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Companies Law - Case Laws
Showing 21 to 40 of 62 Records
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2016 (2) TMI 1116
Scheme of amalgamation - Held that:- Having regard to the fact that the transferor company is a wholly owned subsidiary company of the transferee company, inclined to agree with the prayer made in this behalf by the transferor company. As per clause 4.1 of the scheme, in particular, clause 4.1.1, upon the scheme becoming effective, no shares in the transferee company will be allotted in lieu of shares held by it and its nominee in the transferor company. The entire share capital of the transferor company shall stand cancelled and be extinguished without any further act or deed.
As also told by the counsel for the transferor company that the interest of the creditors in the transferee company shall remain unaltered. Transferee company need not file a separate or a joint application (which it has not in the present case) for obtaining sanction of the scheme.
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2016 (2) TMI 1115
Scheme of Amalgamation seeking - directions of this court to dispense with the requirement of convening the meetings of its equity shareholders, secured and unsecured creditors to consider and approve the said claim - Held that:- In view of the submissions made at the bar and the settled law on the subject, the requirement of convening and holding the meetings of the secured and unsecured creditors of the applicant/transferee company, to consider and if though fit, approve, with or without modification, the proposed Scheme of Amalgamation, is dispensed with.
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2016 (2) TMI 1102
Settlement arrived at by the appellant in his capacity as guarantor without the leave of the court - whether the appellant paid the money to the secured creditor i.e. Punjab & Sind Bank only to save his personal immovable property from coercive action? - Held that:- The appellant in his capacity as the guarantor paid the debt, which was owed by the company (in liquidation). The OL, in fact, was aware of the appellant’s involvement as is evident from the communication dated 30.11.2006 addressed to the Asst. O.L, which is appended as Annexure-D to the appeal. As a matter of fact, in the meeting held in the office of the OL, on 22.9.2011, these aspects squarely came to fore when, payments made by the appellant to Punjab & Sind Bank i.e. the secured creditor, were noted.
A perusal of the minutes dated 22.09.2011 would show that, amongst others, Mr Sanjay Yadav, Dy. O.L. was present at the said meeting.A perusal of order dated 26.08.2011 would show that the date of appearance of ex-directors before the OL and the chartered accountant was changed from 29.08.2011 to 22.09.2011, which is when, the meeting was held and the minutes were drawn up.
The argument that the OL was unaware of the payments made by the appellant i.e. the ex-director is, according to me, not tenable. Second, the submission of Mr Choudhary is equally unsustainable for the reason, which is, that irrespective of the motivation for payment of debts of the company (in liquidation), once, moneys are paid by the appellant, he should be allowed to take recourse to its assets. The principal debtor being the company (in liquidation), and the appellant having paid its creditor (i.e. the Punjab & Sind bank), it falls to reason that it should be entitled to seek recovery by lodging its claim with the OL. Appeal allowed.
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2016 (2) TMI 1067
Compounding of certain offences - Contravened the mandate of Section 383-A of the Companies Act 1956 as per which the company should have a whole time Secretary - Held that:- From the report submitted by Registrar of the Companies, it appears that the 1st appellant company has ₹ 1,01,42,820/- paid up capital share as per Balance Sheet for the Financial Year ended on 31st March 2015. It has operating revenue of ₹ 549,246,895/- as per Profit and Loss Account of March 31st 2015. The company had not filed any Annual Return for the period from 1st November 2011 to 8th May 2013 - 1st November 2014 to 17th December 2015. The maximum penalty for default in complying with Section 383A was calculated at ₹ 10,89,500/- to be paid by each defaulter.
We find that the defaults have been made good and compliance certificate were filed in majority cases after about two years. There is no complaint against the company and there is no default earlier. In the present case, the learned Tribunal referring to provision of Section 383-A observed that the Bench deemed it sufficient to impose a fine of ₹ 2 lacs on each of the defaulting parties. That means less than 1/5th of the maximum penalty, as could have been imposed has been imposed, which is less than ₹ 100/- per day. As we find that no specific grounds have been shown to reduce the amount, no interference is called for against the impugned order.
Contravention of Section 166 of Act 1956 - Held that:- As we find that the appellants have only taken plea that the violation occurred due to inadvertence and without intention & not prejudicial to the interest of any member or creditors or others dealing with the company & nor did affect public interest, we are of the view that the Tribunal rightly brought down the penalty which is less than 1/5th of the maximum amount. In this background no interference is called for against the impugned order.
Contravened section(s) 220 of the Act, 1956 during the period 1st November, 2011 to 25th February, 2016 - Held that:- In the present case as admittedly, the default in filing the Annual Return is more than two years and continued during the subsequent financial years, therefore, we are not inclined to compound the amount to the extent of ₹ 25,000/- each, as ordered by Company Law Board in the other case. It is also noted that non-filing of Annual Returns for any continuous period of three Financial Years is also a disqualification for appointment as Director under Section 164(2)(a) of Companies Act 2013, thus making it a serious offence. However, to be consistent with the orders passed by Tribunal in analogous case, which is approximately 175th of the maximum fine, we modify the impugned order of Tribunal and to compound the offence on payment of ₹ 2 lacs by each of the appellants i.e. the Company and the two Directors, Mr. Sandeep Kapoor and Mr. Atul Prabhakar Kulkarni. That means total six lacs to be paid by them.The amount, as compounded be deposited with the Tribunal within three weeks, after adjusting the amount, if any already deposited by appellants
Contravened Section 210 of the Companies Act 1956 - failure to lay down annual accounts and balance sheet for the year ending 31st March 2011, 31st March 2012, 31st March 2013, 31st March 2014 and 31st March 2015 - Held that:- Tribunal failed to notice the minimum fine prescribed under sub-section (7) of Section 129 of Companies Act 2013 which is applicable for the year ending 31st March 2015, also failed to notice that a fine up to ₹ 10,000/- is payable by appellants under Sub Section (5) of Section 210 of Companies Act 1956 for each of the year ending 31st March 2011, 31st March 2012, 31st March 2013 and 31st March 2014.
This court is not inclined to decide the aforesaid issue, as there will be enhancement of fine, if the fine for the year ending 31st March 2011, 31st March 2012, 31st March 2013 and 31st March 2014 are taken together with minimum fine of ₹ 50,000/- to be imposed for year ending 31st March, 2015. In this background, we deemed it proper to remit the case back to the National Company Law Tribunal, New Delhi Bench to decide the question of compounding of offence afresh, after taking into consideration the Report submitted by the Registrar of the Companies, the grounds shown by the petitioner and the ratio laid down and discussed above. Tribunal will also take into consideration the punishment prescribed under sub-section (5) of Section 210 of the Companies Act 1956 and sub-section (7) of Section 129 of Companies Act 2013 which are applicable for different year ending.
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2016 (2) TMI 908
Forger of documents - scope of the jurisdiction of the CLB - Held that:- We do find that the CLB has observed that it has summary jurisdiction and the question of document being forged or the signature being forged or not, cannot be examined in the proceedings of the Company Petition and the CLB has further observed that such an exercise can be undertaken in the civil suit by the Civil Court.
The observations made by the CLB on the question of limitation may remain only on the presumptive value but it should not be read to control or to curtail in any manner the jurisdiction of the Civil Court in the above referred two civil suits and further the consequential computation of the period of limitation.
Even otherwise also, as rightly observed by the CLB, the question of genuineness of forged document or forged signature could be examined in the proceedings of the Civil suit and there cannot be any dispute that the Civil Court on the said aspects will have wider jurisdiction vis-à-vis jurisdiction of the CLB which is a summary jurisdiction. We leave it at that, since the Civil Court is yet to examine the matter in accordance with law.
In view of the aforesaid, we find it appropriate to observe that the Civil Court in the proceedings of Civil Suit shall be at liberty to take an independent view of the matter on the basis of material and the evidence produced before it and the observations made by the CLB on the point of limitation shall not operate as a bar upon the power of the Civil Court to examine the controversy in accordance with law.
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2016 (2) TMI 857
Company in liquidation - interpretation of the words used in condition No.7 i.e. “the taxes in relation to property” and whether the said words include the sales tax liability of the company in liquidation or not - whether purchaser is required to pay all the taxes in relation to the property including all outstanding dues? - Held that:- Merely because this Court has observed in condition No.7 of the terms and conditions that the purchaser is required to pay all the taxes in relation to the property levied/leviable by the State Government or any local authority in relation to the company in liquidation, it does not mean that preferential payment from the sale proceeds be made to any Government Authority or any local authority over the other secured creditors, workers, etc. of the company in liquidation in contravention to the provisions of Section 530 of the Companies Act, 1956. Moreover, as observed above, as per the condition No.7 of the aforesaid order, the purchaser is required to pay all the taxes in relation to property and sales-tax is not the taxes in relation to the property.
The sales tax dues of the company in liquidation for the year 1988 cannot be termed as the taxes in relation to the property. Further, when the respondent No.2 has already lodged its claim before the respondent No.1 – Official Liquidator in the year 1995, the same would be considered by the Official Liquidator as per the provision of Section 530 of the Companies Act and therefore the charge created by the respondent No.2 in respect of the land of the company in liquidation is required to be removed and the concerned revenue authority is required to make necessary entries in the revenue record entering the name of the applicant No.1 as purchaser of the land of the company in liquidation. Hence, the Mamlatdar, Anand is hereby directed to cancel the entry registering the so-called charge of Sales Tax Department as arrears of land revenue to ensure that the applicant No.1 gets free and clear marketable title qua the property of the company in liquidation purchased vide order dated 06.05.2004 passed in O.L.R. No. 22 of 2004
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2016 (2) TMI 856
Criminal proceedings instituted on the basis of such FIR - Held that:- As allegations made in the FIR even if taken on the face and accepted in the entirety do not constitute any offence and thus to the mind of this Court the criminal proceedings instituted on the basis of such FIR needs to be quashed. Though, it is relevant to point out here that grouse, if any, regarding running of this company by any of the constituents of the company they are well within their rights to move the appropriate forum for any acts of oppression or mismanagement in terms of Sections 397 and 398 of the Act. Thus, the continuation of the criminal proceedings qua the present petitioners would not lead to any conclusive result and rather would only be a wastage of time of the Court as well as putting the petitioner to undue harassment and torture and, thus, the complainant cannot be allowed to have recourse against the present petitioners by such a means.
Thus, in the light of what has been discussed above the present FIR No.69 dated 19.4.2012 under Sections 420, 465, 467,468, 471, 120-B IPC registered with Police Station Division No.3 Chandigarh Annexure P/1 qua the present petitioners is hereby quashed with all consequential effects.
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2016 (2) TMI 818
Scheme of Amalgamation - stamp duty and penalty was payable as presentation was not within one year from the date of the order of the Company Court - Held that:- When the order under Section 394 of the Companies Act sanctioning the Scheme of Amalgamation is made chargeable to duty, levy of duty is not on the order as such, but it is on the effect of the order, that is transfer of properties and assets of the transferor company to the transferee company envisaged under the Scheme. The said transfer took effect only upon sanction granted by the BIFR which was a condition mentioned in the order of the Company Court. In other words, the properties/assets can be said to have been “transferred” or “conveyed” when BIFR granted sanction. The “conveyance” within the meaning of Section 2(g)(iv) can be said to have been created at such point of time when the BIFR granted sanction. Therefore it is the said date and not the date of the order of the Company Court. In the facts and circumstances of the case, would bring the subject matter within the ambit of Section 2(g)(iv) to become the conveyance. Such “conveyance” was presented within one year as above for the purpose of stamp duty, the same was therefore regularly presented.
The impugned orders taking view that stamp duty and penalty was payable as presentation was not within one year from the date of the order of the Company Court are not liable to be sustained. They are therefore hereby quashed and set aside.
It appears from order dated 28th January, 2011 in the petition that petitioner had paid 25% of the total amount at the time of preferring Appeal before the Chief Controlling Revenue Authority and had also paid remaining 75% subsequently under protest. As the impugned orders are set aside, consequences including refund of the said amount to the petitioner, shall follow.
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2016 (2) TMI 817
Right of dissenting workmen - Adjudication of claims of workmen and secured creditors of the company (In liquidation) by Official Liquidator - Whether the dissenting workmen are bound by the consent terms or whether they are entitled to be paid in accordance with Sections 529 and 529A of the Companies Act, 1956? - Held that:- Only such of the dissenting workmen of the Company who became members of the Workers' co-operative in terms of the scheme sanctioned by BIFR and actually worked with the Company till 31 December 1998 are entitled to be paid wages upto the date of the winding up order. Others are not entitled to any wages with effect from 20 September 1991.
There is no question of the workmen getting any notice pay under Section 25-N of the Industrial Disputes Act by virtue of Section 25-O introduced by the Maharashtra amendment.
Notwithstanding the fact that such worker did not work for the entire period specified in Sub-section (1) and to the extent he had not actually availed of such leave, he will be entitled to wages in lieu of the unavailed leave. Sub-section (3) does not provide for wages in lieu of leave generally, but only in the contingencies referred to therein. So far as accumulation of unavailed leave is concerned, Subsection (5) enables a maximum accumulation of leave of thirty days by carrying forward earned leave. The leave that can, thus, be encashed under Section 79 of the Factories Act is only the earned or accumulated leave during the calender year upto a maximum of thirty days under conditions of Sub-section (3). The rate of such wages has to be as per Section 80 of the Factories Act.
As held by this Court in the case of Swadeshi Mills (2016 (2) TMI 645 - BOMBAY HIGH COURT ), bonus is not included in the category of wages under Sections 529 and 529A of the Companies Act and cannot be accorded any priority. The dissenting workmen in the present case accept this position, though they would like to keep their option to claim bonus in the event of availability of surplus funds so as to satisfy nonpriority debts of the Company (in liquidation).
On gratuity, all parties including the Official Liquidator agree that gratuity would be payable. The consent terms provide for such gratuity. So does the adjudication made by the Official Liquidator. The dissenting workmen would accordingly have to be paid gratuity in accordance with law.
Gratuity, however, in the present case has become due and payable only at the date of the winding up order. Any interest post winding up order is governed by Rule 179 of the Companies (Court) Rules. Such interest at a rate not exceeding four per cent per annum is payable only in the event of there being a surplus after payment in full of all claims admitted to proof. There is no question of awarding any interest on gratuity, in the premises, as preferential payment under Sections 529 and 529A of the Companies Act. If and when there is a surplus, a claim for interest on gratuity can be considered, but not otherwise
The Official Liquidator is directed to adjudicate the claims of the Applicants in the Company Applications herein on the basis of this order and after taking into account the documentary evidence available on record and verifying the respective claims. The Official Liquidator shall enlist the assistance of any advocate and / or chartered accountant on his panel for the purpose of such adjudication. The costs of such advocate and / or chartered accountant shall be defrayed from the funds of the Company (in liquidation) available with the Official Liquidator.At any time during the course of such adjudication or after adjudication but before disbursal of payment on the basis thereof, the Official Liquidator shall give an option to each of the Applicants to accept their dues in accordance with and on the principles of the consent terms taken on record in full and final settlement of their claims against the Company (in liquidation).
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2016 (2) TMI 777
Locus standi to make the application - prayer for impleadment - sanction of Scheme of Compromise under companies act - the effect is that all the secured creditors have been paid, though the substantial dues of the workmen, who have first priority as per Section529A of the Companies Act, and who are to be given overriding preferential payment, are still pending - whether Representative Union is authorized to represent the workmen and no other recognized union or individual can do so - whether the applicant cannot claim to be the representative of the workmen? - Held that:- The applicant has no right to appear or act in the proceedings under the GIR Act, where the Representative Union has entered appearance and has acted as a representative of the employees.
The allegations of malafide and loss of confidence in the Representative Union, therefore, have no relevance in view of the dictum of the Supreme Court in the case of Shivanand Gaurishankar Baswanti Vs. Laxmi Vishnu Textile Mills [2008 (7) TMI 994 - SUPREME COURT].
A submission has been advanced on behalf of the applicant that this Court may consider the present application as one for leave to appear at the hearing of the petition, under Rule34 of the Rules. The applicant had notice of the petition which, admittedly, was advertised. It, however, did not file any objections within the stipulated period of time. It has now appeared belatedly by the present application for joining. This Court is unable to accede to the submission regarding leave to appear, in view of the total lack of reasons why objections were not filed at the relevant point of time. Further, in view of the settled position of law, as the applicant is not the Representative Union or even a recognized one, but appears to be a loose body of workmen without any legal status, it is not possible to grant the prayer for impleadment.
The interest of the workmen can be protected by the Representative Union at the relevant point of time. For this purpose, the presence of the applicant is not necessary.
Mr.S.I.Nanavati, learned Senior Advocate has clarified that the secured creditors have been paid by the Sponsor of the Scheme and not through the funds of the Company. This aspect further reduces the relevance of the submissions made on behalf of the applicant. For the aforestated reasons, this Court is of the considered view that the applicant, not being the Representative Union, has no locus standi to pray for impleadment as a partyrespondent in the Company Petition, especially as the Representative Union is already there. The application, being devoid of merit, deserves to be rejected.
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2016 (2) TMI 758
Scheme of Arrangement in the nature of Demerger - Appointed Date - Held that:- It is now settled law that it is open for a Company to propose any date as the appointed date, in its wisdom, and so long as the Scheme with a particular appointed date is approved by the members of the Company, the objections of the Regional Director may not be sustained.
Accounting treatment proposed in the Scheme is not as per the accounting principles and apparently the accounting standard AS14 - With regard to the second observation the observation made by the Regional Director that the accounting treatment proposed in the Scheme is not as per the accounting principles and apparently accounting standard AS14, is based on the misconception and misreading of the said accounting standard. The plain reading of the said accounting standard makes it clear that AS14 would apply only in case of amalgamation and not in case of demerger as is envisaged in the present Scheme.
Compliances of circulars of SEBI by the petitioner Demerged Company being listed with BSE and NSE - With regard to the third observation, the petitioner company has already made appropriate changes in the Scheme of Arrangement. A copy of the Scheme at AnnexureA to the petition, would show that the Scheme does contain the two observations as are quoted by the Regional Director in paragraph 2(f) of his report. The said observations are part of Clause 14 of the Scheme. As such, this observation is also not sustainable.
Invitation of comments from the Income Tax Department - the report of the Regional Director, itself, shows that pursuant to the letter of the Regional Director, no adverse remarks, within the stipulated period of time, are received from the Income Tax Department. In the Circular date 15.1.2014 of the Ministry of Corporate Affairs, it is stipulated that if no response is received from the Income Tax Department within a period of fifteen days from the receipt of the notice by the Regional Director, it may be presumed that the Income Tax Department has no objection to the action proposed under Sections 391 to 394 of the Companies Act, 1956. In any case and without prejudice to the above, the petitioner companies submit that they would undertake the compliance of the Income Tax Act and Rules made thereunder. Thus this Court finds it appropriate to grant sanction to the present Scheme of Arrangement.
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2016 (2) TMI 757
Sanction of the Scheme of Amalgamation - Held that:- The observations made by the Regional Director having been addressed and the Official Liquidator having opined that the affairs of the petitionerTransferor Company have not been conducted in a manner prejudicial to the interest of its members or to the public interest, in the view of this Court, there does not appear to be any impediment in granting sanction to the Scheme of Amalgamation. From the material on record and on a perusal of the Scheme, the Scheme appears to be fair and reasonable and not in violation to any provisions of law or contrary to public policy. The amalgamation under the proposed Scheme appears to be in the interest of the companies and their members and creditors, therefore, the Scheme deserves to be sanctioned. Accordingly, the Scheme as proposed by the petitioner companies is hereby sanctioned. It is however, clarified that the sanctioning of this Scheme would not absolve the petitioners or anyone who is otherwise liable for any responsibility or liability, only on account of this sanctioning.
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2016 (2) TMI 723
Fraudulent/ manipulative practices under the Securities and Exchange Board of India (Prohibition of Fraudulent and Unfair Trade Practices Relating to Securities Market) Regulations - What is the degree of proof required to hold brokers/sub-brokers liable for fraudulent/ manipulative practices under the Securities and Exchange Board of India (Prohibition of Fraudulent and Unfair Trade Practices Relating to Securities Market) Regulations and/or liable for violating the Code of Conduct specified in Schedule II read with Regulation 9 of the Securities and Exchange Board of India (Stock-Brokers and Sub-Brokers) Regulations, 1992? (hereinafter referred to as the ‘Conduct Regulations, 1992’) - Held that:- No other material to hold either lack of vigilance or bona fides on the part of the subbroker so as to make respondent-broker liable. An irresistible or irreversible inference of negligence/lack of due care etc., in our considered view, is not established even on proof of the primary facts alleged so as to make respondent-broker liable under the Conduct Regulations, 1992 as has been held in the order of the Whole Time Member, SEBI which, according to us, was rightly reversed in appeal by the Securities Appellate Tribunal.
The difference between violation of the Code of Conduct Regulations and the FUTP Regulations would depend on the extent of the persistence on the part of the broker in indulging with transactions of the kind that has occurred in the present cases. Upto an extent such conduct on the part of the brokers/sub-brokers can be attributed to negligence occasioned by lack of due care and caution. Beyond the same, persistent trading would show a deliberate intention to play the market. The dividing line has to be drawn on the basis of the volume of the transactions and the period of time that the same were indulged in. In the present cases it is clear from all these surrounding facts and circumstances that there has been transgressions by the respondents beyond the permissible dividing line between negligence and deliberate intention.
Insofar as the plea of violation of principles of natural justice, as raised on behalf of the respondent in C.A.No.282/2014 (Monarch Networth Capital Ltd.) is concerned, we do not think the same to be justified in any manner. The relevant extracts of the trade log which have been perused by us, in view of the clear picture disclosed with regard to the particulars of the offending transactions, must be held to be sufficient compliance of the requirement of furnishing adverse materials to the affected party. It is not the case of the respondents that such trading in the scrips in question had been a regular feature all along. Insofar as the statement of Indumati Gowda is concerned, it is the stand of the SEBI that the same was not relied upon to come to the impugned conclusions and findings. The statement of Shirish Shah, who admittedly was behind the manipulative practices in question through the brokers, was definitely not the foundation of the impugned findings recorded by the Whole Time Member of SEBI. The statement of Shirish Shah, even if not furnished to the respondent brokers, would not materially alter the situation inasmuch as it is the liability of the respondent-brokers, on account of their failure to correct the huge irregularities that were going on through their terminals, that was the subject matter of consideration of the Whole Time Member.
The fact that on behalf of the client Indumati Gowda similar transactions were entered into in respect of other illiquid scrips which did not disclose any irregularities can hardly be a ground to overlook what has happened in case of the scrip involved in which the respondent Monarch Networth Capital Limited had indulged in.
The stage at which the monetary penalty was imposed on the two other brokers indulging in circular trading is prior to any determination of liability of the said two brokers who did not contest the charges. In the case of M/s Monarch Networth Capital Limited the stage has advanced far beyond the above and had culminated in operative findings against the said subbroker. The imposition of monetary penalty in the case of M/s. Ess Ess Intermediaries Pvt. Ltd., M/s. Rajesh N. Jhaveri and M/s. Rajendra Jayantilal Shah [second category] for violation of the FUTP Regulations cannot be a basis for alteration of the punishment of suspension imposed on M/s. Monarch Networth Capital Limited to one of monetary penalty. In this regard, provisions of Section 15J of the SEBI Act has to be kept in mind and if the primary authority had thought it proper to impose different penalties in different cases involving different set of facts, we do not see how and why interference should be made in present appeals.
We allow the same and set aside the orders of the Securities Appellate Tribunal, Mumbai passed in each of the appeals and restore the orders and penalty imposed on the respondents - brokers by the respective orders of the Whole Time Member of the SEBI.
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2016 (2) TMI 722
Scheme of Amalgamation - Restructuring of capital - Held that:- Taking into account the contentions raised in the affidavits and reply affidavits, and the submissions advanced during the course of hearing, this Court is of the view that the observations made by the Regional Director, Ministry of Corporate Affairs, are answered satisfactorily. It appears that the present Scheme of Arrangement is in the interest of the shareholders and creditors of all the companies as well as in the public interest and the same deserves to be sanctioned. The proposed Scheme of Arrangement in nature of amalgamation as well as restructure of capital is, hereby, sanctioned. The Reduction of Equity Share Capital of the Transferee Company is, hereby, confirmed.
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2016 (2) TMI 687
Permit to Official Liquidator - Held that:- The Official Liquidator is permitted to pay the outstanding secured dues/ claims first to the secured creditors i.e. Rajkot Nagarik Sahakari Bank Ltd., amounting to ₹ 1,41,82,993/and to the Secured Creditor Oriental Bank of Commerce, amounting to ₹ 5,63,991/in terms of Section 529A of the Companies Act,1956, and thereafter, the claims of preferential creditors and unsecured creditors as mentioned in table “B” in paragraph 8 of the report, under Section 530 of the Companies Act, 1956, shall be considered as per the funds available in the account of the Company.
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2016 (2) TMI 686
Scheme of Amalgamation - Held that:- Having heard Mr. Bharat T Rao, learned advocate for the petitioner Companies and Mr. Kshitij Amin, learned Central Government Standing Counsel for Mr. Devang Vyas, learned Assistant Solicitor General of India for the Regional Director and upon perusal of the reports of the Official Liquidator and the Regional Director and after considering the Scheme of Amalgamation, together with the relevant documents on record, this Court finds it appropriate to grant sanction to the present Scheme of Amalgamation.
In view of the above, the Scheme of Amalgamation is sanctioned. It is, however, directed that the petitioners shall preserve their books of Accounts, papers and records and shall not dispose of the records without the prior permission of the Central Government under Section 396A of the Companies Act,1956. The petitioner shall further ensure statutory compliance of all applicable laws. On the sanctioning of the Scheme of Amalgamation, the Petitioner Companies shall not be absolved of any of their statutory liabilities. The petitioner Companies shall lodge a copy of this order, the schedule of immovable assets of the petitioner-companies as on the date of this order and the Scheme, duly authenticated by the Registrar, High Court of Gujarat, with the concerned Superintendent of Stamp Duty, if any, on the same within sixty (60) days from the date of the order.
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2016 (2) TMI 645
Calculation of dues of the workers on winding up - from the date of actual winding up or from the date of appointment of the Provisional Liquidator with full powers to sell the assets or from the date on which there is cessation of work on account of various valid legal reasons? - Held that:- While calculating the cut off date the facts in each case have to be taken into consideration. The Amendment Act of 1985 which amended various provisions of winding up proceedings is a beneficial piece of legislation which was brought about to give equal priority to the workers who had contributed to accumulation of capital and revenue of the Company. The Parliament amended the Act and held that the workers dues had a pari passu charge over the secured creditors' dues. The import of the said amendment was to give equal status to workers as that of secured creditors.
In a winding up proceedings, there could be two possible results viz (1) that after selling the assets of the Company and distributing the assets for paying off liabilities, the Company may still have surplus amount or in the alternative the liabilities would outweigh the amount realized by the sale of assets in which case even though both, workers and secured creditors had priority would have to accordingly rateably get their share out of assets and whatever remains would be distributed ratably amongst the other creditors. Therefore, in our view, the Official Liquidator would have to then consider whether there would be any surplus of assets over liabilities to see whether paripasu benefit could be given to the workers and take it to its logical conclusion. The Official Liquidator in such a case therefore would have to consider the last order of actual winding up of the Company as the order from the date of which the workers dues would have to be calculated. In our view, such purposive interpretation or “purposes & objectives” approach could harmonize the intention of the legislature in giving paripasu benefit to workers alongwith the secured creditors.
Since the immovable property of Svadeshi Mills admittedly has not been sold and it has a land of almost about 50 acres in the heart of the City which is a prime residential and commercial area, the Official Liquidator would receive substantial amount (approximately ₹ 1000 crores) to say the least by sale of these assets. The Grandview Estates Private Limited which is a majority shareholder of the Company and whose SLP is pending in the Apex Court, if it is permitted to develop this property it would make substantial profit by developing the said land since it is a developer and builder and earn profit and also get its dues as per the decree passed by DRT wherein they are entitled to get the decretal amount with compound interest. Taking into consideration these facts, in our view, the legislative intention therefore would be taken to its logical conclusion. Therefore, it will have to be held that the date of the last order of the winding up of the Company would be the date from which the workers dues would be calculated and not the earlier date on which much emphasis is laid by the learned Senior Counsel appearing on behalf of the Appellants.
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2016 (2) TMI 644
Arbitration and Conciliation - Held that:- As per the principles of tracing benefits acquired by fraud, breach of confidence, breach of fiduciary relationships or by other wrong doings therefore do not get benefit under the defence of change of position. Further change of position as a defence has to be causally linked to the receipt that makes it inequitable for the recipient to make restitution. Mere fact that the recipient has spend the money whole or in part, does not make it inequitable because expenditure might have been incurred by him in any event in ordinary course of things. But a bona-fide recipient is entitled to establish the defence that he had increased his outgoings as a result of the receipt. [See, para 168, Halsbury’s Law of England, Vol. 40(1), 4th Edition]
Since analogous principles need to be applied in the instant case, the sketchy pleadings and no material save and except the shareholding pattern in Southend does not entitle VSL to any order against Southend, which is an independent entity.
On the question whether the interim measure granted adequately secures an interest of VLS pending adjudication of objections to the award, the pleadings in FAO (OS) No.295/2015 have not even attempted to make any reference to the value of the assets covered by the sweep of the interim measure against the Guptas, Jains and BMS. Thus, even FAO (OS) No.295/2015 is liable to be dismissed and the prayer that the Guptas and the Jains be directed to furnish a bank guarantee to secure the sum as per the award is rejected.
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2016 (2) TMI 584
Scheme of Amalgamation - Held that:- Considering the above facts and circumstance and taking into account the contentions raised by the affidavits and reply affidavits and the submissions advanced during the course of hearing, this Court is satisfied that the observations made by the Regional Director, Ministry of Corporate Affairs, have been suitably addressed. It can be concluded that the present Scheme of Arrangement is in the interest of the shareholders and creditors of all the companies, as well as in the public interest, therefore, the same deserves to be sanctioned.
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2016 (2) TMI 583
Effect of amendment of the Companies Act in 2013 - Appointment of M.D. - whether, after the amendment of the Companies Act in 2013 which was brought into force with effect from 01/04/2014, any Managing Director who was appointed prior to the Amendment Act i.e. before 01/04/2014 would have a right to continue to act as Managing Director after his attaining the age of 70 years without special general resolution being passed by the Company in its general meeting? - Held that:- It has to be borne in mind that by virtue of the Amendment Act of 2013, which came into force on 01/04/2014, one additional disqualification was added to the list of disqualifications which were in existence under the old Act under Section 267. Since a new clause was added as further disqualification for appointment or continuation as Managing Director of the Company, it would operate not only at the stage of appointment but also would operate in the case of a person who has already been appointed and attained the age of 70 years and such a person, therefore, by virtue of disqualification, had no right to be continued as Managing Director, unless a special resolution was passed by the Company. There is no question therefore of the retrospective application of the provision. Since Section 196(3)(a) would apply prospectively, whoever attains the age of 70 after the Amendment Act came into force would cease to function as Managing Director by operation of statute.
In the present case, prior to 2013 Amendment Act, appointment after the age of 70 years was not permissible subject to proviso but after the Amendment Act came into force, this was added as disqualification for further continuation of a person after he attained the age of 70 years. In a case therefore where the appointment is already made and thereafter eligibility criteria is changed then, in that event, it could be said that the vested right is created in a person who is already appointed prior to the amendment and additional eligibility criteria could not be applied retrospectively. However, in a case where additional disqualification is added to the Section then in such a case, after disqualification is incurred after his initial appointment, he would cease to continue as Managing Director since the disqualification would operate as cesession or discontinuation to work as Managing Director. In our view, the learned Single Judge has failed to note this distinction between the disqualification which is added after the appointment and the eligibility criteria which is added after his appointment. In the former case, disqualification would operate even after the appointment but in the latter case, it would operate prospectively.
If appointment to the post of Managing Director is made after coming into force of the Amendment Act, 2013 on 1-4-2014, a person who is above the age of 70 years cannot be appointed on account of disqualification, subject to fulfillment of the proviso. On the other hand, if he was already appointed prior to 1-4-2014 when he was below the age of 70 years, on account of operation of statute, disqualification, whenever incurred after the Amendment Act, would operate automatically, subject to proviso i.e. special resolution being passed by the Company. Appeal allowed.
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