Allowed

Ultimate Electricals Pvt. Ltd. v. Frazer Foods India Pvt. Ltd.

Punjab & Haryana HC7 Sept 2012CP/1/2012

Case brief

AI extract

What is this about?

The High Court of Punjab and Haryana sanctioned the Scheme of Amalgamation of Ultimate Electrical Pvt. Ltd. (Transferor) with Frazer Foods India Pvt. Ltd. (Transferee) under Sections 391-394 of the Companies Act, 1956, vesting assets and liabilities in the Transferee and dissolving the Transferor without winding up, subject to compliance with accounting standards and memorandum alteration procedur

What did the court decide?

Sanction of the Scheme of Amalgamation; Transferor company to be dissolved without winding up; Transferee company to comply with Accounting Standard 14 and MoA alteration procedures.

Ultimate Electricals Pvt. Ltd. Vs Frazer Foods… — Specific Performance | Punjab & Haryana HC (2012)

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C.P. N0. 1 OF 2012 ::1 ::

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IN THE HIGH COURT FOR THE STATES OF PUNJAB AND HARYANA AT CHANDIGARH.

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C.P. NO.1 of 2012 connected with C.P. No. 104 of 2011

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Date of Decision:07.09.2012

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IN THE MATTER OF:

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SECTIONS 391 and 394 OF THE COMPANIES ACT, 1956

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AND IN THE MATTER OF :

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ULTIMATE ELECTRICAL PVT. LTD.

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.....Petitioner/Transferor Company

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WITH

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FRAZER FOODS INDIA PRIVATE LIMITED

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.....Petitioner/Transferee Company

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Present: Mr.Aman Chaudhary, Advocate for the Petitioner Companies

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Mr.D.P.Ojha, Official Liquidator.

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HON’BLE MR. JUSTICE SURYA KANT.

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1. Whether Reporters of local papers may be allowed to see the judgment?

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2. To be referred to the Reporters or not?

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3. Whether the judgment should be reported in the Digest?

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SURYA KANT, J. [ORAL]

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In this petition under Section 391-394 of the Companies Act, 1956, duly supported by affidavits, the petitioner-company seeks sanctioning of the Scheme of Amalgamation (Annexure P/7) of Transferor Company with Transferee Company.

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[2] Main objects of the the Transferor Company and Transferee Company are detailed in their respective Memorandum and Articles of Association annexed with the petition at Annexure P-

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1, and P-2 , respectively.

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C.P. N0. 1 OF 2012 ::2 ::

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[3] The Board of Directors of the ULTIMATE ELECTRICAL PVT. LTD. (Transferor Company) and FRAZER FOODS INDIA PRIVATE LIMITED (Transferee Company) have approved the Scheme of Amalgamation in their respective meetings held on 06.12.2010, vide resolutions Annexures P-8 & P-9, respectively.

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[4] The Authorised Share Capital of Transferor Company as on 31.03.2010 is Rs.50,00,000/- divided into 5,00,000 Equity Shares of Rs.10/- each. Its Issued, subscribed and paid-up capital is Rs.22,50,780/- divided into 2,25,078 Equity Shares of Rs.10/- each.

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[5] The Authorised Share Capital of Transferee Company as on 31.03.2010 is 1,50,00,000/- divided into 15,00,000 Equity Shares of Rs.10/- each. Its Issued, subscribed and paid-up share capital is Rs.1,12,10,000/- divided into 11,21,000 Equity Shares of Rs.10/each.

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[6] The petitioner companies had earlier approached this Court by way of Company Petition No. 104 of 2011 and vide orders dated 29.11.2011 passed therein, the convening of the meetings of shareholders, secured and unsecured creditors of the petitioner companies were dispensed with and Ist Motion Petition was disposed of accordingly.

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[7] In this Second Motion Petition, notice was issued to the Regional Director, Northern Region Ministry of Corporate Affairs, Noida as well as the Official Liquidator and the same was also ordered to be published in the daily 'Indian Express' (English) and 'Nayi Rashtriya Dhara' (Hindi) and in the official Gazette of the Government of Haryana. The compliance report of the said order has

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C.P. N0. 1 OF 2012 ::3 ::

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been placed on record on 24.05.2012.

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[8] Pursuant thereto, the Official Liquidator has placed on record the report dated 16.03.2012 by way of affidavit of Mr.B.K. Bansal, Regional Director, Northern Region, Ministry of Corporate Affairs, Noida. Para 5 and 5.1 of the said report are to the following effects :-

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5 “That the deponent further craves leave to submit that at Para 15 of the Scheme provides as under:-

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“On the Scheme becoming operative, the object of the Transferee Company shall be changed without process of change in object clause in accordance with the provisions of the Act and rule made thereunder”

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5.1 “It is submitted that the Memorandum of Association of a company can be changed/altered only after following the procedure prescribed under the relevant provisions of the Companies Act,1956. It is, therefore, submitted that the Transferee Company may be asked to follow the procedure prescribed under the Companies Act,1956”

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[9] The Official Liquidator has also filed his own report dated

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10.07.2012, pointing out:-

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“That M/s Balwinder Associates Chartered Accountants has stated in his report that the exchange ratio of Transferor Company, M/s Ultimate Electricals Pvt. Ltd. is 100 % subsidiary of the Transferee Company. The shares held by the Transferee Company in the Transferor Company will be cancelled and thus, no valuation has been done by the Petitioner.

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That the said Chartered Accountant on the basis of Books of Accounts of the Transferor Company, M/s Ultimate Electricals Pvt. Ltd. has observed that the transferor company is not having commercial operations during the year 2005-2006 till 2010-2011 (the period verified by the Chartered Accountant). The turnover is nil in all these years. There is operating loss in all these years due to general administrative expenses incurred by the company.

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That the said Chartered Accountant on the basis of the Books of Accounts of the Transferor

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C.P. N0. 1 OF 2012 ::4 ::

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Company, M/s Ultimate Electricals Pvt. Ltd. has also observed that during the year 2009-2010, the company sold its entire Land & Building having book value of Rs.41.08 lacs for Rs.110 lacs to its Holding Company (Transferee Company). The profit of Rs.68.92 lacs has been duly recognised in the Books of Accounts. However, as per the Books of Accounts an amount of Rs.110 lacs is still recoverable from the Holding Company (as per Balance Sheet dated 31.03.2010 as well as 31.03.2011)

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That the said Chartered Accountant on the basis of the records made available to him by the Transferor Company, M/s Ultimate Electricals Pvt. Ltd has opined that there shall nothing be prejudicial to the interest of the shareholders of the Transferor Company and public at large in the event of the amalgamation of this company with Transferee Company vide his aforesaid report dated 06.07.2012 (received in this office on 09.07.2012).

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That on the basis of the aforesaid report of the Chartered Accountant, the Official Liquidator most respectfully submits that the affairs of the Transferor Company M/s Ultimate Electricals Pvt. Ltd. has been conducted in a manner not prejudicial to the interest of its members and public at large. However, the Transferee Company should comply with requirements of Accounting Standard 14 issued by ICAI.”

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[10] Mr. Sunjay Nayar, Director of the Petitioner TransfereeCompany has responded to the above-reproduced observations vide para the 2, 4 & 5 of his affidavit dated 05.09.2012, stating that:-

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2 (i). “Since 100% shares of the Transferor Company is being held by the Transferee Company and there is no exchange of shares, hence all the shares will be cancelled therefore, no valuation was done.

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(ii) The Company was not having commercial operation during the year 2005-2006 till 2010-2011 and there is operating loss in all these years due to general administrative expenses.

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(iii) The Company, during the year 2009-2010 sold its entire land having book value of Rs.41.08 lacs for Rs.110 lacs to its holding company and that the profit of Rs.68.02 lacs has been duly recognized in the Books of Accounts. The Company will be

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C.P. N0. 1 OF 2012 ::5 ::

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amalgamated with the Holding Company, thereafter the same shall be adjusted accordingly.”

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xx xx xx xx

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That in so far as the report dated 16.03.2012 of Regional Director is concerned the Transferee Company undertakes that the memorandum of Association of the the Company will be changed only after following the procedure prescribed under the relevant provisions of the Companies Act, 1956.

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That the transferee Company undertakes that the Company shall comply with the requirements of Accounting Standards 14 (AS-14) issued by the Institute of Chartered Accountants of India upon sanction of the scheme and the amalgamation accounting shall be done in terms of he provisions of AS-14 and the goodwill shall be tested for impairment as per provisions of Accounting Standard (AS) 28 issued by the Institute of Chartered Accountants of India.”

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[11] The petitioner-Companies have confirmed that there are no investigations or proceedings pending against them under Sections 235 and 251 of the Companies Act.

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[12] In view of the procedural requirements as contemplated under Sections 391 to 394 of the Companies Act, the relevant facts and Rules and on due consideration of the reports of Regional Director, Northern Region, Ministry of Corporate Affairs and the Official Liquidator, coupled with the undertaking by way of affidavit filed by the Director of the petitioner companies, the Scheme of Amalgamation of the Transferor Company with the Transferee Company is hereby sanctioned and as a result thereto, the assets and liabilities of the Transferor Company shall stand vested in the Transferee Company and the petitioner-Transferor Company shall stand dissolved without being wound up. The Transferee Company shall also comply with the procedural requirements with regard to

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C.P. N0. 1 OF 2012 ::6 ::

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Accounting Standard-14 and change of Memorandum of Association of the Company.

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[13] The Scheme shall be binding on the Transferor and the Transferee Companies, their respective shareholders, creditors and all concerned.

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[14] Let formal order of sanction of the Scheme of Amalgamation be drawn in accordance with law and the certified copy of the same be filed with the Registrar of Companies within 30 days from the date of receipt of certified copy of the same.

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[15] A notice of this order be published in the daily 'Indian Express' (English) and 'Nayi Rashtriya Dhara' (Hindi) and in the Official Gazette of the Government of Haryana.

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[16] Any interested person shall be at liberty to apply to the Court for any direction(s) as per law.

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[17] Disposed of accordingly.

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07.09.2012

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( SURYA KANT )

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dinesh JUDGE

Ultimate Electricals Pvt. Ltd. v. Frazer Foods India Pvt. Ltd.

Case brief

What is this about?

What did the court decide?

Ultimate Electricals Pvt. Ltd. v. Frazer Foods India Pvt. Ltd.

Case brief

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What did the court decide?

What the court decided

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