TMI Blog2016 (5) TMI 595X X X X Extracts X X X X X X X X Extracts X X X X ..... NO. 262 of 2015, COMPANY APPLICATION NO. 145 of 2015 - - - Dated:- 3-5-2016 - SMT. ABHILASHA KUMARI, J. FOR THE PETITIONER : MR NAVIN K PAHWA FOR MRS SANGEETA N PAHWA, ADVOCATE FOR THE RESPONDENT : MR KSHITIJ AMIN FOR MR DEVANG VYAS, ADVOCATE COMMON ORAL ORDER 1. The present petitions are filed under the provisions of Sections 391 to 394 of the Companies Act, 1956, seeking the sanction of this Court, for the Scheme of Amalgamation of Amitech Chemicals Private Limited and Fine Hydrochem Private Limited with Hema Dyechem Private Limited. 2. Hema Dyechem Private Limited, the Transferee Company, filed Company Application No. 143 of 2015, seeking dispensation of the meeting of the Equity Shareholders. The Petitioner submitted that this being the Transferee Company, the meeting of the Creditors is not required to be held. By an order dated 28.4.2015, passed in Company Application No. 143 of 2015, this Court ordered the dispensation of the meeting of the Equity Shareholders and further ordered that this being the Transferee Company, the meeting of the Creditors is not required to be held. 3. Fine Hydrochem Private Limited, one of the Transferor Companies, file ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in fact, do not exist. Without prejudice and assuming, without admitting, that there are some typographical or other errors, the report of the Regional Director apparently is not in consonance with the requirements of the provision contained in the first proviso to Section 394(1) of the Act. The Learned counsel for the petitioner has relied upon the proviso to Section 394(1) of the Act. It is submitted that the observations made by the Regional Director are, in fact, beyond the scope and ambit of the powers conferred on him under the proviso to Section 394(1) of the Act, in the matter pertaining to the sanction of the Scheme of Arrangement. It is further submitted that as the report does not contain any observation or remark to the effect that the affairs of the Company have been conducted in a manner prejudicial to the interest of its members or to public interest, therefore, this Court may grant sanction to the Scheme. 10. Without prejudice to the above referred contention, the learned Counsel for the petitioner has invited the attention of the Court to the observations of the Regional Director and the response, as submitted in the affidavit. The observations with regard to Am ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... true and fair view of the financial statements of the Company. (f) With regard to the observation contained in Para 2(A)(6) of the first affidavit read with the contents of the further affidavit, It is submitted that AS15 has no application to the Small Medium Companies (SMC) to the extent of recognition and measurement principles. As far as the accrual of liability is concerned, the Company has adopted the policy of accounting the gratuity on pay as you go basis as reported in Note no.22(A)(l). (g) With regard to the observation contained in Para 2(A)(7) of the first affidavit read with the contents of the further affidavit, It is submitted that the Company has made necessary disclosures in Note no.22(e) forming part of the Financial Statements. (h) With regard to the observation contained in Para 2(A)(8) of the first affidavit read with the contents of the further affidavit, It is submitted that the Company has not made provisions for deferred tax assets as there is no reasonable certainty that sufficient future taxable income will be available against which such deferred tax assets can be realized. As per AS22, deferred tax assets should be recognized and carried forw ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ntents of the further affidavit, It is submitted that the provision for tax for the year is made on the estimated basis. Any excess/ shortfall in the provision is adjusted at the time of final determination. The shortfall is reduced from the surplus in the profit and loss account of the previous year. There is thus no reduction from the current year profit and loss account. This method and the method suggested by the Regional Director are different methods which are equally accepted as valid. (e) With regard to the observation contained in Para 2(B)(6) of the first affidavit read with the contents of the further affidavit, It is submitted that AS15 has no application to the Small Medium Companies (SMC) to the extent of recognition and measurement principles. As far as the accrual of liability is concerned, the Company has adopted the policy of accounting the gratuity on pay as you go basis as reported in Note no.22(A)(l). (f) With regard to the observation contained in Para 2(B)(7) of the first affidavit read with the contents of the further affidavit, It is submitted that the Company has not made provisions for deferred tax assets as there is no reasonable certainty that s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Company even otherwise is a closely held private company. It has no public exposure. Accordingly, this observation is misconceived. (d) With regard to the observation contained in Para 2(C)(4) of the first affidavit read with the contents of the further affidavit, It is submitted that the Company is not required to charge depreciation on revaluation portion to the profit and loss account of the Company. The depreciation is thus disclosed net of depreciation on the revalued portion which is charged to revaluation reserve. This treatment is in accordance with the accounting principles. Without prejudice, the Note no.24 of the Profit and Loss Account does refer to the depreciation on revaluation portion. The Company has thus made the requisite disclosures. (e) With regard to the observation contained in Para 2(C)(5) of the first affidavit read with the contents of the further affidavit, It is submitted that the loans are in respect of the car loan and the office premises. The Company is a closely held Company and the disclosures suggested in the observation are neither necessary nor would that have any material impact on the stake holders. (f) With regard to the observation ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... roposed under section 391 to 394 of the Companies Act, 1956. In any case and without prejudice to the above, it is stated by the Ld. Counsel for the petitioner, under the instructions, that the petitioner company would undertake compliance of the Income Tax Act and the Rules made thereunder. (l) With regard to the observations contained in para 2(C) of the first affidavit read with further affidavit, it is submitted the appointed date proposed is 01.04.2014 and not 01.04.2013. Amitech Chemicals Private Limited has passed a Special Resolution in the Extraordinary General Meeting held on 25.03.2015, approving alteration of the Object Clause to enable the object providing for amalgamation. A copy of the Special Resolution is placed on record with the affidavit dated 20.04.2016. 13. The Official Liquidator has filed his report dated 16.2.2016. The report confirms that the affairs of the Transferor Companies are not conducted in a manner prejudicial to the interest of their members or to the public interest. The Official Liquidator, however, has requested this Court to direct the petitioners to preserve their books of accounts, papers and records and not to dispose of the records ..... X X X X Extracts X X X X X X X X Extracts X X X X
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