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TMI Blog2018 (5) TMI 2002X X X X Extracts X X X X X X X X Extracts X X X X ..... llant No.1 (transferor company) is a company incorporated under the Companies Act, 1956. The transferor company is a private limited company. Appellant No.2 (transferee company) is a company incorporated under the Companies Act, 1956 and is also a private limited company. Both the companies are subsidiaries of Mediplus Health Services Private Limited. Both the companies are having their registered office at H.No.11-6-56, Survey No.257 & 258/1, Opposite to IDPL railway Siding Road, Moosapet, Kukatpally, Hyderabad-500037. The main business of both the companies is to establish, run, take on hire or lease, maintain, organize and promote retail pharmacy stores. To buy, sell, import, export or deal in any manner in Medical and Pharmaceuticals Products like intravenous sets, intravenous solutions, all kinds of drugs, disinfectants, tinctures, colloidal products, injectables and all the pharmaceuticals and medicinal preparations, veterinary products including setting up contract manufacturing facility etc. The Board of Directors of the appellant companies vide their respective resolutions dated 6th March, 2017 approved the Scheme of Merger/Amalgamation of Transferor company with Transfere ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cording disinclination to sanction the Scheme of Amalgamation, as proposed. Relevant portion of the impugned order is as under: "13. Upon perusal of the provisions of Section 230 and 232 of the Companies Act, 2013, in the case of merger and amalgamation of Companies, the Act does not provide for allotment of shares at a premium. When the issue was raised, the learned PCS for the Petitioner Companies, submitted a copy of the Order of Hon'ble High Court of Bombay in the matter of Scheme of Amalgamation sanctioned between Rishiroop Rubber International Limited and Puneet Resins Limited under Section 391/394 of the Companies Act, 1956. However, upon perusal of the scheme submitted to the Hon'ble High Court of Bombay, it is observed that shares of both the transferor and transferee companies are listed on Bombay Stock Exchange Limited. Therefore, the Bench is of the considered view that the order relied upon by the Petitioners are not of much useful/not in favour of the Petitioners since the facts in hand and of the scheme approved by the Hon'ble High Court are totally different to the extent that the scheme of amalgamation which was earlier sanctioned, both the Transferor and Transfe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f of the appellants were heard. 09.The learned counsel for the appellants argued that the Tribunal has recorded incorrect findings in observing that the 2nd appellant has not authority or power to issue shares at a premium to the members of the 1st appellant as part of discharging the consideration for the proposed amalgamation. Learned counsel further argued that there is no legal embargo or prohibition for issue of shares at a premium for discharge of purchase consideration in pursuance of a scheme of amalgamation either by a private company or by a public company under the provisions of Companies Act, 2013. 10.Learned counsel further argued that the approval from the relevant stakeholders such as the Board of Directors and creditors of the appellant for scheme of amalgamation have been taken and the same were filed before the Tribunal. Learned counsel also argued that Section 52 of the Companies Act, 2013 specifically provides issuance of shares at a premium, whether for cash or otherwise. 11.Learned counsel for the appellant argued that the following judgements pronounced by various Courts permitted to issue shares at a premium as part of Scheme of Amalgamation or arrangemen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eme of amalgamation as proposed. 16.Section 232(3)(i) also deals with incidental, consequential and supplemental matters, which is as follows: "Xxxxx (i) Such incidental, consequential and supplemental matters as are deemed necessary to secure that the merger or amalgamation is fully and effectively carried out: Provided that no compromise or arrangement shall be sanctioned by the Tribunal unless a certificate by the company's auditor has been filed with the Tribunal to the effect that the accounting treatment, if any, proposed in the scheme of compromise or arrangement is in conformity with the accounting standards prescribed under Section 133." 17.The above section is applicable to all the companies and does not make a distinction whether the company is a private or public company or whether it is listed company or non-listed company. The company where issues shares at a premium, whether for cash or otherwise, a sum equal to the aggregate amount of premium received on those shares shall be transferred to a "securities premium account". Thus there is no bar that the issues of shares at a premium or otherwise than cash also be resorted to by the company. 18.It is the prero ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... amation. 21.We have noted that Section 52 of the Companies Act, 2013 deals with the issue of shares at premium which is as follows:- "Section 52- Application of premiums received on issue of shares-(1) where a company issues shares at a premium whether for cash or otherwise, a sum equal to the aggregate amount of the premium received on those shares shall be transferred to a "securities premium account" and the provisions of this Act relating to reduction of share capital of a company shall, except as provided in this section, apply as if the share premium account were the paid-up share capital of the company. (2)Notwithstanding anything contained in sub-section (1), the securities premium account may be applied by the company- (a) towards the issue of unissued shares of the company to the members of the company as fully paid bonus shares; (b) in writing off the preliminary expenses of the company; (c) in writing off the expenses of, or the commission paid or discount allowed on, any issue of shares or of any debentures of the company; or (d) in providing for the premium payable on the redemption of any redeemable preference shares or of any debentures of the company; ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Section 391 of the Act is placed before the Court by the concerned applicant seeking sanction for such a scheme and the Court gets satisfied about the same. f) That the proposed scheme of compromise and arrangement is not found to be violative of any provision of law and is not contrary to public policy. For ascertaining the real purpose underlying the Scheme with a view to be satisfied on this aspect, the Court, if necessary, can pierce the veil of apparent corporate purpose underlying the scheme and can judiciously X-ray the same. g) That the Company Court has also to satisfy itself that members or class of members or creditors or class of creditors, as the case may be were acting bona fide and in good faith and were not coercing the minority in order to promote any interest adverse to that of the latter comprising of the same class whom they purported to represent. h) That the scheme as a whole is also found to be just, fair and reasonable from the point of view of prudent men of business taking a commercial decision beneficial to the class represented by them for whom the scheme is meant. i) Once the aforesaid broad parameters about the requirements of a scheme for gett ..... X X X X Extracts X X X X X X X X Extracts X X X X
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