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TMI Blog2019 (5) TMI 1821X X X X Extracts X X X X X X X X Extracts X X X X ..... ny Petition, which are relevant to the issue in question, are as under: (1) M/s.Karnataka OEM and Spares Private Limited ("Applicant/Transferor Company")was incorporated on 10.10.1991 under the Companies Act, 1956 having CIN: U28939KA1991PTC012404 and having its registered office at 733, 1st Main C Block AECS Layout, Kundalahalli, Bangalore-560037. The Nominal Capital of the Transferor Company is Rs. 1,00,00,000/- (Rupees One Crore Only) divided into 10,00,000 (Ten Lakhs) Equity Shares of Rs. 10/- (Rupees Ten Only) each and its issued, subscribed and Paid up Share Capital is Rs. 14,51,000/- (Rupees Fourteen Lakhs Fifty One Thousand Only) divided into 1,45,100 (One Lakh Forty Five Thousand One Hundred ) fully paid up Equity shares of Rs. 10/- (Rupees Ten Only) each. The main objects of the Company, in brief, are to engage in the manufacture of machined components, including fasteners. At present the activities are carried out on job work basis for the Transferee Company. (2) M/s.Hiten Fasteners Private Limited ('Applicant/Transferee Company') was incorporated on 21.11.1983 under the Companies Act, 1956 having CIN:U28112KA1983PTC005693 and having its registered office at ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... any will have the benefit of the combined assets, cash flows and manpower of both the Companies. These combined resources will enhance its capability to expand and improve its efficiency of operations. d) The Transferor Company is specialized in business of manufacturing high tensile fasteners and with the amalgamation, benefits of enhanced operational efficiency and expansion of the range of services to ensure to both the Transferor Company and the Transferee Company. e) Accordingly, the Board of Directors of both the Companies, in their meetings held on 17.01.2019 have tentatively approved the Scheme of Amalgamation, subject to compliance of relevant provisions of Section 230 to Section 232 and other relevant provisions of the Companies Act, 2013 and the Rules made thereunder. And also subject to an order being made by the Central Government under Section 230 and 232 of the Act, the Transferor Company shall be dissolved without the process of winding up on the Scheme becoming effective in accordance with the provisions of the Act and the rules made there under. (4) It is stated that the Tribunal vide orders dated 31st October 2018 and 27th November 2018 passed in CA(CAA)No. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s attended by 15 (Fifteen) Unsecured Creditors either in person or through their authorized representatives and 8 (Eight) proxies attended the meeting totalling to 23 (Twenty Three Only) and the total value of their debts was Rs. 78,34,677/- (Rupees Seventy Eight Lakhs Thirty Four Thousand Six Hundred and Seventy Seven Only) representing 79.41% of the total value of debts of the Company. The said Scheme of Amalgamation of the Company was read and explained by the said Chairman Sri. Krishnamurthy MN, to the meeting and it was Resolved unanimously. (8) It is also stated that total number of Unsecured Creditors of the Transferee Company who were entitled to vote as on the cut-off date 31.12.2017 are 211 (Two hundred and eleven ) and total amount of debts as on that is Rs. 9,25,84,461/- (Rupees Nine Crores Twenty Five Lakhs Eighty Four Thousand Four Hundred and Sixty One Only). Against quorum of 30 (Thirty) members prescribed in the Orders, the said meeting was attended by 51 (Fifty One) unsecured creditors either in person or through their authorized representative and 9 (Nine) proxies attended the meeting totalling to 60 (Sixty) and the total value of their debts was Rs. 7,99,13,12 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng clause 1.2 "Appointed Date" means the date from which this Scheme shall become operative viz. 1st April 2018 and/or such other date as the Central Government or Tribunal modifies, then the same shall be the appointed date. b. By substituting substitute clause 2.1 of the scheme of Amalgamation with "Issued Subscribed and Paid up Capital of the Transferor Company is Rs. 14,51,000/- consisting of 1,45,100 equity shares of Rs. 10/- each instead of the existing clause 2.1 "Issued Subscribed and Paid up Capital of the Transferor Company is Rs. 14,51,000/- consisting of 14,51,000 equity shares of Rs. 10/- each. The number of shares was wrongly mentioned as Rs. 14,51,000 instead of 1,41,500 due to typographical error. c. So far as the payment of stamp duty in question is concerned, the existing clause 10.1 of the scheme of Amalgamation clarify it as detailed below: "Upon the Scheme becoming fully effective, the authorised share capital of the Transferor Company shall stand combined with the authorized share capital of the Transferee Company without any further act, instrument or deed. Registration/filing fees and stamp duty, if any, paid by the Transferor Company on their author ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ounts, papers, Statutory Registers and other related records as required by law have been maintained by the Transferor Company so far as it appear from our examination. c) On scrutiny of books of accounts, papers, statutory registers and other related records of the Company we are of the opinion that the affairs of the Company have not been conducted in a manner prejudicial to the interest of the members of the Company or public interest as per Section 232 of the Companies Act, 2013." 6. M/s. Ishwar & Gopal, Chartered Accountants have furnished a certificate dated 23.04.2018, by inter alia stating that the Accounting Treatment contained in the proposed Scheme is not in violation of the requirement of Section 133 of Companies Act, 2013, read with Rules framed thereunder. 7. Heard Shri S. Bhaskar, learned PCA for the Petitioner Companies. I have also carefully perused the pleadings of both the parties and the extant provisions of the Companies Act, 2013 and the law on the issue. 8. The Learned Counsel for the Petitioner, while pointing out various averments made in the Company Petition and various pleadings filed subsequently, has further submitted that the Scheme of Amalgamati ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... any other concerned person (i.e. BSE, NSE, SEBI, RD, ROC, OL, IT Department, Shareholders, Creditors, other stakeholders etc.). It is for the benefit of all the Companies involved and Stakeholders and it is not against Public interest. After analyzing the issue in detail, the Tribunal is convinced that the scheme in question would broadly confirm to the general principles of law as enunciated under provisions of Sections 230 to 232 of Companies Act, 2013 and the rules made thereunder. 11. It is relevant to point out here that the law on the issue. In the case of Miheer H. Mafatlal V Mafatlal Industries Ltd (1997) 1 Supreme Court Cases 579, it is inter-alia held that the factors to be considered by court in granting sanction to Amalgamation and Mergers - Creditors or members must on the basis of relevant material arrive at an informed decision for approving the scheme - Scheme should be just, fair and reasonable to the whole class of the creditors or members including the dissenting minority and should not be illegal, unconscionable, unfair or violative of any public policy - court can in appropriate cases pierce the veil of apparent corporate purpose underlying the Scheme - Howeve ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... far that, in addition to examining the statutory compliance, it must be seen that the proposed scheme of arrangement is reasonable and can be viewed as beneficial to those likely to be affected by it. Obviously the burden to prove this lies on the Petitioner. It is not open to the court to sit in judgment over the views of the shareholders and the Board of Directors unless their views were against the framework of law and public. Moreover, it is purely a business decision based on commercial considerations in respect of which intervention of the court is unwarranted. In the case of Vodafone Essar Mobile Services Ltd, In re, (2011) 163 CC 119 (Delhi) : (2011)2 CLJ 317 (DEL)@ (2011) 107 SCL 51 (Del). Wherein it is interalia held that third party cannot be permitted to file objection to a scheme just because the scheme merely affects some of his rights, unless it is established that there is violation of substantive law. Once the majority in number representing three fourth in value of the creditors or class of creditors or members of classes of members agree to any compromise of arrangement, then, the scheme, if sanctioned by the court will be binding on all creditors and members a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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