19 1.9 10.52 Total 32.79 5.04 42.47 4(1)(B) That Transferor Company 4 has filed the belated income tax return on 30/03/2013 for the Asstt. Year 2012-13, in which a cheque amounting to Rs. 13,72,83,210/- towards self-assessment tax deposited on 30/03/2013 was returned unpaid as dishonored due to insufficient funds. 4(1)(C ) That in response to this continuing default of non payment of statutory dues of income tax liability & due interest worth Rs. 80.30 crores, the management of the company has informed in their reply that the said statutory due of income tax liability shall be taken over by the Tran ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... .10 Cr. The details of the gross share in the valuation of properties of these companies in tabular form are given as under:- Sr. No Name of the Company Share holding in the Transferor Co.4 Valuation of Properties ( In crores) Share in properties as holding Companies (in crores) Total share in the properties (in crores) 1 M/s Sukh Realters Pvt. Ltd. (Transferor Co.No.1) 26.08% 228.38 448.76 677.14 2 M/s Ma Ganga Builders & Constructions Pvt. Ltd. (Transferor Co.No.2) 47.83% 0 823.02 823.02 3 M/s Balisma Buildcon Pvt. Ltd. (Transferor Co.No.3) 25.65% 0 441.37 441.37 4 M/s North Star Apartments Pvt. Ltd. (Transferor Co.No.4) 0.44% 1720.72 7.57 Total 100.00% 1949.1 1720.72 1941.53 In this regard the management has informed that the Transferor Company 1, 2 & 3 which are going to merge with Transferor Company 4 & further the said Transferor Company 4 is merging with Transferee Company 2. Therefore they have not adopted the Asset Valuation method in the first Amalgamation as that would lead to recoding of consideration & immediate cancellation of shares on merger of Transferor Company 4 with Transferee Company 2 in the se ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mpanies in respect to its name of the project, nature of project, ownership, area/location, status, valuation etc are given as under:- S. No Property No Name & Nature of the Project The owner Company Areas (in Acres) Location Status of the property Valuation (Rs. In crores) 1 5 Primary school North Star Towers Pvt. Ltd. 0.98 Sector 48, Gurgaon Plot 4.41 2 6 Nursery school North Star Towers Pvt. Ltd. 0.2 Sector 48, Gurgaon Plot 0.94 3 7 Nursery Home North Star Towers Pvt. Ltd. 0.47 Sector 48, Gurgaon Plot 2.16 4 13 Sec 83 GH-I/Group Housing A & D Estates Pvt. Ltd. 11.45 Sector 83, Gurgaon Vacant Land 164.38 5 14 Sec 83 GH-II/ Group Housing A & D Estates More Build Tech Pvt. Ltd. Goldline Build Tech Pvt. Ltd. & Style Towers Pvt. Ltd. 11.42 Sector 83, Gurgaon Vacant Land 178.25 6 15 Sec 83-CI / Commercial A & D Estates Pvt. Ltd. & Goldline Build Tech Pvt. Ltd. 14.7 Sector 83, Gurgaon Vacant Land 209.72 7 16 Sec 83-C 2/ Commercial A & D Estates Pvt. Ltd. 8.61 Sector 83, Gurgaon Vacant Land 118.71 8 18 Commercial / Agricultural Land North Star Towers P Ltd. North Star Apartments Pvt. Ltd. & Matrix Bu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of Hon'ble Supreme Court in the decision of Hindustan Lever Employees Union v/s Hindustan lever Ltd. & others (1995) 83 Company Case 30. The said valuation report should have been placed in the Board Meeting of the Companies as well as in the General Meeting for the approval of the members and same should be placed before the Hon'ble High Court of Punjab & Haryana while filing the petition of Amalgamation along with Scheme of Amalgamation. Therefore, in light of above said circumstances, this Scheme of Amalgamation is insufficient & incorrect to purpose the purchase consideration between the companies under Amalgamation. In the absence of Independent Valuation Report & basis of calculation of purchase consideration in the form of issuing of Equity & Preference shares in the Scheme of Amalgamation, the Board of Directors has taken the Fairness Opinion Report from the M/s SSPA & Co., Chartered Accountants, Gurgaon dated 12/08/2013 to justify the basis of calculation of purchase consideration prepared by the management. In this regard, we have noticed that the M/s SSPA & Co. (Chartered Accountants), Gurgaon has given their Fairness Opinion Report only on the basis of managem ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gamation is clearly prejudicial to the interest of members. 4(6) Legally Incorrect modification to the Scheme of Amalgamation (second motion petition) only filed by the companies In first motion petition (C.P.No.155 of 2013), the company has filed Scheme of Amalgamation, minutes of Board meetings, consent of the shareholders on affidavits, consents of creditors, approval/consent of the financial institutions & affidavits of the directors and all necessary documents for approval of the Scheme of Amalgamation. The said first motion petition was allowed by this Hon'ble High Court on 20/12/2013 with Purchase Consideration for issue of: 33,16,000 equity shares of the face value of Rs. 10/- each at a premium of Rs. 577/- each of Transferee Company no.2 credited as fully paid up to all the equity share holders of the Transferor company no.4 as on the Record date, in proportion of their holding in the Transferor company no.4 and -7000 non-cumulative redeemable preference shares of the face value of Rs. 1000/- each of Transferee Company no 2 credited as fully paid up to all the preference shareholders of the Transferor company no.4, as on Record date, in proportion of their holding ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re the modified second motion petition cannot be legally different from first motion petition which was already approved by the Hon'ble High Court on 20/12/2013. Moreover, the contentions of company in said modification that it is typographical error in the clause 23.1.1 of the Scheme of Amalgamation is also incorrect because no such basis of the said calculation of shares under purchase consideration has been given in the Scheme of Amalgamation from which this typographical error has been occurred under modified second motion petition with Hon'ble High Court. In our opinion, such typographical error has not been occurred while drafting the first motion & second motion petitions. However, it was a mistake in the calculation of purchase consideration. There is a difference of Rs. 1753.75 crore (1949.10 crore minus 195.35 crore) between the purchase consideration mentioned in lieu of issuing the shares in the first motion petition & modified second motion petition. In these circumstances, to rectify the mistake by the management; the revised petition under first motion to be filed with the Hon'ble High Court with the modified Scheme of Amalgamation alongwith all revised ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of Revenue, Members & the public at large." It is evident that serious objections have been raised by the Official Liquidator to the Scheme of Amalgamation. The petitioner in turn has filed an affidavit assuring compliance of the statutory provisions of the Income Tax Act and adhering to the guidelines of the RBI. The Official Liquidator apart from raising objections to the Scheme which have been extracted hereinabove has opposed the motion as sought for by the Companies seeking Amalgamation. Learned counsel for the respondents responding to the objections of the Official Liquidator has placed reliance on judgment of the Hon'ble Supreme Court in case titled as Miheer H Mafatlal vs. Mafatlal Industries Ltd. reported as (1997) 1 SCC 579 where it has been observed as follows:- "In view of the aforesaid settled legal position, therefore, the scope and ambit of the jurisdiction of the Company Court has clearly got earmarked. The following broad contours of such jurisdiction have emerged: 1 The sanctioning court has to see to it that all the requisite statutory procedure for supporting such a Scheme has been complied with and that the requisite meeting as contemplated by Section ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sanction such a Scheme on that ground as it would otherwise amount to the Court exercising appellate jurisdiction over the Scheme rather than its supervisory jurisdiction. The aforesaid parameters of the scope and ambit of the jurisdiction of the Company Court which is called upon to sanction a Scheme of Compromise and Arrangement are not exhaustive but only broadly illustrative of the contours of the Court's jurisdiction." Reliance has also been placed upon a decision rendered by this Court in Company Petition no. 25 of 2014 connected with Company Petition no.166 of 2013 in the Scheme of Amalgamation between Ludhiana Holdings Limited with Oswal Woolens Mills where this Court observed as follows:- "19. Having gone through the Scheme of Amalgamation and taking into consideration the views of the Regional Director and the Official Liquidator, the resolutions passed by the Board of Directors, the consents given by the shareholders of the Transferor Company, and the unanimous approval of the Scheme by the shareholders, secured creditors and unsecured creditors of the Transferee Company and the submissions made by the learned counsel for the petitioner companies, I find no reason to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... anies who seek merger/Amalgamation for the complete support of the participants of the affairs of the Company. For this reason the objections of the Official Liquidator in this regard opposing the motion are rejected. For the aforesaid reasons and upon consideration of the entire material and keeping in view the provisions of Section 391 to 394 of the Companies Act and upon consideration of the reports of the Regional Director to the Northern Region, Ministry of Corporate Affairs, Noida and the Official Liquidator as also the affidavit that there are no investigation or proceedings pending against the constituent Companies to the Scheme on Amalgamation under Section 235 and 251 of the Companies Act, the Scheme of Amalgamation is hereby sanctioned and as a result thereof the assets and liabilities of the Transferor Companies 1, 2, 3 and 4 shall stand vested in the Transferee Company no.2 and the Transferor Companies shall be dissolved without being wound up. The Scheme shall be binding on the participants Companies and therefore, respective shareholders, creditors and all concerned. Let a formal order of sanction of the Scheme of Amalgamation be drawn up in accordance with law an ..... 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