Allowed

Multiplast Polymer Pvt.Ltd. v. --

Bombay HC16 Sept 2014CSP/45/2014

Case brief

AI extract

What is this about?

The High Court at Bombay considered company scheme petitions for the sanction of a Scheme of Amalgamation involving three private limited companies. The court found that statutory compliances were met, no opposition was raised, and the scheme was fair and reasonable.

What did the court decide?

Company Scheme Petitions Nos. 43, 44, and 45 of 2014 were made absolute. Directions given for stamp duty adjudication, ROC registration, and payment of costs to Regional Director and Official Liquidat

Multiplast Polymer Pvt.Ltd. 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. 43 OF 2014

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CONNECTED WITH

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COMPANY SUMMONS FOR DIRECTION NO. 374 OF 2013

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Soft Clads Laminates Private Limited ….Petitioner Company

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(Transferor Company No. 1)

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AND

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COMPANY SCHEME PETITION NO. 44 OF 2014 CONNECTED WITH

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COMPANY SUMMONS FOR DIRECTION NO. 375 OF 2013

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Aman Multiplast Private Limited ….Petitioner Company

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(Transferor Company No. 2)

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AND

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COMPANY SCHEME PETITION NO. 45 OF 2014

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CONNECTED WITH

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COMPANY SUMMONS FOR DIRECTION NO. 376 OF 2013

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Multiplast Polymer Private Limited ….Petitioner Company

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(Transferee Company )

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In the matter of the Companies Act,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 the Scheme of

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Amalgamation of Soft Clad Laminates Private Limited the Transferor Company

No. 1.

AND

Aman Multiplast Private Limited the Transferor Company No. 2.

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WITH

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Multiplast Polymer Private Limited the Transferee Company.

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Called for Hearing

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Mr. Sharan Jagtiani Counsel alongwith Mr. Sanjay Udeshi and Mr. Darshan Ashar Advocates i/b M/s Sanjay Udeshi & Co, Advocate for the Petitioners.

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Mr. K.R. Choudhari i/b Mr. H.P Chaturvedi for the Regional Director.

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Mr. S. Ramakantha Official Liquidator present in C.S.P. No. 43 and 44 of 2014.

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CORAM: S.J. KATHAWALLA J. DATE : 16^th SEPTEMBER, 2014

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P.C.:

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Heard Counsel for the parties. None appears before the Court to oppose the Scheme nor any party has contraverted any averments made in the petition.

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The sanction of the Court is sought under Sections 391 to 394 of the Companies Act, 1956, to Scheme of Amalgamation of Soft Clad Laminates Private Limited the Transferor Company No. 1 and Aman Multiplast Private Limited the Transferor Company No. 2 with Multiplast Polymer Private Limited the Transferee Company.

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The Learned Counsel for the Petitioners state that the Transferor

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Company No. 1, is engaged in business to manufacture, export, import, distribute or sell in retail different types of paper and to deal in different types of electronic products. The Transferor Company No. 2 is engaged in the business of manufacture of Plastic Blow and injection molded plastic bottle, containers, caps and article for all types of packaging needs. The Transferee Company is engaged in the business of manufacturer of Plastic Blow and injection molded plastic bottle, containers, caps and article for all types of packaging needs.

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The Proposed Scheme of Amalgamation will be beneficial to the Petitioner Companies since the Scheme of Amalgamation will result in cost saving for all the companies as AMPL and SCPL are not carrying out any business activity and their amalgamation with MPPL will result in higher net worth for the amalgamated company and cost savings for the amalgamated Company. The Amalgamated Company will have the benefit of the combined resources of Transferor and Transferee Company i.e. Reserves, investments, and other assets, manpower, finances, customers, distributors, brands etc. The amalgamated Company would be in a position to carry on consolidated operations through optimum utilization of its resources and avoidance of duplication. The Amalgamated Company will be in position to have more efficient and more cost effective management system in view of consolidation of operations and larger size. Also the Transferee Company will be expanding its operations as the future opportunities in this line of business activity are very good. The Amalgamated Company would also have a larger networth base, and greater borrowing capacity, which would provide it a competitive edge over the others, especially in view of the increasing competition due to liberalization and globalization, which will be beneficial in more than one ways to both the Transferor Companies and the Transferee Company and their respective shareholders and creditors, as all the companies plan to meet the competition in more effective way by

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combining their asset base and resources.

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The Petitioner Companies have approved the said Scheme of Amalgamation by passing the Board Resolution which is annexed to the respective Company Scheme Petition.

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The Learned counsel for the Petitioner Companies states that the Petitioner Companies have complied with all the directions passed in Company Summons for Direction and that the Company Scheme Petition have been filed in consonance with the orders passed in Summons for Direction.

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Counsel appearing on behalf of the Petitioner Companies state that the Petitioners have complied with all requirements as per directions of this Court and they have filed necessary affidavits of compliance in the court. Moreover, the Petitioner Companies through its counsel undertake to comply with all statutory requirements, if any, as required under the Companies Act, 1956 and the Rules made thereunder. The said undertaking is accepted.

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The Regional Director has filed an affidavit on 31^st day of July, 2014 stating therein save and except stated in paragraph 6 (a), (b), (c), (d) and (e) of the said Affidavit, it appears that the Scheme is not prejudicial to the interest of the shareholders and public. In paragraph 6 (a), (b), (c), (d) and (e) of the said Affidavit, it is stated that;-

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“6. That the Deponent further submits that,

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a) Clause 12(c) of Scheme provides for adjustments 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

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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 12(f) and 12(g) of the Scheme state that the difference arising out of this Scheme shall be credited/debited by the Transferee Company to its General Reserve/ Goodwill as the case may be and general reserves shall constitute as free reserves for all purposes. In this regard, it is submitted that the reserve, if any, arising out of the Scheme shall be credited to Capital Reserve Account of the Transferee Company and such reserve shall not form part of free reserve of the Transferee Company.

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d) The Registrar of Companies vide his report dated 14/03/2014 reported that both the Transferor companies and Transferee company have violated the provisions of Section 159, 166, 210 & 220 of the Companies Act, 1956 and issued default notices against all three companies on 10/03/2014. The legal proceedings initiated by the Registrar of Companies will continue against the Transferee company and concerned directors. The Registrar of Companies/Regional Director/Central Government reserve their right to take appropriate legal action against the said company and its directors.

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e) Clause 18 of the Scheme provides for Modification of Scheme wherein the Board of Directors of the Transferor Companies 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 Directors without obtaining further approval from the Hon’ble High Court. The Transferor and Transferee Company shall be directed to undertake to this effect.”

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As far as the content of paragraph 6 (a) of the Affidavit of Regional Director is concerned, counsel appearing for the Petitioner Companies undertakes to follow the accounting treatment provided in the Scheme and to comply with requirements of the relevant applicable accounting standards.

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As far as the content of paragraph 6 (b) of the Affidavit of Regional Director is concerned, counsel appearing on behalf of the Petitioner Companies states that the Transferor Companies and the Transferee Company are bound to comply with the applicable provisions of the income Tax Act and all tax issues arising out of Scheme will be met

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and answered in accordance with the law.

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As far as the content of paragraph 6 (c) of the Affidavit of Regional Director is concerned, counsel appearing on behalf of the Petitioner Companies understakes that the reserve, if any, arising out of the Scheme, be credited to Capital Reserve Account of the Transferee Company and such reserve shall not form part of the free reserve of Transferee Company.

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As far as the content of paragraph 6 (d) of the Affidavit of Regional Director is concerned, counsel appearing on behalf of the Petitioner Companies states that if there are any legal actions taken by the registrar of Companies or regional Director or Central Government with respect to the above, the same shall be defended by the Petitioner Company.

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As far as the content of paragraph 6 (e) of the Affidavit of the Regional Director in concerned, the learned counsel for the Petitioner company states that clause 18 of the Scheme gives power to the Board of Directors of the Petitioner Company to amend any part of the Scheme. The learned counsel for the petitioner company states that the Petitioner Company has filed an Affidavit dated 30^th July, 2014 of Mr. Manoj Vishanji Gada authorized signatory of the Petitioner Company interalia stating 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 18 of the Scheme will be subject to the approval of the High Court.

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Learned Counsel for the Petitioner Company submits that the transferee company has already filed an affidavit dated 30^th July, 2014 of Mr. Manoj Vishanji Gada the Authorised Signatory of the Transferee Company accordingly giving its undertaking as mentioned in paragraph 4 to 8 of the said affidavit.

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The Learned Counsel for the Regional Director on instructions of Mr. M. Chandana muthu, Joint Director, in the office of the Regional Director, Ministry of Corporate Affairs, Western Region, Mumbai states that they are satisfied with undertaking given by the Petitioner Companies mentioned hereinabove. The said undertaking is accepted.

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The Official Liquidator has filed his Report dated 4th July, 2014 stating that as per clause 4(b) of the scheme of Amalgamation annexed as Exhibit-“B” to the petition appointed date of the scheme is mentioned as 16.2.2012. That both the transferor companies have audited the accounts upto the periods 31.3.2011. The accounts from 01.04.2011, up to the date of appointed date i.e. 16.2.2012 and the accounts for the periods as on 31.3.2012, 31.3.2013 & 31.3.2014 are not got audited. That the charted accountants appointed by the official Liquidator to scrutinize the accounts of these companies have scrutinized the audited accounts up to 31.3.2011 only. That the official Liquidator submits that the assets and liabilities as on the date of “appointed date” stands lawfully transferred. Subsequent developments are not in knowledge of his Hon’ble court , shareholders, creditors etc.,

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As far as the content of paragraph 9 of the Official Liquidator’s Report is concerned, the Counsel appearing on behalf of the Petitioner Companies states that the proposed Scheme of Amalgamation will not affect the rights of the Shareholders and Creditors of the Petitioner Companies. The Counsel appearing on behalf of the Petitioner Companies further states that in view of the objections raised by the Official Liquidator, the Petitioner Companies on 18th July, 2014 thereby provided the copies of Audited Financial Statements of the Transferor Companies for the year ended 31st

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March, 2012 and 31st March, 2013. The Petitioner Companies also forwarded the Provisional Balance Sheet of the Transferor Companies as on 31st March, 2014. The Learned Counsel on behalf of the Petitioner Companies states that the Petitioner Companies have also passed a Resolution dated 28th July, 2014 whereby the earlier resolution passed by the Board of Directors on 16th February, 2012 is hereby ratified and approved on the basis of the Audited Balance Sheets for the year 2011-12 and 2012-13 and Provisional Balance Sheet for the year 2013-14. The Petitioner Companies have also forwarded the copies of the said Resolution to the Office of the Official Liquidator on 28th July, 2014. The Counsel appearing on behalf of the Petitioner Companies states that as far as the Equity Shareholders of the Transferor Company No. 1 are concerned, the Transferee Company and the Transferor Company No. 2 are the Shareholders and as far as the Equity Shareholders of the Transferor Company No. 2 are concerned, the Transferee Company and Transferor Company No. 1 are the Shareholders. In view of the above, the Petitioner Companies state that the Transferor Companies are wholly owned subsidiaries of the Transferee Company and the rights of the Shareholders will not be affected. As far as the Creditors of the Transferor Companies are concerned, the Transferor Companies state that they do not have any Secured Creditors as on 31st March, 2014. As far as the Unsecured Creditors of the Transferor Companies are concerned as on the date of the Company Summons for Direction Order, the First Transferor Company had no Unsecured Creditors and the Second Transferor Company had three Unsecured Creditors all of whom had given letters of Consent to the Scheme of Amalgamation. Since the Order on the Company Summons for Direction and today these three Unsecured Creditors have been paid off their dues and are not creditors of the Second Transferor Company. To satisfy the concern of the Official Liquidator, as regards the initial non-submission of the Audited Account, which only came to be filed subsequently as on 18^th July, 2014 the

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Transferor Companies have tendered their respective Affidavits of Mr. Manoj Gada, dated 25th August, 2014, annexing the consents to the proposed Scheme of Amalgamation of the Unsecured Creditors of the Transferor Companies, as on Audited Balance Sheet of 31st March, 2013 and Provisional Balance Sheet of the 31st March, 2014. The Counsel appearing on behalf of the Petitioner Companies states that in the facts of the present case and since the Transferor Companies are wholly owned subsidiaries of the Transferee Company and given the present consents of all the Unsecured Creditors, the proposed Scheme of Amalgamation will not affect the rights of the members and Creditors of the Petitioner Companies and hence, the said Scheme of Amalgamation may be allowed, notwithstanding the Official Liquidator Report of 4^th July, 2014.

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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. None appears before the Court to oppose the Scheme and nor any party has contravened averments made in the petition.

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Since all the requisite statutory compliances have been fulfilled, the Company Scheme Petition No. 43 of 2014 filed by the Transferor Company No. 1 is made absolute in terms of prayer clause (a) and Company Scheme Petition No. 44 of 2014 filed by the Transferor Company No. 2 is made absolute in terms of prayer clause (a) and Company Scheme Petition No. 45 of 2014 filed by the Transferee Company is made absolute in terms of prayer clause (a).

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The Petitioner 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 this Order.

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Petitioner is directed to file a copy of this order alongwith a copy of Scheme of Amalgamation with the concerned Registrar of Companies, electronically, alongwith E-Form 21, in addition to physical copy, as per the provision of the Act.

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Petitioners in all the Company Scheme Petitions to pay costs of Rs.10,000/- each to the Regional Director, Western Region, Mumbai. The Petitioner in Company Scheme Petition No. 43 and 44 of 2014 to pay a sum of Rs.10,000/- to the Official Liquidator, High Court, Bombay, towards his costs. Costs to be paid within four weeks from today.

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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 the Scheme duly authenticated by Company Registrar, High Court, Bombay.

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(S.J. Kathawalla J.)

Multiplast Polymer Pvt.Ltd. v. --

Case brief

What is this about?

What did the court decide?

Multiplast Polymer Pvt.Ltd. 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

Coram

Case details

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