The High Court approved a Scheme of Amalgamation involving three companies. The court accepted undertakings regarding accounting and tax compliance. The petitions were made absolute.
Company Scheme Petitions 127, 128, and 129 of 2014 were made absolute.
This page shows the compact analysis of this judgement. The full analysis — procedural history, issue-by-issue holdings with ratio and obiter, advocates, and paragraph-level evidence for every claim — is being added to the record in batches and will appear here when this judgement has been through it.
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IN THE HIGH COURT OF JUDICATURE AT BOMBAY ORDINARY ORIGINAL CIVIL JURISDICTION
COMPANY SCHEME PETITION NO.127 OF 2014
CONNECTED WITH
COMPANY SUMMONS FOR DIRECTION NO.828 OF 2013
A.A. Jewellery Private Limited ….Petitioner
WITH
COMPANY SCHEME PETITION NO.128 OF 2014
CONNECTED WITH
COMPANY SUMMONS FOR DIRECTION NO.829 OF 2013
Lucky Star Exports (India) Private Limited
WITH
COMPANY SCHEME PETITION NO.129 OF 2014
CONNECTED WITH
COMPANY SUMMONS FOR DIRECTION NO.830 OF 2013
Rosy Blue (India) Private Limited
In the matter of the Companies Act, 1956
AND
In the matter of Sections 391 to 394 of the Company Act, 1956;
AND
In the matter of the Scheme of Amalgamation of
A.A. Jewellery Private Limited (the “1st Transferor Company”)
AND
Lucky Star Jewellery Exports (India) Private Limited
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(the “2nd Transferor Company”) with Rosy Blue (India) Private Limited. (the “Transferee Company”) AND Their respective Shareholders
Called for hearing:
Mr. Yogesh Adhia, Advocate for the Petitioner. Mr. H.V.Mehta, i/b H.P. Chaturvedi for the Regional Director. Mr. S. Ramakantha for the Official Liquidator
CORAM: S. J. Kathawalla, J. DATE: 11th July, 2014
P.C.
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domestic market. At present, there are no operating activities. The 2nd Transferor Company is also engaged in the business inter alia interalia of manufacturing of Jewellery and the Transferee Company is engaged in the business inter alia sale of diamonds since 1998. The benefit of the Scheme is that the amalgamation of the Transferor Companies with the Transferee Company, which being in a closely aligned line of business as of the Transferor Companies, shall provide greater leverage in its operations planning and enhance operations flexibility. The sound financial background of the Transferee Company makes it viable for it to acquire the Transferor Companies’ manufacturing facilities and capabilities. The proposed amalgamation would thus be beneficial for all the companies. The proposed amalgamation would bring greater integration resulting into better financial strength and operational flexibility, leading to better client services and maximizing overall shareholder value and enable greater efficiency in cash management of the amalgamated entity, and provide unfettered access to cash flow generated by the combined businesses which can be deployed more efficiently for the business purposes, to maximize shareholders value. The proposed amalgamation would help in achieving improved organizational capabilities and leadership, arising from the pooling of human capital that have diverse skills, talent and vast experience to compete successfully in an increasing competitive industry. Consequent to the implementation of the Scheme, the Transferee Company will have a strong financial and operational structure and will be capable of resource mobilization and financial consolidation necessary to withstand the new competitive environment. The Transferee Company will have the benefit of
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synergy and more focused operations, rationalization, standardization and simplification of business process and would help to achieve economies of scale through efficient utilization of resources and facilities as the companies concerned would be able to combine their resources, expand their activities, rationalize and streamline their management, business and finances as well as eliminate duplication of work to their common advantage. This in turn will enhance the share value for the benefit of the shareholders. Considering the above, the proposed amalgamation will enhance financial and growth prospects for the shareholders and organizations connected with the Company. The proposed Scheme of Amalgamation of the Transferor Companies and the Transferee Company is between the companies whose shareholding is closely held. Hence, the proposed Scheme of Amalgamation shall not prejudicially or adversely affect the interest of any person or the public at large. The interests of the existing employees of the Transferor Companies shall be protected with continuity of employment, better utilization of manpower and an opportunity for enhancement of technical knowledge and expertise being provided. The Plant & Machinery and other assets of the Transferor Companies which were underutilized shall be properly, gainfully and efficiently utilized and may be upgraded with new technology. The upgradation of the Plant & Machinery and the induction of new technology into the manufacturing unit would augment the asset base and thereby resulting in the optimal utilization of resources and greater revenue inflow. The proposed amalgamation of the companies will bring administrative and operational rationalization, organizational efficiencies and rationalization in economies of
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scale and more optimal utilization of various resources.
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change in the accounting policy to achieve uniformity in accounting of similar items, will be quantified and adjusted in lines with the prevalent accounting standards and policies. In this regard, it is submitted that the Transferee Company shall pass such accounting entries which are necessary in connections with this Scheme to comply with other Accounting Standards such as AS-5, etc..
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Act, and all tax issues arising out of the Scheme will be met and answered in accordance with law.
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(S. J. Kathawalla, J)
1 issue framed by the court
Whether the Scheme of Amalgamation between Transferor Companies and Transferee Company requires court sanction under Sections 391 to 394 of the Companies Act, 1956.
1 provisions across 1 enactments
A.A. Jewellery Private Limited
Lucky Star Exports (India) Private Limited
Rosy Blue (India) Private Limited
Regional Director
Official Liquidator
S. J. Kathawalla
As recorded by the court registry
Judgements on the same questions, provisions and authorities, from every court
