TMI Blog2006 (3) TMI 336X X X X Extracts X X X X X X X X Extracts X X X X ..... to 95,00,777 equity shares of Rs. 100 each as on 15-9-2005; G.I. India (P.) Ltd. ( second transferor-company ) incorporated on 22-1-2003, having authorised share capital of Rs. 40,00,00,000 divided into 4,00,00,000 equity shares of Rs. 10 each and issued, subscribed and paid-up share capital as Rs. 15,31,95,410 divided into 1,53,19,541 equity shares of Rs. 10 each as on 15-9-2005 ; Force Computers (P.) Ltd. ( third transferee-company ), originally incorporated as Smart Modular Tech India (P.) Ltd., on 23-6-2000, having authorised share capital of Rs. 10,00,00,000 divided into 1,00,000 equity shares of Rs. 1,000 each and the issued subscribed and paid-up share capital of Rs. 4,71,58,000 divided into 47,158 equity shares of Rs. 1,000 each as on 15-9-2005 and 31-9-2005, respectively and Winphoria Networks (India) (P.) Ltd., ( fourth transferor-company ), incorporated as a private limited company on 30-8-2000 having authorised share capital of Rs. 10,00,000 divided into 1,00,000 equity shares of Rs. 10 each and the issued, subscribed and paid-up share capital of Rs. 6,96,860 divided into 69,686 equity shares of Rs. 10 each as on 15-9-2005 seeking amalgamation with Motorola India (P.) L ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ur secured creditors to the tune of Rs. 82,62,12,458.69. The transferee-company relied upon no objection (Annexure P.27) in respect of all the secured creditors, to the scheme of amalgamation proposed. The transferee-company has 409 unsecured creditors, representing unsecured credit of Rs. 33,64,819.249. The list of unsecured creditors annexed to the petition included parties for whom provisions have been made by the respective petitioner-company in its books of account. As a matter of abundant caution, it was pointed out that inclusion of amounts provided for in the list of unsecured creditors is not intended to and does not amount to an admission or acknowledgement of those sums and claims and further the same is without prejudice to the petitioners right to contest the claim of such parties in whole or in part. 6. Keeping in view the claim of the petitioners, this court, vide order dated 10-11-2005, dispensed with the convening and holding of meeting of the shareholders of the petitioner-companies and the meeting of secured creditors of the transferee-company. The meetings of unsecured creditors of the petitioner-companies were directed to be convened and held on 24-12-20 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... set up. The transferee-company relieved the engineers of UWTL from deployment without reason and prior notice, failed to issue and delayed the issue of purchaser order in breach of its commitment for further deployment of engineers, etc. It is the case of the objectors that huge sum of money was invested in setting up Motorola Centre of Excellence for training its engineers and for meeting its obligations under the said agreement. Considerable time, effort and money was put in, in anticipation of the business projects by the transferee-company from time to time. It is also pleaded that on 25-9-2003, Mr. Pramod Saxena, the then chief executive of the transferee-company had sought a soft loan of Rs. 50 lakhs from Dr. Rao of UWTL. The said amount was arranged by Dr. Rao to tide over his personal difficulty. However, the Central Bureau of Investigation has registered an FIR on 25-9-2003, one of the accused being the transferee-company. Since the money was sourced from UTL group, Dr. Rao was also named in the FIR. A fact-finding team was constituted by Motorola Inc., the parent company of the transferee-company to investigate into the said incident. As per the objectors, it is believed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pany and the latest auditors report on the accounts of the company including the fact of complaint filed against the transferee-company by the Central Bureau of Investigation, having not been disclosed, the order of sanctioning of the scheme should not be made. It is also pointed out that the notice of the meeting of 24-12-2005, was received on 8-12-2005. Thus, the objectors have not received the requisite notice as contemplated under the law. 11. It has also been pleaded that on 4-1-2006, a sum of Rs. 33,65,154.00 was due and payable by the transferee-company to UWTL for the services rendered but the objectors have received cheques for Rs. 8,58,565.05 and Rs. 9,14,641.66 respectively, towards some of the outstanding invoices. It is pointed out that such payment is clearly inconsistent with the stand adopted by the transferee-company earlier. It was pointed out that the objectors have also filed a suit in the Bombay High Court for recovering the amount due and payable for the services rendered under the agreement dated 25-8-2002 and for recovery of unliquidated damages for the breaches committed by the transferee-company. 12. The petitioner-companies in reply to such object ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cured creditors. Since all other 148 unsecured creditors present and voting, voted in favour of the implementation of the scheme, therefore, the claim was approved by 98.01 per cent in number representing 98.43 per cent in value of the unsecured creditors present and voting, in the meeting. Even assuming the objectors are entitled to vote on of the said amount of Rs. 50,548.082 the same would have no bearing on the outcome of the meeting inasmuch as the scheme would have been approved representing 98.23 per cent in value. 15. It is pointed out that in the course of its business, the transferee-company has received products and service from Overseas Motorola entities for valuable consideration. Therefore, such Overseas Motorola entities are included in the list of unsecured creditors. The allegation that no amount is due or payable to such Overseas Motorola entities, is vehemently denied. Such amount is due is reflected in its books of account as well. It is pointed out that the Overseas Motorola entities constitute only 17 votes representing unsecured credit of 1,35,22,13,654 and other 134 unsecured creditors represent unsecured credit of Rs. 1,50,15,81,196. It is pointed out t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ounded. In my view, though it is the stand of the transferee-company that the FIR is not registered against the transferee-company but against Shri Pramod Saxena in his individual capacity but the fact remains that registration of an FIR by itself is not such a fact, which was required to be disclosed in the proposed scheme. With the FIR registered, the investigating machinery is set in motion to find out the veracity of the allegations contained in such FIR. It is only on completion of investigation, prima facie, it can be said that there is allegation of misfeasance, which may be a relevant fact to be disclosed in the proposed scheme. Therefore, the non-disclosure of the FIR in respect of some allegations against the former country manager of the transferee-company is not material fact, the consequences of which can be passed on to the transferee-company. As a matter of fact in the objections itself, it is the allegation of the objectors that a sum of Rs. 50 lakhs was given to Shri Parmod Saxena to tide over his personal difficulty. Therefore, to allege that the conduct of the company is under investigation seems to be far fetched, but since the matter is under investigation, i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... red creditors, is again without any merit. Mere filing of the suit to claim the said amount cannot be said to be a cause of accrued or contingent liability. The claim of the said amount is based upon unliquidated damages in respect of loss of expected future profits. Since the claim is required to be established before the competent court of law, therefore, the same amount cannot be said to be a liability of the transferee-company, which was required to be reflected in the list of unsecured creditors. 22. The objection that classification of the unsecured creditors by including Motorola Overseas entities as unsecured creditors is with a view to gain undue leverage to the transferee-company, is again not tenable in law. The amount due is claimed to be reflected in books of account. There is nothing on record, which may lead to an inference that such amount was not reflected in the books of account. In the scheme of amalgamation of the companies, the unsecured creditors such as the objectors and Motorola Overseas entities are not sought to be dealt with separately. The entire claim of unsecured creditors is sought to be maintained without any modification. The amount due and paya ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tors, is again not made out. The transferee-company has relied upon communication dated 9-12-2005, addressed by UWTL, wherein Mr. Ameya Joshi, advocate, was authorised to inspect and take copies of the documents specified therein. Mr. Joshi has inspected the documents on 12-12-2005. The inspection of the documents is not found to be deficient in any manner. The objection that the copy of the petition was received only on the afternoon of 23-12-2005 cannot be believed inasmuch as on 24-12-2005, no such objection has been raised before the chairman appointed for the meeting of unsecured creditors. 26. It may be noticed that the objectors are the unsecured creditors of the transferee-company alone. The scheme of amalgamation is in respect of four transferor-companies. The assets which are contemplated to amalgamate with the transferee-company are much more than the projected liability of the objectors. It will be so evident from the following chart: (Rs. in million) MIPL MIEL WNIPL FIPL FIPL Share Capital 1825.8 950 0.7 47.2 153.2 Reserves 860.1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nsferor-companies had paid requisite fee and other charges in respect of the petitioner-companies at the time of its authorised share capital was created. The question of payment of stamp duty also came up for consideration before this court in CP No. 131 of 2005 ( Saluja Fabrics Ltd. and Saluja Processors (P.) Ltd. and SEL Mfg. Co. (P.) Ltd. and for amalgamation of Saluja Fabrics Ltd. and Saluja Processors (P.) Ltd. with SEL Mfg. Co. (P.) Ltd. ) decided on 23rd February, 2006, as well. Relying upon a judgment of the High Court in Company Petition No. 25 of 2003 in Jaypee Cement Ltd., In re [2004] 52 SCL 801 (All.) decided on 10-3-2004, it was held that if the authorised share capital of the transferee-company is increased with the merger of the authorised share capital of the transferor-company, the fee is not required to be paid again as the fee stands paid by the transferor-company. Therefore, I do not find any merit in the said objection. 29. In respect of the objection that memorandum of association of a company can be amended after following the procedure prescribed under the relevant provisions of the Act, including passing of special resolution by the member ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d. In reply, it is the stand of the company that para 2.5.5.3 be modified and that the equity shares held by the transferee-company including nominee in the said transferor-companies would get cancelled and extinguished. Therefore, the modified clause 2.5.5.3 of the scheme shall read as under : "The equity share held by the transferee-company including its nominee in the share capital of GHPL shall stand cancelled and extinguished." 33. In respect of balance sheet as on 31-3-2005 of transferor-company Force Computers India (P.) Ltd., it has been clarified that there is a typographical error in Schedule B to the balance sheet. The error is in giving the face value of the equity shares as Rs. 100 instead of Rs. 1,000. Such error is apparently a typographical error and does not in any manner affect the other figures or computations in the balance sheet as the amount in Schedule B is given correctly by taking into consideration the face value of the equity shares as Rs. 1,000. It has been further pointed out that the face value of the equity shares has been given correctly in para 23 of the company petition as well as clause 2.1.1 of the scheme. Since the mistake is typographical ..... 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