TMI Blog2009 (5) TMI 540X X X X Extracts X X X X X X X X Extracts X X X X ..... 983, in the name of Paramount Centrispun Castings Ltd., in the State of Maharashtra and its name was changed to Paramount Centrispun Castings (P.) Ltd., with effect from 26-4-2001. The registered office of this company was shifted from the State of Maharashtra to the State of Gujarat with effect from 15-9-2008. This company is a wholly-owned subsidiary of AIA Engineering Ltd. It is doing the job work of manufacturing of semi-finished castings for AIA Engineering Ltd. 3. The petitioner in Company Petition No. 24 of 2009 is Reclamation Welding Ltd. It was incorporated on 10-4-1981, in the name of Grey Casting Ahmedabad (P.) Ltd., and its name was changed to Reclamation Welding (P.) Ltd., with effect from 22-11-1990 and was further changed to Reclamation Welding Ltd., with effect from 11-5-2005. This company is also a wholly-owned subsidiary of AIA Engineering Ltd., and it is doing the job work of manufacturing of semi-finished castings for AIA Engineering Ltd. 4. The petitioner of Company Petition No. 25 of 2009 is AIA Engineering Ltd. It was incorporated on 11-3-1991, in the name of Magotteaux (India) (P.) Ltd., and its name was changed to AIA Engineering (P.) Ltd., with eff ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... etition No. 23 of 2009, i.e., Paramount Centrispun Castings (P.) Ltd., had filed an application in this Court being Company Application No. 587 of 2008 for requisite directions for dispensing with the convening and holding of the meeting of the equity share-holders of this company in view of the fact that the consent letters had been received from all the equity shareholders and that there had been no objection. By order dated 24-11-2008, passed by this Court in the said company application, this Court dispensed with the requirement of holding of meetings of the equity shareholders of this company. This company has also prayed for dispensing with the meeting of the creditors secured and unsecured of the company in the light of the fact that no compromise was offered to any of the creditors and neither any liability of the creditors under the scheme is being reduced or extinguished. This Court vide its order dated 24-11-2008, dispensed with the said meeting, however, this Court directed to inform all the secured and unsecured creditors having the amount due to them by the company exceeding Rs. 10,00,000. The company has thereafter filed another application being Company Applicat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the equity shareholders of the company on 16-1-2009. Mr. Sanjay Mazumdar, the director of the company and in his absence, Mr. Bhadresh K. Shah, the director of the company and in his absence, Mr. R.S. Shah, the director of the company was ordered to be appointed as the chairman of the said meeting. In the said company application, the company had also prayed for dispensing with the meeting of the secured and unsecured creditors of the company in light of the fact that the rights and interests of the creditors of the company are not affected by the scheme. This Court vide its order dated 24-11-2008, dispensed with the holding of meetings of the secured and unsecured creditors of the company. 9. Notices of meetings were sent individually to the equity shareholders of the company, pursuant to the order dated 24-11-2008, together with a copy of the scheme and the explanatory statement required under section 393 of the Act and the form of proxy. Notice of the meeting was also advertised as directed by this Court in The New Indian Express , Ahmedabad edition and Sandesh , Ahmedabad edition, on 19-12-2008. Mr. Sanjay Mazumdar, the chairman of the meeting has already filed the requ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... feree-company, i.e., AIA Engineering Ltd., has violated the provisions of section 297 of the Compa- nies Act, 1956, in respect of transactions with Hotel Gulmarg and the transferee-company assured to file a compounding application for compounding such offences. Since the transferee-company is a public and listed company, in context of corporate governance, the applications stating the facts are to be brought to the notice of this Court. 14. Mr. Mihir Joshi, learned senior counsel appearing for the petitioner-companies, has submitted that simply because the Court has granted its sanction to the scheme, it would not absolve the transferee-company from any liability that may arise in future on violation of any statutory provisions or the scheme would not affect the pending proceedings either before the civil or criminal court and the liability that may be inflicted upon the petitioner or petitioners or the directors would not be affected simply by virtue of the scheme of amalgamation. As a matter of fact, the transferee-company made compounding application under section 621A of the Companies Act, 1956, on 14-4-2009. The Court finds substance in the submission made by Mr. Joshi. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e, the machinery of the transferor-company should be clubbed with the machinery of the transferee-company and shown at a combined figure. Similarly, general reserve of the transferor-company should be clubbed with the general reserve of the transferee-company. The balance of the profit and loss account of the transferor-company should be aggregated with the corresponding balance of the transferee-company or transferred to the general reserve, if any. This reflects the facts that the entries are simply merged together. No goodwill account should be accounted for. ( b )If at the time of amalgamation, the transferor and transferee-companies have conflicting accounting policies, a uniform set of accounting policies should be adopted following the amalgamation. The effects on the financial statement of any changes in the accounting policies should be appropriately disclosed. ( c )The difference between the amount recorded as the share capital issued ( plus any additional consideration in the form of cash or other assets) and the amount of share capital of the transferor-company should be adjusted in the reserves of the transferee-company. ( ii ) Purchase method - This method of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rsed. 17. From the above, it appears that no goodwill or capital reserve account is to come about as a result of difference between the purchase conside-ration paid and the net assets takenover by the transferee-company. The difference is to be adjusted in general reserve or other reserves. 18. Having heard Mr. Mihir Joshi, learned senior counsel appearing with Mr. Sandeep Singhi, the learned advocate for the petitioner-companies and Mr. Harin P. Raval, the learned Assistant Solicitor General of India appearing for the Central Government and having considered the observations made by the Regional Director as well as the reply affidavit filed on behalf of the petitioner-companies, the Court is of the view that none of these two observations have any bearing in the eye of law. As far as the first observation is concerned, the Court has made it very clear while disposing of the earlier petitions involving the same issue and the Court took the view that grant of sanction to the scheme would not absolve the company or its directors and, hence, the transferee-company is liable to face all the necessary proceedings which are pending and/or prefer an application for compounding of ..... X X X X Extracts X X X X X X X X Extracts X X X X
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