Allowed

Rizvi Land Developments Private Limited v. -

Bombay HC5 Sept 2014CSP/275/2014

Case brief

AI extract

What is this about?

The High Court at Bombay sanctioned a Scheme of Amalgamation between Rizvi Land Developments Private Limited and Rizvi Estates and Hotels Private Limited under Sections 391-394 of the Companies Act, 1956. The court accepted undertakings regarding accounting standards, tax compliance, and future amendments, dismissing creditor objections that the scheme did not affect their rights, and dismissed th

What did the court decide?

The Company Scheme Petition was made absolute in terms of prayer clauses (a) to (c); the scheme was sanctioned.

Rizvi Land Developments Private Limited Vs - — Specific Performance | Bombay HC (2014)

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IN THE HIGH COURT OF JUDICATURE AT BOMBAY

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ORDINARY ORIGINAL CIVIL JURISDICTION

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COMPANY SCHEME PETITION NO. 275 OF 2014. CONNECTED WITH COMPANY SUMMONS FOR DIRECTION NO. 236 OF 2014.

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

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AND

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In the matter of Sections 391 to 394 of the Companies Act, 1956;

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AND

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In the matter of Scheme of Amalgamation of RIZVI LAND DEVEPOPMENTS PRIVATE LIMITED, the Transferor Company with RIZVI ESTATES AND HOTELS PRIVATE LIMITED, the Transferee Company and their respective Shareholders and Creditors

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RIZVI LAND DEVEPOPMENTS ) PRIVATE LIMITED, a company incor) porated under the Companies Act, ) 1956 having its Registered Office at ) Rizvi House 1st Floor Hill Road, ) Bandra (West), Mumbai – 400050, ) Maharashtra, India ) …Petitioner Company.

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Called for hearing

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Mr. Chandrakant Mhadeshwar i/b Milind Nakashe, Advocate for the

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Petitioner

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Mr. S. Ramakantha, Official Liquidator, present

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Mr. Purnima Awasthi i/b Dr. H.P.Chaturvedi for Regional Director.

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Jhangiani, Narula & Associates Advocate for M/s. La Cera Mall Pvt. Ltd. Unsecured Creditors

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CORAM: S. J. Kathawalla, J.

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DATE : 05^th September, 2014

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Page 1 of 7

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PC:

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Heard learned counsel for the parties.

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The sanction of the Court is sought to a Scheme of Amalgamation of RIZVI LAND DEVEPOPMENTS PRIVATE LIMITED, the Transferor Company with RIZVI ESTATES AND HOTELS PRIVATE LIMITED, the Transferee Company and their respective Shareholders and Creditors, under Sections 391 to 394 of the Companies Act, 1956.

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Learned Counsel for the Petitioners states that the Transferor Company carrying Construction business and Transferee Company carrying on the business of construction and development of real estate. The proposed scheme of Amalgamation will have the benefit that Consolidation of the business operations of the Transferor Company and Transferee Company by way of amalgamation would lead to a more efficient utilization of capital and create a stronger base for future growth of the amalgamated entity and Greater efficiency in cash management of the amalgamated entity, and unfettered access to cash flow generated by the combined business which can be deployed more efficiently to fund growth opportunities and Benefit of operational synergies to the combined entity and greater leverage in operations planning and process optimization and Cost savings are expected to flow from more focused operational efforts, rationalization and standardisation of administrative expenses .

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Page 2 of 7

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Transferor Companies and Transferee Company has approved the said Scheme of Amalgamation by passing the Board Resolutions which are annexed to the Company Scheme Petition.

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The learned Advocate for the Petitioner further states that, Petitioner Company have complied with all the directions passed in Company Summons for Directions and that the Company Scheme Petition have been filed in consonance with the orders passed in respective Company Summons for Directions and seeks sanction to the said proposed Scheme of Amalgamation.

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The learned counsel appearing on behalf of the Petitioner have stated that the Transferor Company 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 undertake to comply with all statutory requirements if any, as required under the Companies Act, 1956 / 2013 and rule made there under whichever is applicable. The said undertaking is accepted.

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The Official Liquidator has filed his report on 23^rd July, 2014 stating 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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The Regional Director has filed an Affidavit on 31^st July, 2014 stating therein, save and except as stated in paragraph 6, it appears that the

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Page 3 of 7

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Scheme is not prejudicial to the interest of shareholders and public. In paragraph 6 of the said Affidavit, it is stated as under.

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‘6. That the Deponent further submits that:-

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(a) Clause 15.7 of Scheme provides for adjustment for differences in Accounting Policies between Transferor company and Transferee company. In this regard, it is submitted, that Transferee company shall pass such accounting entries which are necessary in connection with Scheme to comply with other applicable Accounting Standard such as AS-5, etc.

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(b) It is respectfully submitted. that the tax implication, if any, arising out of the 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 Authority to scrutinize the tax returns filed by the Transferee Company after giving effect to this scheme of amalgamation, The decision of the Income Tax Authority is binding on the Transferee Company

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(c) Clause 17 of the Scheme provides for Modification of Scheme wherein the Board of Directors of the Transferor Company and Transferee Company have been authorized 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 Director without obtaining farther approval from the Hon'ble High Court. The Transferor and Transferee Company shall be directed to undertake to this effect.

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So far as the observation in paragraph 6 (a) of the Affidavit of Regional Director is concerned, the Petitioner /Transferee Company through its counsel undertakes that in addition to compliance of Accounting Standard 14, the Transferee Company will pass such accounting entries which are necessary in connection with this Scheme to comply with any other Accounting Standards.

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So far as the observation in paragraph 6(b) of the Affidavit of Regional Director is concerned, the Petitioner Companies are bound to

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Page 4 of 7

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comply with all applicable provision of Income Tax Act, and all tax issues arising out of Scheme will be met and answered in accordance with law.

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So far as the observation in paragraph 6(c) of the Affidavit of Regional Director is concerned, Counsel for the Petitioner Company states that Clause 17 of the Scheme gives power to Board of Director of the Petitioner Company to amend any part of the Scheme. The Learned Counsel for the Petitioner Company on behalf of the Petitioner Company states 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 17 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. Chandana Muthu, Joint Director Legal in the office of the Regional Director, Ministry of Corporate Affairs, Western Region, Mumbai states that they are satisfied with the undertaking given by the Advocate for the Petitioner Companies. The undertaking given by the petitioner companies are accepted.

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Mr. Pankaj Shah, Advocate for MVM Buildtech and Jhangiani, Narula & Associates, advocate for the M/s. La Cera Mall Pvt. Ltd. have raised their respective objections stated that the dues of aforesaid creditors have not paid by the Petitioner/Transferee Company. The Counsel for the Petitioner states that the Scheme does not affect the rights of the Creditors including creditors mentioned herein above and no Compromise or Arrangement is called for with any of the Creditors. It is open to the unsecured Creditors Page 5 of 7

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including MVM Buildtech and M/s. La Cera Mall Pvt. Ltd. to pursue their legal remedies against the Transferee Company as may be advised for recovery of their dues. The Transferee Company shall abide by the final outcome of the said legal remedies if any, in favour of the Creditors.

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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 is made absolute in terms of prayer clauses (a) to (c).

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The Petitioner Companies to lodge a copy of this order and the Scheme duly authenticated by the Company Registrar, High Court (O.S.), 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 the order.

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Petitioners are 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 21 or INC 28 in addition to physical copy as per the relevant provisions of the Companies Act, 1956/2013 whichever is applicable.

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The Petitioner Companies to pay costs of Rs.10,000/- each to the Regional Director, Western Region, Mumbai and to the Official Liquidator,

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Page 6 of 7

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High Court, Bombay. Costs to be paid within four weeks from the 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 Scheme duly authenticated by the Company Registrar, High Court (O. S.), Bombay.

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(S. J. Kathawalla, J.)

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Page 7 of 7

Rizvi Land Developments Private Limited v. -

Case brief

What is this about?

What did the court decide?

Rizvi Land Developments Private Limited v. -

Case brief

What is this about?

What did the court decide?

What the court decided

A compact analysis

Issues for consideration

Statutes considered

Parties & counsel

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