TMI Blog2005 (7) TMI 360X X X X Extracts X X X X X X X X Extracts X X X X ..... of these companies. 3. The proposed Scheme was approved unanimously by the Equity Shareholders as the nominees of the Transferee Company. There are no Secured Creditors in case of any of the Transferor Companies. The only Unsecured Creditor being the Transferee Company has also approved the proposed Scheme. The consent letters of the Equity Shareholders and the Unsecured Creditor were put on record along with respective applications. Hence, the meetings of the Shareholders and Creditors were not required to be held and accordingly they were dispensed with vide the order passed on 7-3-2005 annexed to the petition as Annexure D. 4. After the petitions were admitted, the same were duly advertised in the Newspapers, viz., Indian Express, Vadodara edition and Loksatta-Jansatta, Vadodara edition dated 18th March, 2005 and the publication in the Government gazette was dispensed with as directed in the order dated 11th March, 2005. No one has come forward with any objections to the said petitions even after the publication. 5. Notice of the petition of the Petitioner Transferor Companies was served upon the Official Liquidator attached to this Court. Vide the report ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... urpose. She has further submitted that section 391 is a complete code in itself. Once a Scheme of arrangement/amalgamation falls squarely within the four corners of the section, it can be sanctioned even if it involves doing acts for which the procedure is specified in other sections of the Act. She has further submitted that as established and accepted in number of cases by various High Courts the principle of Single Window Clearance, permits all other formal requirements of the Companies Act, such as approval of change of objects or any other alteration of Memorandum of Association and all other consequential changes or incidental changes required for implementing the Scheme, should be formalized in a single petition. 9. She has further submitted that there is no question of payment of any Stamp Duty on the order under section 394 in the present instance as no shares are going to be issued by the Transferee Company pursuant to the amalgamation as all the Transferor Companies are wholly owned subsidiaries of the Transferee Company. She has further submitted that on the issue of the payment of the Registration Fees, it has been held by various High Courts that since the Transfe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... so referred to the decision of the Bombay High Court in the case of Vasant Investment Corpn. Ltd. v. Official Liquidator, Colaba Land Mills Co. Ltd. [1981] 51 Comp. Cas. 20 and the decision of this Court in the case of Manekchowk Ahmedabad Mfg. Co. Ltd., In re [1970] 40 Comp. Cas. 819 and also the decision of the Bombay High Court in the case of PMP Auto Industries Ltd., In re [1992] 7 CLA 17 and based on the said decisions, the Court has overruled the objections raised by the Regional Director. 12. Smt. Swati Soparkar has further relied on the decision of the Delhi High Court in the case of Hotline Hoi Celdings (P.) Ltd., In re [2005] 65 CLA 72 wherein it is observed that in case of a merger like this, where it is provided that the Share Capital of the Transferor Companies become the authorised capital of the Transferee Companies, no such payment of fee to the Registrar of Companies or Stamp Duty to the State Government is payable. The Court has further observed that this issue is no more res integra and stands settled by series of judgments of various High Courts. She has, therefore, submitted that the objection raised by the Regional Director is not sustainab ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... laws as may belong to or be available to the Transferor Company,. . . all debts, liabilities and duties of the Transferor Company and all other obligations of whatsoever kind including liabilities for payment of gratuity, pension benefits, provident fund or compensation in the event of retrenchment. She has further submitted that under clause 8 of the Scheme dealing with accounting treatment of assets, liabilities and reserves of the Transferor Company, the reserves of the Transferor Company will be merged with those of the Transferee Company in the same form as they appear in the financial statements of the Transferor Company vide clause 8( i ). Clause 11 of the Scheme provides that, upon the Scheme being sanctioned, the Transferor Company shall stand dissolved without winding up on the effective date and the effective date has been defined to mean the date on which the last of the approvals specified in clause 10 of the Scheme are obtained. She has further submitted that the Transferor Company has already paid all the necessary fees and charges to the Registrar of Companies, Maharashtra and has also paid the necessary stamp duty to the Stamp Authorities under the necessary stam ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t the Capital structure of a Company is, by law, required to be shown on the left side of the balance sheet under the heading "Liabilities". The Transferee Company is, therefore, required to show the Capital Structure (liabilities) of the Transferor Company in its balance sheet as on the effective date. She has, therefore, submitted that the addition of authorised capital of the Transferor Company into the authorised capital of the Transferee Company, taken along with the transfer of all the assets, liabilities and stock of the former Company into the latter Company is, indeed, the paramount object and the very raison d etre of merger or amalgamation, because the basic concept of both these terms is virtually the same. These terms are almost synonymous and often used interchangeably. The Country s fast changing economic scenario and the changing trends in the corporate world have been, in no small measure, the result, inter alia, of a spate of mergers and acquisitions. Corporate mergers and acquisitions have, indeed, been ushering radical changes for the better in the economic and industrial environment of the country. She has further submitted that the above integration is the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Scheme authorising such increase in the share capital of the Transferee Company, the learned counsel for the petitioner before the Madras High Court has made the statement before the Court that the Transferee Company would pay, on the Scheme of amalgamation approved by the High Court of Bombay, the necessary fee under section 97 of the Companies Act on the increased Share Capital of the Transferee Company and the Court has, therefore, taken the view that the legal objections, having been answered by the learned counsel for the Transferor Company, the order sanctioning the Scheme was passed by the Madras High Court. In that case, on concession of the learned counsel, the Court has passed the order and hence, this cannot be cited as a precedent. No other contrary decision has been pointed out by Mr. Malkan. On the contrary, judgments relied on by Smt. Swati Soparkar are clearly on the point and they have uniformly taken the decision that no such Stamp duty or Registration Charges are required to be paid on the increase of Authorised Share Capital of the Transferee Company on amalgamation or merger. Thus, after having gone through the objections and submissions, the Court is satisf ..... X X X X Extracts X X X X X X X X Extracts X X X X
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