9911796707
TMI Blog2009 (5) TMI 541X X X X Extracts X X X X X X X X Extracts X X X X ..... the demerged company under section 391 read with sections 394, 78 and 100 to 104 of the Companies Act, 1956. 2. It has been submitted that with the object of realignment of the shareholding pattern of the demerged company as agreed between the shareholders, the proposed scheme envisages the purchase of equity shares from the shareholders and subsequent cancellation and reduction of equity share capital by the demerged company. 3. It has been further submitted that the demerged company is presently engaged in two different activities, viz., development of real estate projects as well as the development and operating of hotels. The resulting company is a newly incorporated company and will be engaged exclusively in the business of developm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dispensation with the procedure prescribed under section 101(2) of the Companies Act, 1956 as well as rules 48 to 65 of the Companies (Court) Rules, 1959. 6. In case of resulting company vide the order dated 26-2-2009, passed in Company Application No. 31 of 2009, the meeting of equity shareholders was dispensed with in view of the consent letters from all of them on oath, being placed on record. 7. After the petitions were admitted, the same were duly advertised in the newspapers being The New Indian Express and Sandesh both Ahmedabad edition of 1-4-2009 and the publication in the Government Gazette was dispensed with as directed in the order dated 13-3-2009. No one has come forward with any objections to the said petition even after the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rred to the capital reserve and not to the general reserve. 10. An additional affidavit dated 27-4-2009, has been filed by Mr. N.G. Patel, the director of the petitioner-companies, which deals with the above observation. It has been submitted that the allegation that the proposed accounting treatment is not in consonance with the accounting principles in general and Accounting Standard-14 in particular, is based on the misconception and misreading of the said Accounting Standard. The plain reading of the said standard makes it very clear that the same is applicable only in case of amalgamation and not in case of demerger as envisaged in the present scheme. In the light of this, the said principle is not applicable in the present scheme. It ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s view is supported by the decision of the Allahabad High Court in the case of Jagran TV (P.) Ltd., In re [2009] 90 SCL 138 , wherein it is held that with regard to Accounting Standard-14 a statement was given in the Delhi High Court that since the transferor company will merge into the transferee company, the Accounting Standard-14 will be followed. In the case before the Allahabad High Court there is no amalgamation but demerger of the business of the petitioner-company with the transferee company. Here in the present case, there is no amalgamation and it is merely a demerger of the business of the petitioner-company with the resulting company. Even otherwise, the petitioner has shown its willingness to treat the difference which may aris ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The objection was raised to the effect that since surplus arising out of the scheme of arrangement, i.e., arrangement/amalgamation reserve is of capital nature and cannot be considered as general reserve as the same (general reserve) is free for distribution to the shareholders of a company in the form of dividend/bonus shares, whereas "arrangement/amalgamation reserve" cannot be utilised for distribution to the shareholders. While dealing with this contention the court held that such a clause in the scheme was not objected to by the shareholders and the meeting of the shareholders unanimously approved the scheme of arrangement. The court did not see any good reason to exclude such a clause from the scheme and broadly found the scheme to b ..... X X X X Extracts X X X X X X X X Extracts X X X X
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