TMI Blog1997 (5) TMI 346X X X X Extracts X X X X X X X X Extracts X X X X ..... inting the Chairman or Chairmen of the meeting(s) and notices may be issued and published in respect thereof and for all other incidental matters relating thereto. 4. Similar prayers were made in Company Petition No. 5 of 1988, filed by the transferor. 5. In Company Petition No. 14 of 1988, which was a joint petition by the transferor and transferee-companies, a prayer was made that the scheme of amalgamation/merger/compromise/arrangement, framed by the companies may be sanctioned by the Court so as to bind all the members and the creditors of the aforesaid petitioners (i.e., the transferor and the transferee-company). 6. As a matter of fact, the main relief claimed in the bunch, has been sought in Company Petition No. 14 of 1988. 7. Heard Mr. P.C. Jain, on behalf of the Income-tax Department and Mr. Anant Kasliwal, for the companies. 8. It is not necessary to give the details of all the incorporate and assets of the two companies. Suffice is to say that the two companies have been amalgamated under the provisions of section 391. The scheme of amal-gamation which was prepared on 19-7-1990 is annexed as Schedule-1 to the judgment. 9. The circumstances which ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h the operation of the transferor-company are improving over last 2-3 years, however, the same require rationalisation. Amal-gamation would enable consolidation of certain operations of both the companies with a view to achieve economics of scale, which will be in the interest of both the companies, ( f )amalgamation of the aforesaid companies would mean expansion, modernisation and diversification, which would generate further employment in the country and this amalgamation is in the public and national interest as well, ( g )amalgamation will provide a healthier financial base, especially from the view point of the transferor-company, which will enable to avail better financial assistance from the banks and/or financial institu- tions for its working capital requirements and expansion projects, ( h )increase in business and thereby profits at the Hotels would lead to better services to the tourists and other guests at the hotels. Apart from earning a good will for the company, the amalgamation would, therefore, also be in the interest of the tourists industry as a whole, and ( i )it is seen from the above that by amalgamation, all the aforesaid- three Hotels would genera ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f affairs. He submitted his opinion regarding the book value of the shares. 16. In this case, the only point which we have to consider and decide is as to how the Income-tax Department would be affected by this amalgam-mation so far as capital gain tax liability or any other tax liability is concerned. 17. We are conscious of the fact that while scrutinising the matter of the amalgamation of two companies the Court has always to keep in mind the public interest as supreme. While doing so, the scheme has to be examined having regard to the object, general conditions and the back-ground under which the scheme has been framed. This scheme has always to be according to the wisdom of the shareholders. 18. If the Court, on a careful examination of all the factors leading to the framing of the scheme, comes to the conclusion that it is fair and is in the public interest, it will have no hesitation in accepting the same and pass an order for amalgamation. Except the Income-tax Department, nobody else has raised any objection to the merger/amalgamation of the two companies. 19. Mr. Jain, appearing on behalf of the department, contended that this merger was done in order to a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... feree-company. It is agreed between the parties that they should amalgamate to the intent that the transferor-company should merge in the transferee-company as set out herein. It is clarified that with effect from the appointed day, apart from profits, all the losses and expenses of the transferor-company include-ing the amount paid, if any, to the directors of the transferor- company shall belong to the transferee-company and shall be treat- ed as such for all purposes including for the purpose of declaration of dividends for the year ended after 31st March, 1987, by the transferee-company. 4.As part of the consideration for the transfer, the transferee-company shall allot to the shareholders of the transferor-company (whose names stand in the Register of Members of the transferor-company as on the day on which this scheme is sanctioned) for every 1 (one) equity share of the transferor-company 5 (five) equity shares of the transferee-company as fully paid-up, i.e., to say the transferee- company shall allot for each or 25,000 (Twenty Five Thousand) equity shares of transferor-company 1,25,000 (One Lac Twenty Five Thousand) equity shares of the transferee-company as fully paid ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to have carried on its business on behalf of the transferee- company until such time the scheme becomes effective. The trans-feree-company also proposes to obtain further loans and bank facilities from financial institutions and banks on the security of its assets. The transferor-company shall carry on its business until the completion of amalgamation with the transferee-company with the utmost prudence and shall not save and except with the permission of the transferee-company, dispose of, alienate or encumber during the pendency of this scheme any of its fixed assets or declare any dividends on its shares until the scheme of amalgamation is sanc-tioned by the High Court. Profits Losses accruing after the appointed day to the transferor-company upto the date of amalga-mation shall for all purposes be treated as the profits and losses of the transferee-company. 9.The transferor-company shall, with all reasonable despatch, make an application to the High Court of Rajasthan at Jaipur for sanctioning this scheme of amalgamation under the provisions of section 394 of the Companies Act, 1956 for carrying this scheme into effect and for dissolution of the transferor-company without ..... X X X X Extracts X X X X X X X X Extracts X X X X
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