Allowed

Sincere Mercantile Pvt. Ltd. v. -

Bombay HC7 Nov 2014CSP/469/2014

Case brief

AI extract

What is this about?

The Bombay High Court sanctioned a Scheme of Amalgamation involving four transferor companies and one transferee company. The court accepted undertakings regarding tax compliance, MOA amendments, and modified the Scheme's accounting clauses based on the Regional Director's observations.

What did the court decide?

Company Scheme Petitions made absolute; Scheme amended as per Regional Director's observations; order filed with Registrar of Companies; costs awarded.

Sincere Mercantile 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.467 OF 2014.

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CONNECTED WITH COMPANY SUMMONS FOR DIRECTION NO. 185 OF 2014.

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LOGOS TECHNOSYSTEMS PRIVATE LIMITED

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....Petitioner/ Transferor Company No.1.

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AND

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COMPANY SCHEME PETITION NO.468 OF 2014. CONNECTED WITH

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COMPANY SUMMONS FOR DIRECTION NO. 186 OF 2014.

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MAINSTREAM MERCHANDISE PRIVATE LIMITED

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....Petitioner/ Transferor Company No.2.

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AND

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COMPANY SCHEME PETITION NO.469 OF 2014. CONNECTED WITH COMPANY SUMMONS FOR DIRECTION NO. 187 OF 2014.

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SINCERE MERCANTILE PRIVATE LIMITED

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....Petitioner/ Transferor Company No.3.

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AND

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COMPANY SCHEME PETITION NO.470 OF 2014. CONNECTED WITH COMPANY SUMMONS FOR DIRECTION NO. 188 OF 2014.

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HYPER-TECH INFOSOLUTION PRIVATE LIMITED

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....Petitioner/ Transferor Company No.4.

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WITH

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COMPANY SCHEME PETITION NO. 471 OF 2014. CONNECTED WITH

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COMPANY SUMMONS FOR DIRECTION NO. 189 OF 2014.

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INFOLINK SOLUTIONS PRIVATE LIMITED

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....Petitioner/ Transferee Company.

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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 between LOGOS TECHNOSYSTEMS PRIVATE LIMITED, the Transferor Company No.1; MAINSTREAM MERCHANDISE PRIVATE LIMITED, the Transferor Company No.2; SINCERE MERCANTILE PRIVATE LIMITED, the Transferor Company No.3; HYPER-TECH INFOSOLUTION PRIVATE LIMITED, the Transferor Company No.4; AND

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INFOLINK SOLUTIONS PRIVATE LIMITED, the Transferee Company.

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Called for hearing

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Mr. Dnyaneshwar Jadhav, Mr. Nikhil Patil i/b Legasis Partners, Advocate for the Petitioners in both Petitions.

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Mr. S. Ramakantha, Official Liquidator, present in Company Scheme Petition Nos. 467 of 2014 to 470 of 2014

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Mr. C. J. Joy with Nisha Velani i/b Dr. H.P.Chaturvedi for Regional Director in all the Petitions.

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CORAM: S. J. Kathawalla, J. DATE : 7^th November, 2014

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PC:

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Heard learned counsel for the parties. No objector has come before the court to oppose the Scheme and nor any party has controverted any averments made in the Petition.

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The sanction of the Court is sought to a Scheme of Amalgamation between LOGOS TECHNOSYSTEMS PRIVATE LIMITED, the Transferor Company No.1; MAINSTREAM MERCHANDISE PRIVATE LIMITED, the Transferor Company No.2; SINCERE MERCANTILE PRIVATE LIMITED, the Transferor Company No.3; HYPER-TECH INFOSOLUTION PRIVATE LIMITED, the Transferor Company No. 4 and INFOLINK SOLUTIONS PRIVATE LIMITED, the Transferee Company under Sections 391 to 394 of the Companies Act, 1956.

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Learned Counsel for the Petitioners states that the Transferor Company No.1 is in business of trading activity of computer hardware, application software, cables, Iron & Steel (Tower Steel Material) on wholesale basis., the Transferor Company No.2 is in business of trading in information technology products such as computer hardware and software and steel on wholesale basis, the Transferor Company No.3 is in business of trading activity of computer hardware/ company software packages and Iron & Steel material on wholesale basis, the Transferor Company No.4 is in business of engaged in trading in telecommunication, office & electronics equipments, computer hardware & software packages, tower steel and optical fiber cable etc. and the Transferee Company is in business of engaged in trading in telecommunication equipments, computer hardware & software packages, iron & steel etc. The proposed scheme of Amalgamation will have the benefit that Efficient and better utilization of resources and assets of the combined entity and synergies of operations with integration of management and other expertise and stronger capital structure which will enable the merged entity to raise larger amount of finances and greater efficiency in cash

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management of the amalgamated entity which can be deployed more efficiently to fund organic and inorganic growth opportunities, to maximize shareholders value and cost savings are expected to flow from more focused operational efforts, rationalization, standardization and simplification of business processes, productivity improvements, improved procurement, and the elimination of duplication, and rationalization of administrative expenses.

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

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The learned Advocate for the Petitioners further states that, Petitioner Companies have complied with all the directions passed in Company Summons for Directions and that the Company Scheme Petitions have been filed in consonance with the orders passed in respective Company Summons for Directions.

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The learned counsel appearing on behalf of the Petitioners have stated that the Transferor Companies and the Transferee 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 Companies 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 dated 03^rd November, 2014 in Company Scheme Petition Nos. 467 of 2014 to 470 of 2014 stating that

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the affairs of the Transferor Companies respectively have been conducted in

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a proper manner and that the Transferor Companies may be ordered to be dissolved

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The Regional Director has filed an Affidavit on 30^th October, 2014 stating therein, save and except as stated in paragraph 6, it appears that the 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 8.1 of the Scheme provides for transferring the assets on fair value basis. Clause 8.2(iv) of the Scheme provides for transferring the liabilities also on fair value basis. Besides, clause 8.3 of the Scheme provides that the aggregate of Capital Reserve, Capital Redemption Reserve, Capital Redemption Reserve Account, Share Premium Account, General Reserve Account, Profit and Loss Account will be transferred to General Reserve Account of the Transferee company. It has been observed after examining the relevant balance sheet of the Transferor companies that the Transferor companies are not having such kinds of reserves. In view of the foregoing, transferring reserves of the Transferor Companies to Transferee Company is erroneous clause. When the matter was taken up with the company, it has been clarified that the Accounting Treatment provided in the Scheme has been reconsidered and proposed a new set of Accounting Treatment vide its letter dated 14/10/2014, Copy of the said letter is annexed hereto and marked as Exhibit- D. The accounting treatment provided in the said letter appears to be in order. Therefore, it is submitted that the Petitioner companies be directed to suitably amend the Clause 8 of the Scheme, by substituting the same with new clause as provided vide its letter dated 14/10/2014.

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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 the Scheme. The decision of the Income Tax Authority is binding on the Petitioner Companies.

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c) Schedule I of the Scheme provides for amendment to the Object clause of the Memorandum of Association of the Transferee Company. In this connection, the Transferee Company may be directed to comply with provisions of Section 13(1) & (6) read with Section 15 of the Companies

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Act, 2013 along with section 40 read with section 18 of the companies Act, 1956 and to file amended copy of Memorandum of Association alongwith necessary form with Registrar of Companies.”

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So far as the observation in paragraph 6 (a) of the Affidavit of Regional Director is concerned, the counsel for the Petitioner seeks leave to delete existing clause 8 and same to be substituted with new clause 8 as provided vide its letter dated 14/10/2014 being Exhibit- D annexed to the Affidavit of Regional Director, accordingly the learned Advocate for the Petitioner Companies has tendered draft amendment as per the Exhibit D annexed to Affidavit of Regional Director and requested the same may be taken on record and may be allowed.

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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 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, the Petitioner /Transferee Company through its counsel undertakes to comply with provisions of Section 13(1) & (6) read with Section 15 of the Companies Act, 2013 along with section 40 read with section 18 of the companies Act, 1956 and to file amended copy of Memorandum of Association alongwith necessary form with Registrar of Companies.

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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

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satisfied with the undertaking given by the Advocate for the Petitioner Companies and also agrees with the amendment in clause 8 of the Scheme as the same is required to carry out in the scheme. The undertakings given by the Advocate for the Petitioner Companies are accepted.

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The draft amendment tendered by the Advocate is taken on record and marked “X” for identification. The amendment is allowed in terms of draft amendment. Amendment to be carried out within period of two weeks from date of the order.

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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 of the parties concerned has come forward to oppose the Scheme in the court.

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Since all the requisite statutory compliances have been fulfilled, Company Scheme Petition Nos. 467 of 2014, 468 of 2014, 469 of 2014, 470 of 2014 and 471 of 2014 are made absolute in terms of prayer clauses (a).

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The Petitioner Companies to lodge a copy of this order and the amended 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 amended Scheme of Amalgamation with the concerned Registrar of Companies, electronically, along with E-Form 21 / INC 28 in addition to

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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 the Petitioners in the Company Scheme Petition Nos. 467 of 2014 to 470 of 2014 to pay costs of Rs.10,000/- each to the Official Liquidator, 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 amended Scheme duly authenticated by the Company Registrar, High Court (O. S.), Bombay.

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(S. J. Kathawalla, J.)

Sincere Mercantile Pvt. Ltd. v. -

Case brief

What is this about?

What did the court decide?

Sincere Mercantile 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

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