TMI Blog2016 (2) TMI 354X X X X Extracts X X X X X X X X Extracts X X X X ..... ed advocate for Mrs.Swati Soparkar, learned advocate on behalf of the petitioner Companies. 3. It has been submitted that all the companies in the proposed scheme belong to the same group of management. They are all engaged in complementary commercial activities, viz. Animal Health Products. Hence, with the primary objective of consolidation of the above activities, the Board of Directors of the petitioner Companies have proposed the amalgamation of three companies into the Transferee Company, with the primary objective of consolidation of the activities and operational synergy. The Demerged company is currently engaged in trading of large animal health products and also providing consultancy services to cattle farmers. With a primary intention of achieving operational efficiencies, it has been decided by the management of Hester Biosciences Limited and Innoves Animal Health Private Limited to demerge the Trading undertaking of Innoves Animal Health Private Limited into Hester Biosciences Limited. 4. It has been further pointed out that the Transferee Company viz. Hester Biosciences Limited is a listed public limited company and the shares are listed on BSE Limited and Nation ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bsidiary(s) of Promoter/Promoter Group of the listed company, the compliance of clause 5.16(a) of SEBI circular No.CIR/CFD/DIL/5/2013 dated February 4,2013 read with SEBI Circular No.CIR/CFD/DIL/8/2013 dated May 21, 2013 is not necessary for the petitioner Company. The petitioner Company has already submitted the requisite Undertaking and the Auditor's certificate to the SEBI. In view of the facts and circumstances, it was not necessary for the Transferee Company to obtain the approval from its public shareholders through Postal Ballot and evoting. 7. Further, the attention of the Court is drawn to paragraph17 of the petition filed by the Transferee Company, where it has been submitted that the proposed scheme does not envisage any compromise with the Secured or Unsecured Creditors of the Company. It has been further submitted that the Transferee Company has substantially positive net worth in the preScheme scenario and although the Transferor Companies and the Demerged undertaking have some losses, the net worth of the Transferee Company shall not be severely affected. The net worth of the Transferee Company in the post Scheme scenario shall be more than ₹ 74.75 Crore ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es Act, 1956. 10. Accordingly, the Transferee Company is hereby directed to preserve the books of accounts, papers and records of all the Transferor Companies and not to dispose of the same without prior permission of the Central Government. It is further directed that even after the Scheme is sanctioned, the Transferor companies shall comply with all the applicable provisions of law and shall not be absolved from any of their statutory liabilities. 11. Notice of the petitions has been served upon the Central Government and Mr.Kshitij Amin, learned Central Government Standing Counsel has appeared for the Central Government. A common affidavit date 4th November, 2015, has been filed by Mr.Shambhu Kumar Agarwal, the Regional Director, NorthWestern Region, Ministry of Corporate Affairs, whereby four main observations are made. 12. The attention of this Court is drawn to the common Additional Affidavit dated 20th November 2015 filed by Mr.Rajiv Gandhi, Chief Executive Officer and Managing Director of the petitioner Transferee Company, wherein the above observations have been dealt with. 13. This Court has heard the submissions made by the learned counsel appearing for the C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e rules and regulations, including the provisions of FEMA, to enable it to issue shares to the shareholders of the Demerged Company. In view of the same, no further directions are required to be issued to the petitioner in this regard. (iv) The observation of the Regional Director made vide paragraph2( f) pertains to the Accounting Treatment as envisaged under Clause23.4 of the Scheme. It is contended that the proposed treatment is against the requirement of accounting principles and the excess of assets over liabilities cannot be credited to the General Reserve Account and has to be treated as Capital Reserve Account. In this regard, it has been submitted that the prevalent Accounting Standards are not applicable to the Scheme of Demerger. It is further pointed out that even under AS14, a company is entitled to prescribe under the Scheme itself, a specific treatment to be given to its reserves. Further, Section211 (3B) of the Companies Act, 1956, also provides that if the practice adopted for such accounting entry varies from the said standard, necessary disclosure should be made in the financial statements. The said issue has already settled by several decisions of various H ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ies Act, 1956, as the case may be. The request for adjournment cannot, therefore, be considered. 16. Considering the above facts and circumstances and taking into account the contentions raised in the affidavits filed by the respective parties and the judgment of this High Court, as well as the submissions advanced during the course of hearing, this Court is satisfied that the observations made by the Regional Director have been sufficiently addressed and no longer survive. This Court is of the view that the present Scheme of Arrangement would be in the interest of the shareholders and creditors of all the companies, as well as in the public interest. The same, therefore, deserves to be sanctioned. 17. Hence, the following order : (1) The prayers in terms of paragraph16( a) of the Company Petitions Nos.319 to 321 of 2015, and paragraph29( a) of the Company Petition No.339/2015, are hereby granted. (2) The petitions are disposed of, accordingly. (3) So far as the costs to be paid to the Central Government Standing Counsel is concerned, they are quantified at ₹ 10,000/per petition for the Transferee Company, being a listed company and at ₹ 7,500/per petitio ..... X X X X Extracts X X X X X X X X Extracts X X X X
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