Gujarat High Court Case Information System
Print
COMP/83/2009 11/ 13 JUDGMENT
IN
THE HIGH COURT OF GUJARAT AT AHMEDABAD
COMPANY
PETITION No. 83 of 2009
IN
COMPANY
APPLICATION No. 162 of 2009
WITH
COMPANY
PETITION No. 84 of 2009
IN
COMPANY
APPLICATION No. 163 of 2009
For
Approval and Signature:
HONOURABLE
MR.JUSTICE K.A.PUJ Sd/-
===================================
1.
Whether
Reporters of Local Papers may be allowed to see the judgment ?
YES
2.
To
be referred to the Reporter or not ?
NO
3.
Whether
their Lordships wish to see the fair copy of the judgment ?
NO
4.
Whether
this case involves a substantial question of law as to the
interpretation of the constitution of India, 1950 or any order
made thereunder ?
NO
5.
Whether
it is to be circulated to the civil judge ?
NO
===================================
MEDTEK
ASIA PRIVATE LIMITED - Petitioner
Versus
-
Respondent
===================================
Appearance
:
MRS
SWATI SOPARKAR for Petitioner.
MR PS CHAMPANERI for
Respondent.
===================================
CORAM
:
HONOURABLE
MR.JUSTICE K.A.PUJ
Date
: 05/08/2010
COMMON ORAL JUDGMENT
These
are the petitions filed by two petitioner companies for sanction of
a Scheme of Arrangement
in nature of amalgamation of Medtek
Asia Private Limited,
the
Transferor Company with IRM
Limited,
the
Transferee Company under section 391 read with Section 394 of the
Companies Act, 1956.
It
has been submitted that both the Petitioner Companies belong to the
same group of management. Medtek Asia Private Limited, the
Transferor Company is presently engaged in manufacturing of pharma
products having its industrial undertaking in Mysore, state of
Karnataka. It has commanded pioneer knowhow and initial monopoly
position in several Hospital products as well as Diagnostic
products. It is in a position to explore other special pharma
products segments but for the financial constraints. The IRM
Limited, the Transferee Company is a closely held public limited
company. It has been engaged in multiple businesses. It was
originally engaged into Pharma management consultancy and Pharma
Research Manifestation but has diversified in several other
businesses like Travel, Services, Hospitality, Tea Gardens etc.
Considering its financial strengths, it is posed for venturing into
additional businesses. The amalgamation is proposed to obtain
synergic advantages. The petitions give details of the advantages
that would flow by virtue of the arrangement between these
companies.
It
has been pointed out that the proposed scheme was approved
unanimously by the Equity Shareholders and Unsecured creditors of
the Transferor company through the consent letters in writing placed
on record. It has been submitted that there are no Secured Creditors
of the Transferor Company. The Equity Shareholders of the Transferee
Company also approved the scheme through their consent letters.
Hence, the meetings of shareholders and/or creditors of the
petitioner companies were not required to be held and accordingly
they were dispensed with vide the orders passed on 9th
April 2009 annexed to the respective petitions as Annex. D.
After
the petitions were admitted, the same were duly advertised in the
newspapers viz. The Indian Express and Sandesh ,
both Ahmedabad editions dated 29th April 2009 and the
publication in the Government gazette was dispensed with as directed
in the order dated 20th April 2009. No one has come
forward with any objections to the said petitions even after the
publication. The same has been confirmed vide an Additional
Affidavit dated 22nd December 2009.
Notice
of the petition of the Petitioner Transferor Company
was served upon the Official Liquidator attached
to Gujarat High Court. Vide the report dated 8th
December 2009, filed by the Official Liquidator, it is observed
that the affairs of the Transferor company has not been conducted in
a manner prejudicial to the interest of their members or to the
public interest. The
Official Liquidator has, however, observed in his report that the
books of accounts and other records and affairs of the Company after
the appointed date i.e. 01.04.2008 have not been examined by the
Chartered Accountant. The Company has not disclosed its financial
position as on 31.03.2009. The Company, therefore, be directed to
place on record its financial position as on 31.03.2009. The
Official Liquidator has further observed that the Transferor Company
may be directed to preserve its books, papers and records for a
period of 8 years from the date of sanctioning of the Scheme of
Amalgamation and not to dispose of the records without prior
permission of the Central Government under Section 396-A of the
Companies Act, 1956 before the aforesaid period. He
has also observed that the petitioner Company may
be directed to pay an amount of Rs.4,500/- being cost in relation to
preparation of his report etc.
In response to
the report of the Official Liquidator and observations made by him,
Mrs. Swati Soparkar, learned advocate appearing for the petitioner
Companies has submitted that the Transferor Company was to be merged
with the Transferee Company with effect from the appointed date i.e.
01.04.2008. Hence, final accounts of the Transferor Company are not
prepared. She has, however, submitted that the provisional accounts
for the year ending on 31.03.2009 are already placed on the record
of this petition. Nothing adverse was found in the said accounts.
Notice
of the petition has been served upon the Central Govt. and Shri P.
S. Champaneri, learned Assistant Solicitor General appears for the
Central Govt. An affidavit dated 11th
Novemebr 2009 has been filed by Mr. Rakesh Chandra, the Regional
Director,
Western Region, Ministry of Corporate Affairs,
whereby the only observation pertains to the latest Financial
Statements of both these companies. The same has been dealt with by
the petitioner Company in the aforesaid Additional Affidavit dated
22nd
December 2009. It is stated that there is no material change in the
financial statements of the Company since the last audited
balance-sheet except reflecting the transactions conducted by the
petitioner Company in the normal course of business.
The
Regional Director has, however, filed further affidavit on
09.06.2010. It is observed in the said affidavit that on perusal of
the entire material and balance-sheet as at 31.03.2009 of the
Transferor Company with regard to Schedule II dealing with small
Creditors, it is observed that no purchases were shown in the
profit and loss account but Sundry Creditors rose from 139.52
Lacs to 173.28 Lacs. The Transferor Company has not given any
justification / clarification but inspite of the fact that the
Registrar of Companies, Gujarat has called for clarification
from the Company vide his letter dated 11.05.2010. The Regional
Director has, therefore, directed the Registrar of Companies to take
up the matter with the Company for violation of Section 211 of the
Companies Act, 1956.
The
Regional Director has further observed in his further affidavit that
on perusal of the entire material and balance-sheet as at 31.03.2009
of the Transferee Company, it is noticed that the Auditors have made
adverse comments at paragraph (f) and (g) of their report attached
to the said balance-sheet as at 31.03.2009. The matter was taken up
with the Company by Registrar of Company, Gujarat vide his letter
dated 11.05.2010 as advised by the Regional Director and the Company
has submitted its reply vide letter dated 20.05.2010. The Regional
Director further observed that the reply of the Company may hold
good, for the compliance of Section 217 (3) of the Act. However,
the reply given by the Board of Directors in their report / in their
reply to the Registrar
of Companies’ letter, no justification / clarification
has been given for non-provisions of the gratuity, especially when
the Company has made huge profits. The Company ought to have made
provisions for gratuity as provided in Accounting Standard 15
read with Section 211 (3C) of the Companies Act, 1956. The Regional
Director has, therefore, directed the Registrar of Companies to take
up the matter with the Company for violation of Section 211 (3C)
read with Accounting Standard 15.
In
response to this further affidavit of the Regional Director, on
behalf of the Transferee Company, an additional affidavit was filed
on 28.07.2010. As regards the observation made by the Regional
Director in relation to the Transferor Company, it is submitted that
the debt in account of Creditors of the Transferor Company as per
the balance-sheet as on 31.03.2009 has appeared due to the said
amount has been received from another Group Company, which has had
considerable purchases from the Company effected in the past, which
has paid part payment of the amount as advance for buying some
machinery from the petitioner Company. Another part of the amount
has been received from the same Group Company towards operating
expenses and settling dues of the manufacturing unit of the
Transferor Company. It is further submitted that both these amounts
are placed together which are duly disclosed in the advances and not
between Sundry Creditors for goods or expenses and for advances
received. Thus, though there being no purchases being recorded by
the Company, there is an increase in the Sundry Creditors. The
petitioner Transferor Company has also placed a certificate from the
Chartered Accountant explaining and clarifying the said position.
It
is further stated in the additional affidavit with regard to the
observation made by the Regional Director in relation to the
Transferee Company that non-provision of gratuity of the employees
in case of the Transferee Company has resulted due to unintentional
lapse. The Company has owned sufficient
profits and the amount of provision is a small
amount and the said error shall also to be rectified by making the
required provision in the current financial year. The Board of
Directors in their report to shareholders have confirmed the said
lapse and further assured the corrective actions in this regard. It
is further stated that the said non-compliance by either Company is
not an issue material for the proposed Scheme of Amalgamation. The
present Scheme does not envisage any exemption against any
contraventions or procedural lapses, if any, in case of the
petitioner Companies. The Scheme does not come in the way of any
proceedings, if initiated for such alleged lapses against the
Company or its Directors. The said view is consistently taken by
this Court in various matters while sanctioning the Scheme.
Having
heard Smt. Swati Saurabh Soparkar, learned advocate for the
petitioner companies and Shri P.S. Champaneri, learned Assistant
Solicitor General for the Central Govt. and having gone through the
petitions, affidavits, reply to these affidavits, further affidavits
and additional affidavits and considering the submissions made by
the parties, the Court is of the view that the scheme of arrangement
would be in the interest of the companies and their members and
creditors. The objections raised by the Regional Director as well as
the Official Liquidator were duly answered in the Additional
affidavits submitted before the Court. In any case, those
objections do not have much bearing on sanctioning of the Scheme.
Even otherwise, the Scheme does not envisage any exemption against
any contravention or procedural lapses, if any, in case of the
petitioner Companies. The sanctioning of the Scheme shall not come
in the way of any proceedings, if initiated, for such alleged lapses
against the Company and/or its Directors. In this view of the
matter, prayers in terms of paragraph 19 (a) in case of both the
petitions are hereby granted.
The
petitions are disposed of accordingly. So far as the costs to be
paid to the Central Govt. Standing Counsel is concerned, I quantify
the same at Rs.5,000/-
per petition. The same may be paid directly by the petitioner
Company to the learned advocate Shri P. S. Champaneri. Cost of Rs.
4,500/- be also paid to the Office of the Official Liquidator, for
the Transferor company only. The Transferor Company is directed to
preserve its books, papers and records for a period of 8 years from
the date of sanctioning of the Scheme of Amalgamation and not to
dispose of the records without prior permission of the Central
Government under Section 396-A of the Companies Act, 1956 before the
aforesaid period.
Sd/-
[K. A. PUJ, J.]
Savariya
Top