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TMI Blog2007 (1) TMI 158X X X X Extracts X X X X X X X X Extracts X X X X ..... only the above question which has been referred to this court by the Tribunal. The material facts of the case appear from the referring order of the Tribunal and which are as follows: The Orissa Mining Corporation (hereinafter called "the corporation"), a Government of Orissa undertaking, the assessee and the applicant before the Income-tax Appellate Tribunal (ITAT), is engaged in the mining of different kinds of ores. The corporation had a wholly owned subsidiary named OMC Alloys Ltd. By a Gazette notification dated August 30, 1991, issued by the Government of India, Ministry of Law, Justice and Company Affairs, the subsidiary company was merged with the corporation in public interest as contemplated under section 396 of the Companies Act. Clause 4(2) of the said notification stipulates as follows: "4. Amalgamation of the companies.-(l)..... (2) For accounting purposes, the amalgamation shall be effected with reference to audited accounts and balance-sheets as on April 1, 1986, of the two companies and the transactions thereafter shall be pooled into a common account, the dissolved company shall not be required to prepare its final accounts as on any later date and the res ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... his court finds that the order of amalgamation was made by the Central Government under section 396(1) and (2) of the Companies Act, 1956 in public interest and for the purpose of ensuring co-ordination in policy, efficient administration and economic expansion. The applicant-company was a Government of Orissa company and OMC Alloys Ltd. was its subsidiary. As such, the amalgamation between the two companies being in public interest was approved by the Central Government as stated above. Learned counsel for the Revenue very much relied on the expression "appointed day" in the order of amalgamation dated August 30, 1991. Clause 2(a) of the order defines" appointed day" which is as follows: "2. Definitions.- In this order, unless the context otherwise requires. (a) 'appointed day' means the date on which this order is notified in the Official Gazette." But the effect of amalgamation of the company is dealt with separately in clause 4(1) and 4(2) of the amalgamation order. Clause 4(2) has already been set out above. Learned counsel for the petitioner very much relied on clause 4(2) and urged that for the accounting purpose the amalgamation shall be effected with reference to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Marshall Sons and Co. (India) Ltd. v. ITO reported in [1997] 223 ITR 809. That was also a case of amalgamation. Learned counsel for the petitioner very much relied on the principles laid down in the judgment to the effect that every scheme of amalgamation of companies has necessarily to provide a date with effect from which the amalgamation/transfer shall take place. The apex court also held that while sanctioning the scheme, it is open to the company court to modify the said date and prescribe such date of amalgamation/transfer as the company court or the Central Government may think appropriate. But where no other date is prescribed, but merely the scheme is sanctioned, the date of amalgamation/date of transfer is the date specified in the scheme as the transfer date. In the case of Marshall Sons and Co. (India) Ltd. in December, 1982, the subsidiary company passed a resolution proposing to amalgamate with the holding company with effect from January 1, 1982. Then an application was made to the company court and pursuant to its order a meeting of shareholders was held on February 11, 1983, wherein a resolution was passed approving amalgamation of the subsidiary company with the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... orders of the court before the Registrar of Companies, the allotment of shares, etc., may have all taken place subsequent to the date of amalgamation/transfer, yet the date of amalgamation in the circumstances of this case would be January 1, 1982." The hon'ble Supreme Court while coming 'to the said conclusion also relied on the decision of the Privy Council in the case of Raghubar Dayal v. Bank of Upper India Ltd., reported in AIR 1919 PC 9; [1918-19] 46 IA 135 (PC). Learned counsel also submits in the instant case that the scheme of amalgamation clearly shows that transfer date as April 1, 1986, and in paragraph 3 of the scheme, which has been sanctioned, clearly provide as under: "3. 'transfer date', means the 1st day of April, 1986." It is not in dispute that the said scheme has been approved by the Central Government without any change of transfer date. Therefore, the time which has elapsed between the scheme and its approval without a different date is not relevant in deciding the date of amalgamation. In the decision of the Privy Council in Raghubar Dayal, AIR 1919 PC 9; [1918-19] 46 IA 135 (PC), the court considered similar questions. In that case, the Privy Counci ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fied in the Official Gazette. It was also stated that the main order of amalgamation dated August 30, 1991, was passed under the provisions of section 396 of the Companies Act and such order was placed before Parliament under section 396(5) but the order of clarification has not been placed before Parliament and, therefore, it has to be ignored. Learned counsel for the Revenue also submitted that in all the cases of definitions the expression, "unless the context otherwise requires" finds place. Therefore, there is no substance in this case. Learned counsel further submitted that the statutory definition cannot be ignored. It was also submitted that clause 4(2) does not override clause 4(1) of the amalgamation order as the said clause 4(2) does not start with a non obstante clause. Learned counsel for the Revenue relied on a decision of the Supreme Court in the case of General Radio and Appliances Co. Ltd. v. M.A. Khader reported in [1986] 60 Comp Cas 1013 (SC). On the basis of the said judgment, it was contended that subsidiary companies exist as separate entities from April 1, 1986, to August 30, 1991. Learned counsel also submitted that clause 8 of the amalgamation order is a pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sport Agency [2005] 123 Comp Cas 226 has no relevance to the facts and circumstances of the present case. In the case of Ashok Transport Agency [2005] 123 Comp Cas 226, a suit was filed against M/s. OMC Alloys Ltd. on August 1, 1986. M/s. OMC Alloys Ltd. filed a written statement on October 14, 1997. Thereafter, the suit was dismissed for default. Then the plaintiff M/s. Ashok Transport Agency filed an application for restoration of the suit. The said prayer for restoration was not opposed and the application for restoration was heard and allowed. Thereafter, the suit was proceeded ex parte against M/s. OMC Alloys Ltd. Neither OMC Alloys Ltd. nor the Government of Orissa informed the court about amalgamation of the OMC Alloys Ltd. with the said corporation and as such the decree was sought to be executed. The executing court allowed the same to be executed against the Government of Orissa and TISCO. Against such order, the matter went before the hon'ble Supreme Court. In the background of these facts, the Supreme Court held that there is no dispute about the amalgamation of the two companies and the Central Government passed the order of amalgamation under section 396 of the Comp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... text requires a different meaning. The exact words of the apex court are as follows: "This implies that a definition, like any other word in a statute, has to be read in the light of the context and scheme of the Act as also the object for which the Act was made by the Legislature." This has been further elucidated in paragraphs 11. and 12 of the judgment in the following words: "11. While interpreting a definition, it has to be borne in mind that the interpretation placed on it should not only be not repugnant to the context, it should also be such as would aid the achievement of the purpose which is sought to be served by the Act. A construction which would defeat or was likely to defeat the purpose of the Act has to be ignored and not accepted. 12. Where the definition or expression, as in the instant case, is preceded by the words 'unless the context otherwise requires', the said definition set out in the section is to be applied and given effect to but this rule, which is the normal rule may be departed from if there be something in the context to show that the definition could not be applied." Following the aforesaid principles, this court cannot hold that the date ..... X X X X Extracts X X X X X X X X Extracts X X X X
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