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IN RE : GALACTIC ENTERPRISES LIMITED

2016 (3) TMI 334 - GUJARAT HIGH COURT

Composite Scheme of Arrangement - Held that:- The observations made by the Regional Director having been addressed and the Official Liquidator having opined that the affairs of the Petitioner Transferor Companies have not been conducted in a manner prejudicial to the interest of its members or to the public interest, in the opinion of this Court, there does not appear to be any impediment to the grant of sanction to the Composite Scheme of Arrangement. From the material on record and on a perusa .....

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would not absolve anyone, who is otherwise liable for any responsibility or liability, only on account of this sanctioning. - COMPANY PETITION NO. 236, 237, 239 of 2015, COMPANY APPLICATION NO. 76, 77, 79 of 2015 - Dated:- 8-3-2016 - SMT. ABHILASHA KUMARI, J. FOR THE PETITIONER : MS DHARMISHTA RAVAL, ADVOCATE FOR THE RESPONDENT : MR. KSHITIJ AMIN, CENTRAL GOVERNMENT STANDING COUNSEL FOR MR DEVANG VYAS, ADVOCATE ORAL ORDER 1 These petitions have been filed by the Petitioner Companies for the sa .....

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enable the merged entity to focus on, and enhance, the business of running a hotel and also carrying on the activities of a restaurant. Moreover, the proposed Arrangement between the Transferor Companies with the Transferee Company would enable the companies to carry on and conduct the business more efficiently and advantageously. The proposed Arrangement would also reduce the administrative cost and provide a more efficient and lean framework to carry on its activities. 3 With respect to Chama .....

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and Unsecured Creditors of the Transferor Company 2, were dispensed with. 5 With respect to Galactic Enterprises Limited ( Transferor Company 3 ), pursuant to order dated 31.03.2015, passed by this Court in Company Application No. 76 of 2015, the meeting of the Equity Shareholders of the Transferor Company 3 was held as per the directions issued in the said order and the Scheme was unanimously approved by the Equity Shareholders. The Chairman had submitted a report dated 11.06.2015, in respect .....

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2015. The public notices for the same were duly advertised in the Ahmedabad edition of the English daily newspaper Indian Express and in the Gujarati daily newspaper Sandesh on 05.08.2015. The publication in the Government gazette was dispensed with. 8 Notice of the petition has been served upon the Regional Director (Western Region) in response to which Shri Devang Vyas, Assistang Solictior General of India has filed his appearance in all the petitions and an affidavit dated 15th February, 2016 .....

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or the 6 nominee shareholders of the Petitioner Transferor Company 2 namely M/s. Victoria Capital Ventures Limited. b) In para 2(d) it is submitted that the issued share capital of ₹ 40,00,000 of the Petitioner Transferor Company namely M/s. Mangaldas Mehta and Company Limited is further divided into 3,62,600 number of Class A equity shares and 37,400 number of Class B equity shares and that, petitioner Transferor Company 2 holds 3,86,700 number of equity shares whose bifurcation is not su .....

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count of the scheme of arrangement be credited to the Capital Reserve and not general reserve as envisaged by the company. e) In para 2(g) it is submitted that vide letter dated 27.07.2015 to Chief Commissioner of Income Tax, Ahmedabad, and Gujarat he was requested to provide specific comments in respect to the proposed scheme. 11 In response to the first observation made by the Regional Director, Ms. Dharmishta Raval, learned advocate for the petitioners, has submitted that the shareholders of .....

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ed as an Annexure to the letter submitted by the petitioner Transferee Company dated 18.11.2015, it was clearly mentioned that these 6 (six) shareholders are the nominee shareholders who are holding on behalf of the petitioner Transferor Company 1. Accordingly, the petitioner Transferor Company 2 is a 100% subsidiary of the petitioner Transferor Company 1. As both the Petitioner Transferor Companies 1 and 2 are merging with the Petitioner Transferee Company, the shares held by the Petitioner Tra .....

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difference in the rights of both the classes of the equity shares, such bifurcation would not make any difference, in so as far as the present Scheme of Arrangement is concerned. 13 In response to the third observation made by the Regional Director, Ms. Dharmishta Raval, learned advocate for the petitioners, has submitted upon instructions, that the Petitioner Transferee Company undertakes, on the sanctioning of the Scheme, to cancel the shares held by petitioner Transferor Company 1 and 2 and a .....

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Companies Act provides that if the practice adopted for an accounting entry varies from the said standard, necessary disclosures should be made in the financial statements. In view of the several decisions of various High Courts, including of this Court, on the said issue, the petitioner hereby undertakes to make disclosures in the first financial statements of the petitioner Transferee Company after the Scheme is sanctioned. In this regard, it was submitted by Ms. Raval that this Court has conc .....

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e Income Tax Department are not substantial in nature. Further it is submitted that as per clause 3.2, of the Scheme all the liabilities and obligations of the Transferor Companies shall stand transferred to the Transferee Company, so as to become the debt, liability, duty and obligation of the Transferee Company. Further, clause 5 of the Scheme provides that all proceedings, of whatever nature, shall not abate and shall be continued, prosecuted and enforced against the Transferee Company. Furth .....

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the Petitioner Transferor Companies, which were supplied. The Official Liquidator obtained investigation report dated 31st March,2015 from M/s. K M Swadia & Co., Chartered Accountants, who submitted such investigation report after scrutinizing the books of accounts and affairs of the Petitioner Transferor Companies. The Official Liquidator, after examining the details and the comments offered by the Chartered Accountants has opined that in view of the report of the Chartered Accountants, the .....

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apers and records and not dispose the same without prior permission of the Central Government as per Section 396 A of the Companies Act, 1956, it was submitted by Ms. Raval, learned advocate that as observed by the Official Liquidator, the books of account and papers would be preserved by the Petitioner Company as per Section 396 A of the Companies Act,1956. It was further submitted by Ms. Raval, learned advocate, that petitioner companies would comply with the provisions of the Companies Act, 1 .....

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on record and on a perusal of the Scheme, the Scheme appears to be fair and reasonable and is not violative of any provisions of law, nor is it contrary to public policy. The Arrangement under the proposed Scheme appears to be in the interest of the companies and their members and creditors and, therefore, deserves to be sanctioned. Accordingly, the Scheme as proposed by the petitioner companies along with the newlyproposed clause 9.1 A, is hereby sanctioned. It is however, clarified that the s .....

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