Allowed

Infrasofttech India Limited v. -

Bombay HC5 Sept 2014CSP/208/2014

Case brief

AI extract

What is this about?

The High Court of Bombay sanctioned a Scheme of Amalgamation of InfrasoftTech India Limited with Infrasoft Technologies Limited under Sections 391-394 of the Companies Act, 1956, accepting undertakings to address objections from the Regional Director and Official Liquidator regarding surplus, accounting, and tax compliance.

What did the court decide?

Company Scheme Petition made absolute with directions to lodge order with Registrar and pay costs.

Infrasofttech India Limited Vs - — Company and Corporate | Bombay HC (2014)

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IN THE HIGH COURT OF JUDICATURE AT BOMBAY ORDINARY ORIGINAL CIVIL JURISDICTION COMPANY SCHEME PETITION NO. 208 OF 2014

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CONNECTED WITH

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COMPANY SUMMONS FOR DIRECTION NO. 80 OF 2014

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In the matter of Companies Act, 1956 (1 of 1956);

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AND

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In the matter of Sections 391-394 and other applicable provisions of the Companies Act, 1956;

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AND

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In the matter of Scheme of Amalgamation of InfrasoftTech India Limited with Infrasoft Technologies Limited.

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InfrasoftTech India Limited a ) Company incorporated under the ) provisions of the Companies Act, ) 1956 and having its Registered ) Office at Unit No. 86 & 87, 1^st Floor, ) SDF III, SEEPZ, Andheri (East), ) Mumbai 400096, State of ) .......... Petitioner Company Maharashtra.

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Called for Hearing

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Mr. Suneet Barve i/b Malvi Ranchoddas & Co. for the Petitioner Company

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Mr. P.S. Gujar i/b Dr. H.P. Chaturvedi for Regional Director Mr. S. Ramakantha, Official Liquidator, present Mr. NameshDutt P. Sharma for Bharat Sanchar Nigam Limited

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Coram: S.J. Kathawalla, J.

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Date: 5^th September, 2014

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Heard learned counsel for parties.

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The Learned Counsel for the Petitioner states that M/s Bharat Sanchar Nigam Limited has raised an objection in respect of payment of bills which are due and payable

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by the Transferor Company. The Learned Counsel for objector states that the amount which is due and payable by the Transferor Company will be paid by the Transferee Company as and when due and undertaking may be recorded accordingly. The Learned Counsel appearing for Petitioner Company on behalf of Transferee Company undertakes that the bills which are due and payable by the Petitioner/Transferor Company, if any, will be paid by the Transferee Company. The said undertaking is accepted.

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The sanction of the Court is sought under Sections 391 to 394 of the Companies Act, 1956, to a Scheme of Amalgamation of InfrasoftTech India Limited with Infrasoft Technologies Limited.

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The Learned Advocate for the Petitioner Company states that the Petitioner Company and the Transferee Company are engaged in the business of planning, designing, developing, improving, marketing or otherwise distributing, selling, licensing, installing, altering, importing, exporting or otherwise dealing in all software, hardware and programme of any kind.

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The amalgamation would result into greater integration and greater financial strength and flexibility for the amalgamated entity, which would result in maximising overall shareholder value, and will improve the competitive position of the combined entity. The amalgamation would result in improved organizational capability and leadership due to synergy of operations and from the pooling of human capital who have the diverse skills, talent and vast experience to compete successfully in an increasingly competitive industry. The amalgamation would also result in greater leverage in operations planning and process optimization and enhanced flexibility in business. The amalgamation would also result in cost savings from more focused operational efforts, rationalization, standardisation and simplification of business processes, productivity improvements, improved procurement, and the elimination of duplication, and rationalization of administrative expenses. The amalgamation would also result in strengthened leadership in the industry, in terms of the asset base, revenues, diverse product range, production volumes and market share of the combined entity.

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The Petitioner Company as well as the Transferee Company have approved the said Scheme of Amalgamation by respectively passing Board Resolution which are annexed to the Company Scheme Petition.

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The Learned Advocate for the Petitioner further states that InfrasoftTech India Limited, the Petitioner Company is wholly owned subsidiary of Infrasoft Technologies Limited, the Transferee Company and no new shares are required to be issued to the members of the Petitioner Company. In the circumstances and in view of the decision of this Court in the case of Mahaamba Investments Limited v. IDI Limited [2001 (Vol. 105) Company Cases, 16], the filing of a separate Company Summons for Direction and Company Scheme Petition by the Transferee Company for sanction of the proposed Scheme was dispensed with by order dated 21^st February 2014 in Company Summons for Direction No. 80 of 2014 filed by the Petitioner Company.

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The learned Advocate for the Petitioner states that the Petitioner Company has complied with all the directions passed in Company Summons for Direction and that the Petition has been filed in consonance with the orders passed in the Company Summons for Direction.

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The Learned Advocate appearing on behalf of the Petitioner has stated that they have complied with all requirements as per directions of this Court and they have filed necessary Affidavits of compliance in the Court. Moreover, Petitioner Company undertakes to comply with all statutory requirements, if any, as required under the Companies Act, 1956 and 2013 and the Rules made there under, whichever is applicable. The said undertaking is accepted.

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The Regional Director has filed his Affidavit on 3^rd July, 2014, inter alia, stating therein that save and except as stated in paragraphs 6 (a),(b),(c)&(d) of the said Affidavit, it appears that the Scheme is not prejudicial to the interest of shareholders and public. In paragraphs 6 (a),(b),(c) & (d) of the said Affidavit, the Regional Director has stated that:

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6. That the Deponent further submits that,

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(a) Clause 10.4.2.1 of the Scheme states that “if the difference results in a surplus of the net assets over the aggregate of reserves and capital, the same shall be

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credited to an account styled as ‘Amalgamation Reserve Account’. The said account shall be considered as a free reserve and shall form part of the net worth of the Transferee Company”. In this regard, it is submitted that the Surplus, if any, arising out of this Scheme proposed to be transferred to ‘Amalgamation Reserve Account’ of Transferee Company, shall not be treated as Free Reserve of Transferee Company as provided under section 2(29A) of the Companies Act, 1956 read with section 2(43) of the Companies Act, 2013.

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(b) Clause 10.1 of the Scheme states that no adjustment is intended to be made to the book values of the assets and liabilities of the Transferee Company when they are incorporated in the books of account of the Transferee Company except to ensure uniformity of accounting policies. In this regard, it is submitted that the Transferee Company shall pass such accounting entries which are necessary in connection with this Scheme to comply with other Accounting Standard such as AS-5, etc.

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(c) It is respectfully submitted that the tax issue, if any, arising out of this Scheme is subject to final decision of Income Tax Authorities. The approval of the Scheme by this Hon’ble Court may not deter the Income-tax Authorities to scrutinize the tax returns filed by the Companies after giving effect to the Amalgamation. The decision of the Income-tax Authority is binding on the Transferor and Transferee Company.

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(d) Clause 11 of the Scheme provides for Modification of Scheme wherein the Board of Directors of the Transferor Company and Transferee Company have been authorised to make any amendments to the Scheme, if necessary, after the Scheme, is approved by the Hon’ble High Court. Such liberty shall not be exercised by the Board of Directors without obtaining further approval from the Hon’ble High Court. The Transferor Company and Transferee Company shall be directed to undertake to this effect.

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As far as the objection of the Regional Director, Western Region, Mumbai in paragraph 6(a) of his affidavit is concerned, the Learned Counsel appearing for Petitioner on behalf of Transferee Company undertakes that surplus, if any, arising out of the

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Scheme proposed to be transferred to Amalgamation Reserve Account of the Transferee Company, and the same shall not be treated as free reserve of the Transferee Company as provided under section 2(29A) of Companies Act 1956 read with section 2(43) of the Companies Act 2013.

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As far as the objection of the Regional Director, Western Region, Mumbai in paragraph 6(b) of his affidavit is concerned, the Learned Counsel appearing for Petitioner on behalf of Transferee Company undertakes that in addition to accounting treatment given in the scheme, the Transferee Company shall pass such accounting entries which are necessary in connection with this Scheme to comply with any other Accounting Standards.

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As far as the objection of the Regional Director, Western Region, Mumbai in paragraph 6(c) of his affidavit is concerned, the Learned Counsel appearing for Petitioner and on behalf of Transferee Company submit that the Petitioner Company and the Transferee Company are bound to comply with all applicable provisions of the Income Tax Act and all tax issues arising out of the Scheme will be met and answered in accordance with law.

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As far as the objection of the Regional Director, Western Region, Mumbai in paragraph 6(d) of his affidavit is concerned, the Learned Counsel for the Petitioner Company states that Clause 11 of the Scheme gives power to the Board of Directors of the Transferor Company and Transferee Company to amend any part of the Scheme. The Learned Counsel appearing for the Petitioner Company submits that such power to amend the Scheme is subject to prior approval of the High Court. It is therefore clarified that the power vested under Clause 11 of the Scheme will be subject to the approval of the High Court.

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The Learned Counsel for Regional Director on instructions of Mr. M. Chandanamuthu, Joint Director, Legal in the Office of the Regional Director, Ministry of Corporate Affairs, Western Region, Mumbai, states that they are satisfied with the undertakings and submissions made by the Petitioner/Transferor Company through their advocate. In view thereof, the said undertakings are accepted.

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The Official Liquidator has filed his report on 24^th July, 2014, inter alia , stating therein that the affairs of the Transferor Company have been conducted in a proper manner and that the Transferor Company may be ordered to be dissolved.

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From the material on record, the Scheme appears to be fair and reasonable and is not violative of any provisions of law and is not contrary to public policy.

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Since all the requisite statutory compliances have been fulfilled, Company Scheme Petition No. 208 of 2014 filed by the Petitioner Company is made absolute in terms of prayer clauses (a) to (g), (i) and (j).

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The Petitioner Company to lodge a copy of this order and the Scheme duly authenticated by the Company Registrar, High Court, Bombay, with the concerned Superintendent of Stamps, for the purpose of adjudication of stamp duty payable, if any, on the same within 60 days from the date of this order.

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Petitioner is directed to file a copy of this order along with a copy of the Scheme of Amalgamation with the concerned Registrar of Companies, electronically, along with e-Form INC-28, in addition to physical copy, as per the relevant provisions of law.

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The Petitioner to pay costs of this Company Scheme Petition of Rs.10,000/- each to the Regional Director, Western Region, Mumbai and the Official Liquidator, High Court, Bombay. Costs to be paid within four weeks from date of the order.

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Filing and issuance of the drawn up order is dispensed with.

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All concerned regulatory authorities to act on a copy of this order along with the Scheme duly authenticated by the Company Registrar, High Court (O. S.), Bombay.

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(S. J. KATHAWALLA, J.)

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Infrasofttech India Limited v. -

Case brief

What is this about?

What did the court decide?

Infrasofttech India Limited v. -

Case brief

What is this about?

What did the court decide?

What the court decided

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