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2016 (7) TMI 977 - GUJARAT HIGH COURT

2016 (7) TMI 977 - GUJARAT HIGH COURT - TMI - Scheme of Arrangement in the nature of Amalgamation is in the interest of the Shareholders and Creditors of all the three companies as well as in the public interest, therefore, the same deserves to be sanctioned and the same is hereby sanctioned. - The Reduction of Issued, Subscribed and Paid up share capital of the Transferee Company viz. Kalthia Engineering and Construction Limited as envisaged under Clause 15 of the Scheme is specifically gra .....

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re hereby granted. - The petitions are disposed off accordingly. - COMPANY PETITION NO. 145 of 2016 In COMPANY APPLICATION NO. 141 of 2016 With COMPANY PETITION NO. 146 of 2016 In COMPANY APPLICATION NO. 142 of 2016 TO COMPANY PETITION NO. 147 of 2016 In COMPANY APPLICATION NO. 143 of 2016 - Dated:- 15-7-2016 - MR. R.M.CHHAYA, J. FOR THE PETITIONER : MR TUSHAR P HEMANI, ADVOCATE, MS VAIBHAVI K PARIKH, ADVOCATE FOR THE RESPONDENT : MR KSHITIJ AMIN, ADVOCATE for DEVANG VYAS, ADVOCATE ORAL ORDE .....

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Limited viz. the Transferee Company and Restructure of Capital of Kalthia Engineering and Construction Limited proposed under Sections 391 to 394 read with Sections 100 to 103 of the Companies Act, 1956. 2. All the three petitions being necessarily interconnected, they were heard together and are considered simultaneously by this common order. 3. Ms. Vaibhavi Parikh, learned advocate for the petitioner companies submitted that Kalthia Investment Private Limited (KIPL), the First Transferor Compa .....

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at Bhavnagar and Rajkot. Kalthia Engineering and Construction Limited (KECL), the Transferee Company is a public limited company and primarily engaged in the business of taking up on a contractual basis various civil construction jobs relating to building of roads, canals, industrial sheds and other miscellaneous construction projects in the infrastructure segment. KECL is specializing in taking up turnkey jobs on EPC basis. The principal focus of the company is in road projects. KECL is also ha .....

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ve factors which will culminate in overall improvement in profits. KIPL and RLKEAPL are subsidiaries of KECL. Substantial equity shares of KIPL and RLKEAPL are owned and held by KECL. Merger of both the companies into KECL pursuant to this Scheme would result in streamlining the group corporate structure. The merger will further enable to reduce the number of entities within the group that requires to be administered and also help realize operational synergies which would also result in simplifi .....

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pany, meeting of the Equity Shareholders, sole Unsecured Loan Creditor and sole Unsecured Trade Creditor were dispensed with in view of the written consent letters from all its shareholders and sole unsecured loan and trade creditor, approving the proposed scheme and confirmation of the same by a certified Chartered Accountant, being placed on record. There are no Secured Creditors of the First Transferor Company. 6. Similarly, in case of R. L. Kalthia Engineering and Automobiles Private Limited .....

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ansferor Company. 7. In respect of the Transferee Company, it has been pointed out that vide an order dated 11th April, 2016, passed in Company Application No. 147 of 2016, filed by Kalthia Engineering and Construction Limited, the Transferee Company, the meeting of the Equity Shareholders of the Company were dispensed with in view of the written consent letters from all its shareholders, approving the proposed scheme and confirmation of the same by the certified Chartered Accountant, being plac .....

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nd that of the Transferor Companies held by the Transferee Company. The scheme envisages the said restructure and is proposed as an integral part of the scheme. The interests of the creditors of the Transferee Company are not in any way affected by such reduction. It has been submitted that the reduction of Equity Share Capital does not involve either diminution of liability in respect of unpaid share capital or payment to any shareholder of any paidup share capital. Further it is also pointed o .....

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r the sanction of the scheme were filed by both the Companies which were admitted on 29th April, 2016. The notice for the hearing of the petitions were duly advertised in the newspapers being The Indian Express and Jai Hind both Ahmedabad Editions on 16th May, 2016, and the publication in the Government Gazette was dispensed with as directed in the said orders. Affidavit dated 16th June, 2016 confirms the same. Pursuant to the said publication in the newspapers, no objections were received eithe .....

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ould be applicable to all the employees instead of all permanent employees . In response to the said observation, the learned counsel for the Transferor Companies submitted that the employees other than permanent employees that are employed by the Transferor Companies are as per the contractual obligations and therefore cannot be absorbed by the Transferee Company as the validity of the contract is for a specific period. In any case, the employees other than the permanent employees are automatic .....

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equired to amend Clause 12 of the Scheme. It is further clarified that the Transferee Company agrees to absorb all the employees of the Transferor Companies upon scheme coming into effect and therefore no directions are required to be issued. (ii) It has been observed by the Official Liquidator that the affairs of the Transferor Companies have not been conducted in a manner prejudicial to the interest of its members or to the public interest in terms of second proviso of Section 394(1) of the Ac .....

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nies and not to dispose of the same without prior permission of the Central Government. It is hereby 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 its statutory liability. 11.Notice of the petitions have been served upon the Central Government and Shri Kshitij Amin, learned Central Government Standing Counsel has appeared for Shri Devang Vyas, learned Assistant Solic .....

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onal Director have been dealt with. This Court has heard submissions advanced by Mr. Kshitij Amin, learned counsel appearing for the Central Government and Ms. Vaibhavi Parikh, learned advocate appearing for the Petitioners on the said observations; (i) The observation made vide paragraph nos. 2(a) and 2(b) of the affidavit of the Regional Director refers to the factual position and requires no response. (ii) The observation of the Regional Director made vide paragraph no. 2(c) pertains to the c .....

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tax Department an amount of ₹ 9,67,661/- has to be recovered from the Transferor Company No. 2 viz. R. L. Kalthia Engineering and Automobiles Private Limited and therefore the Incometax Department has sought direction that the Transferee Company to create provision of ₹ 15 lakhs towards income tax liabilities which also include the liability of interest on the late payment of the above mentioned demand and recast the accounts accordingly. In response to the said observation, the lear .....

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tified then there will be no demand against the Second Transferor Company. A copy of the said letter dated 29th June, 2016 is placed on record as Annexure - 1 along with the Additional Affidavit dated 13th July, 2016. It is further pointed out that a Clause 7 has been incorporated in the Scheme to that effect and the Transferee Company viz. Kalthia Engineering and Construction Limited has agreed to assume any liability towards the statutory dues including the Incometax dues of the Second Transfe .....

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f Amalgamation. 13.Considering all the facts and circumstances and taking into account all the contentions raised in the affidavits and reply affidavits and the submissions made during the course of hearing, on behalf of the parties, this Court is of the view that the observations made by the Official Liquidator and the Regional Director, Ministry of Corporate Affairs, do not survive. No directions are required to be issued to the Petitioner Companies. This Court is of the view that based on the .....

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ally granted. Prayers in terms of Paragraph No. 15(a) of the Company Petition Nos. 145 and 146 of 2016 for the Transferor Companies viz. Kalthia Investment Private Limited and R. L. Kalthia Engineering and Automobiles Private Limited and prayers made in terms of Paragraph Nos. 17(a) and 17(b) as well as the Minutes under Section 103(1) of the Companies Act, 1956 in terms of Paragraph 14 of the Company Petition No. 147 of 2016 for the Transferee Company viz. Kalthia Engineering and Construction L .....

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