Allowed

Mark Project Private Limited (Mpspl) v. -

Bombay HC31 Oct 2014CSP/351/2014

Case brief

AI extract

What is this about?

The Bombay High Court sanctioned the Scheme of Amalgamation of six Reliance subsidiary companies with Reliance Industrial Investments And Holdings Limited. The court found the scheme fair and reasonable, accepted undertakings regarding tax and accounting compliance, and made the petitions absolute upon statutory compliance.

What did the court decide?

The Company Scheme Petitions were made absolute and the Scheme of Amalgamation was sanctioned.

Mark Project Private Limited (Mpspl) Vs - — Company and Corporate | Bombay HC (2014)

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IN THE HIGH COURT OF JUDICATURE AT BOMBAY ORDINARY ORIGINAL CIVIL JURISDICTION

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COMPANY SCHEME PETITION NO.350 OF 2014

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CONNECTED WITH

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COMPANY SUMMONS FOR DIRECTION NO.270 OF 2014

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Reliance Gas Corporation Limited …Petitioner Company (First Transferor Company)

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AND

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COMPANY SCHEME PETITION NO.351 OF 2014

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CONNECTED WITH

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COMPANY SUMMONS FOR DIRECTION NO.271 OF 2014

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Mark Project Services Private Limited … Petitioner Company (Second Transferor Company)

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AND

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COMPANY SCHEME PETITION NO. 352 OF 2014

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CONNECTED WITH

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COMPANY SUMMONS FOR DIRECTION NO.272 OF 2014

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Reliance Security Solutions Limited

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… Petitioner Company (Third Transferor Company)

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AND

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COMPANY SCHEME PETITION NO. 353 OF 2014

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CONNECTED WITH

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COMPANY SUMMONS FOR DIRECTION NO.273 OF 2014

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Reliance Industries Investment and … Petitioner Company Holding Limited (Fourth Transferor Company)

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AND

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COMPANY SCHEME PETITION NO. 354 OF 2014

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CONNECTED WITH

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COMPANY SUMMONS FOR DIRECTION NO.274 OF 2014

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GenNext Innovation Ventures Limited … Petitioner Company (Fifth Transferor Company)

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AND

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COMPANY SCHEME PETITION NO. 355 OF 2014

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CONNECTED WITH

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COMPANY SUMMONS FOR DIRECTION NO.275 OF 2014

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Reliance Corporate Services Limited … Petitioner Company (Sixth Transferor Company)

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In the matter of the Companies Act, 1956 and the Companies Act, 2013, as applicable;

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-And-

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In the matter of Sections 391 to 394

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of the Companies Act, 1956;

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-And-

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In the matter of the Scheme of

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Amalgamation of

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(1) Reliance Gas Corporation Limited (“RGCL”)

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(2) Mark Project Services Private Limited (“MPSPL”)

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(3) Reliance Security Solutions Limited (“RSSL”)

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(4) Reliance Industries Investment and Holding Limited (“RIIHL-2”)

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(5) GenNext Innovation Ventures Limited (“GIVL”)

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And

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(6) Reliance Corporate Services Limited (“RCSL”) (Collectively, the “Transferor Companies”) with

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(7) Reliance Industrial Investments And Holdings Limited (“RIIHL”) (the “ Transferee Company”)

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CALLED FOR HEARING

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Advocate Mr. Arif Doctor i/b M/s. Junnarkar & Associates, Advocates for the Petitioner Companies in all the Petitions.

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Mr. S. Ramakantha, Official Liquidator, in CSP Nos. 350 to 355 of 2014.

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Mrs. S.V. Bharucha with Mr. P.S. Jetley i/b Mr. H.P. Chaturvedi for Regional Director in all the Petitions.

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CORAM : S.J. Kathawalla, J. DATE : 31^st October, 2014

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P.C:-

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Heard learned Counsel for parties. No objector has come before the Court to oppose the Scheme and nor has any party controverted any averments made in the Petitions.

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The sanction of this Court is sought under Sections 391 to 394 of the Companies Act, 1956 to a Scheme of Amalgamation of Reliance Gas Corporation Limited(“RGCL”), Mark Project Services Private Limited(“MPSPL”), Reliance Security Solutions Limited(“RSSL”), Reliance Industries Investment and Holding Limited(“RIIHL-2”), GenNext Innovation Ventures Limited(“GIVL”) and Reliance Corporate Services Limited(“RCSL”) (collectively the “Transferor Companies”) with Reliance Industrial Investments And Holdings Limited (“RIIHL”) (the “Transferee Company”).

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The learned Counsel for the Petitioner Companies states that the First Transferor Company is engaged in the business of providing services for marketing and selling natural gas, the Second Transferor Company is engaged in the business of sports activities, the Third Transferor Company is engaged in providing consultancy, design, engineering, program management, execution and support services for advanced technology- driven Safety, Security and Automation programs and projects in the urban, home and homeland markets, the Fourth Transferor Company is engaged in the business of trading in electronic goods and holds investments, the Fifth Transferor Company is engaged in the business of providing consultancy and trusteeship services and the Sixth Transferor Company is engaged in the business of providing consultancy services and the Transferee Company holds investments and is engaged in the business of sale of petroleum products. The benefits of the proposed Scheme of Amalgamation are that all the Transferor Companies are wholly owned subsidiaries of the Transferee Company. The present activities and businesses of all the Transferor Companies can be conveniently combined with the business of the Transferee Company. The amalgamation will achieve economy, better administration and

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efficiency of operations. The amalgamation will achieve reduced administrative costs, avoid duplication and result in internal economies and optimize profitability. The amalgamation will reduce multiple companies by consolidating the companies into a single larger entity.

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All the Transferor Companies and the Transferee Company have approved the Scheme of Amalgamation by passing Board Resolutions, which are annexed to the respective Company Scheme Petitions.

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The Counsel for the Petitioner Companies states that all the Transferor Companies and the Transferee Company have a positive net worth and all the Transferor Companies are wholly owned subsidiaries of the Transferee Company and no new shares of the Transferee Company are to be issued to the shareholders of the Transferor Companies and in view of the Judgement dated 31^st January, 2001 in the case of Mahaamba Investments Limited Vs. IDI Limited [reported in (2001) 105 Company Cases Pg. 16], and that there will be no re-organisation of the share capital of the Transferee Company and the interest of shareholders and creditors of the Transferee Company will not be affected, hence the filing of a summons for direction and separate petition under Sections 391 to 394 of the Companies Act, 1956 by Reliance Industrial Investments And Holdings Limited, the Transferee Company, was dispensed with by Orders dated 25^th April 2014 passed in Company Summons for Direction Nos. 270 to 275 of 2014.

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Learned Counsel for the Petitioner Companies further states that the Petitioner Companies have complied with all directions passed in Company Summons for Direction and that the Company

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Scheme Petitions have been filed in consonance with the Orders passed in the said Company Summons for Direction.

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

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The Regional Director has filed an Affidavit on 17^th October 2014 stating therein that save and except as stated in para 6(a) & (b), it appears that the Scheme is not prejudicial to the interest of shareholders and public. In Para 6 of the said Affidavit, it is stated that:

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“a) Clause 12.5 of the Scheme provides for accounting adjustment. In this regard, it is submitted that in addition to compliance of AS-14 Transferee Company shall pass such accounting entries as may be necessary in connection with the scheme to comply with other applicable Accounting Standard such as AS-5, etc.

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b) The Income Tax Department vide its letter dated 23/09/2014 forwarded the comments made by Dy. Commissioner of Income Tax- 3 (3), Mumbai with respect to the Transferee Company. Copy of the said letter is annexed hereto and marked as Exhibit-„D‟. The given comments are as under:-

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“i) It is clear that all pending proceedings against the Transferor Company shall be continued against the Transferee Company. Therefore, the scheme should be without prejudice to the rights of the Income Tax Department and the Income Tax Department is free to

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proceed against the Transferee Company for all its proceedings.

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ii) At the moment this Scheme is not being examined with reference to the taxation aspect vis-à-vis other such Scheme/s, if any. In future, if it is discovered that this Scheme or similar such schemes are in any way acting as a device for tax-avoidance then Department will be at liberty to initiate the appropriate course of action as per law.

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iii) The Income Tax Department will be free to examine the aspect of any tax payable as a result of the Scheme and in case it is found that the Scheme of Arrangement ultimately results in tax avoidance or is not in accordance to the amalgamation provisions of the Income Tax Act then the Department will be at liberty to initiate the appropriate course of action as per law.

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iv) It is further requested that the rights of the Income Tax Department should remain intact to take out appropriate proceedings regarding raising of any tax demand against the transferor (petitioner company) at any future date and these rights should not be adversely affected in view of the sanction of the Scheme.

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In this regard, the Deponent respectfully submits that the Tax issue if any arising out of this scheme shall be subject to final decision of Income Tax Authority and approval of the Scheme by the Hon‟ble High Court may not deter the Income Tax Authority to scrutinize the tax returns filed by the Transferee Company after giving effect to the amalgamation. The decision of the Income Tax Authority is binding on the Transferee Company.”

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With respect to Para 6(a) of the Affidavit of the Regional Director, the Learned Counsel for the Petitioner Companies undertakes that it shall pass such accounting entries which are necessary in connection with the Scheme of Amalgamation to comply with any other applicable Accounting Standards.

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With respect to Para 6(b) (i) to (iv) of the Affidavit of the Regional Director, the Learned Counsel for the Petitioner Companies

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submits that the Petitioner Companies are bound to comply with all applicable provisions of 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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The Ld. Counsel 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 given by the Advocate for the Petitioner Companies. The undertakings given on behalf of the Petitioner Companies and the Transferee Company as mentioned above are accepted.

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The Official Liquidator has filed his Report on 29^th October 2014 in Company Scheme Petitions Nos. 350 to 355 of 2014 stating therein that the affairs of the Transferor Companies have been conducted in a proper manner and that all the Transferor Companies 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 Petitions are made absolute in terms of prayer clauses (a) to (j) of Company Scheme Petitions Nos. 350 to 355 of 2014 respectively.

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The Petitioner Companies are directed to file a copy of this Order alongwith a copy of the Scheme of Amalgamation with the

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concerned Registrar of Companies, electronically, alongwith E-Form 21/ INC 28 in addition to the physical copy, as per relevant provision of the Companies Act, 1956 or Companies Act, 2013, whichever is applicable.

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The Petitioner Companies to file 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 sixty days from the date of the Order.

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The Petitioner Companies in all Company Scheme Petitions to pay costs of Rs. 10,000/- each to the Regional Director, Western Region, Mumbai and to the Official Liquidator, High Court, Bombay respectively. 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 alongwith Scheme, duly authenticated by the Company Registrar, High Court (O.S.).

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(S.J. Kathawalla, J.)

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Mark Project Private Limited (Mpspl) v. -

Case brief

What is this about?

What did the court decide?

Mark Project Private Limited (Mpspl) v. -

Case brief

What is this about?

What did the court decide?

What the court decided

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