- (1.) THIS appeal is directed against a judgment and order dated July 5, 2007 Areva T and D India Ltd. in re, [2007] 138 Comp Cas 834 (Cal). passed by the Hon'ble company judge only to the extent that by the said judgment and order his Lordship directed Clause 11.7 of the scheme to be deleted and replaced in the manner indicated in the said judgment and order and further provided that increase of authorised share capital of the transferee -company would be effective only upon the transferee -company paying the requisite fees as provided in Schedule X to the Companies Act, 1956.
(2.) MR . S.B. Mukherjee, learned senior advocate appearing on behalf of the appellant submitted that the only question that arises in this appeal is whether in a scheme of amalgamation the authorised capital of the transfer ror -companies can be combined with the authorised capital of the transferee -company thereby increasing the authorised capital of the transferee -company without payment of any fee. He relied upon the following decisions reported in Saboo Leasing P. Ltd. In re, [2003] 117 Comp Cas 728 (AP); Jaypee Cement Ltd. In re ; Hotline Hoi Celdings P. Ltd., In re : [2005] 127 Comp Cas 165 (Delhi); Cavin Plastics and Chemicals P. Ltd. In re, [2006] 129 Comp Cas 915; Juggilal Kamlapat Holding Ltd. In re ; Bysani Consumer Electronics Ltd. In re and Jaypee Greens Ltd. In re : [2006] 134 Comp Cas 542 (All). He submitted that all these decisions dealt with the said question have been answered in the affirmative and in favour of the appellant. Mr. Mukherjee further pointed out that the Allahabad High Court, Delhi High Court, Madras High Court and the Andhra Pradesh High Court have consistently taken the view that such combination of authorised capital of transferor and transferee -companies in a scheme of amalgamation is permissible resulting in increase of authorised capital of transferee -company without payment of any fee. 4. No appeal was filed from the said order so passed by the said High Courts by the Central Government and further the respondents having confirmed such fact on instruction before this Court during the course of hearing, the Central Government had sought to raise an objection to Clause 11.7 of the scheme which objection was upheld by the learned single judge in spite of the said earlier decisions of different High Courts, his lordship only held that the said decisions were not supported by any reason. 5. Mr. Mukherjee further submitted that such reasoning of the Hon'ble judge in differing with the view taken in the earlier judgments of other High Courts is not correct for the following reasons: (a) The said High Courts have relied upon the decisions reported in Maneckchowk and Ahmedabad Manufacturing Co. Ltd. In re : [1970] 40 Comp Cas 819 (Guj), Telesound India Ltd. In re , PMP Auto Industries Ltd. In re : 1991(4)BomCR387 and Rangkala Investments Ltd. In re : (1995)1GLR308 in support of their finding on the basis of the reasons given by the said High Courts. (b) The hon'ble company judge has also accepted the ratio of the said decisions which recognise that the provisions contained in Sections 391 to 394 of the Companies Act, 1956, constitute a complete code and that a single window clearance is permissible under these sections so that the concerned companies are not required to pass separate resolutions or take separate approvals of the Government under other provisions of the Act unless a peculiar procedure relating to a particular section so requires. (c) In the said judgments of the other High Court it has been recognised that in an amalgamation there would be no requirement to pay any additional fee if authorised capital of the transferee -company stands increased by combining the authorised capital of the transferor -company with it as the transferor -company has already paid the fees for its authorised capital and payment of any further fees would amount to double payment. 6. Mr. Mukherjee further pointed out that the said judgment and order cannot be sustained as under Section 394 of the said Act a scheme may make provision for transfer to the transferee -company of the whole or any part of the properties of the transferor -companies. He drew attention to Section 394(1)(i) of the Companies Act, 1956. Section 394(4) of the said Act provides that property includes property rights and powers of every description. The transferor -companies having paid the requisite fee for their authorised capital had every right to exhaust its authorised capital and utilise the same. Therefore, this right stands transferred. It is only the paid up capital of the transferor -companies which does not stand transferred. In such circumstances the authorised capital of the transferor -companies stands transferred to the transferee -company by operation of law. 7. He further pointed out that the objection raised to Clause 11.7 of the scheme having been decided against the Central Government by other High Courts from which no appeal has been preferred by the Central Government, it was not open to the Central Government to raise the selfsame objection. 8. In such circumstances Clause 11.7 of the scheme could not have been deleted, modified or substituted at the instance of the Central Government. 9. In support of such submission he relied on Union of India v. : [2001]249ITR219(SC) , CIT v. : [2002]254ITR606(SC) and Berger Paints India Ltd. v. : [2004]266ITR99(SC) . 10. He further submitted that in the instant case the very scheme forming the subject -matter of the instant appeal has been approved unconditionally by the Delhi High Court and the Madras High Court. Therefore, this Court would also sanction the said scheme without deletion or substitution of Clause 11.7 of the scheme and without imposing any liability to pay fees for increase in authorised capital. 11. Accordingly, he further submitted that money which was deposited by the appellant with the advocate -on -record in terms of the order passed on October 16, 2007, should be refunded to the appellant and the appeal should be allowed in favour of the appellant -petitioner and the impugned judgment and order be set aside and the condition imposed in the order that increase of authorised capital of the transferee -company should take place upon payment of the fee should also be set aside. 12. Mr. Ramesh Choudhury, learned advocate appearing on behalf of the respondent contended that in the present case the hon'ble court has passed a reasoned order on the issue in question in the instant appeal. The view taken by the hon'ble court is a possible view. Mr. Choudhury submitted that the judgment relied upon by the appellant are not relevant and the mandatory requirement to comply with the provisions of the Companies Act, 1956, cannot be given a go -by. He relied on a decision reported in Anmol Trading Co. Ltd. v. Shaily Engineering Plastics Ltd. and submitted that the transferee -company is required to comply with Section 97 of the said Act, inasmuch as the issue in the said case was with regard to whether the transferee was required to comply with Section 97 or not. The said judgment, according to Mr. Choudhury, is an authority for the proposition that the transferee -company has to comply with the statutory provisions and is required to make payment of statutory charges for enhancement of its capital. Hence, he submitted that the order so passed by the hon'ble first court should not be disturbed and/or interfered with. 13. Mr. Mukherjee, learned senior advocate appearing for the appellant submitted that the decision cited by the learned advocate for the respondent has no application in the present case. 14. After hearing the learned advocates appearing for the parties, and after analysing the facts and the authorities cited before us, we find no substance in the submissions made by the learned advocate appearing for the respondent. 15. In the case reported in Saboo Leasing P. Ltd. In re, [2003] 117 Comp Cas 728, the court relied upon a passage from the judgment of the Delhi High Court in Telesound India Ltd. In re, [1983] 53 Comp Cas 926, which is reproduced hereunder (page 942): Amalgamation of a company with another or an amalgamation of two companies to form a third is brought about by two parallel schemes of arrangements entered into between one company and its members and the other company and its members and the two separate arrangements bind all the members of the companies and the companies when sanctioned by the court. Amalgamation is, therefore, an absorption of one company into another or merger of both to form a third, which is not a mere act of the two companies or their members but is brought about by virtue of a statutory instrument and to that extent has statutory genesis and character, and to that extent it is distinguishable from a mere bilateral arrangement to merge or join in a common endeavour, an undertaking or enterprise. 16. In the case reported in Jaypee Cement Ltd. In re , the court, inter alia, held that (page 874): The second objection of the Central Government is with regard to another condition mentioned in paragraph 4.03(ii) of the scheme which provides that upon the merger authorised share capital of JPI shall stand combined with the authorised share capital of JPC. According to the Regional Director, this amounts to increase of the authorised capital of JPC, which cannot be done without paying the requisite fee/stamp duty to the Government. In reply to this objection, it was submitted on behalf of JPC that the fee/stamp duty is nominal and has a maximum limit which the JPC is prepared to pay. But, it was submitted that the requisite fee has already been paid on the authorised capital of JPI and merely because of its merger with JPC, there is no reason why the same fee should be paid again by JPC on the same authorised capital. The submission has force and no good reason has been shown why the two merged companies should be required to pay duty again on the same authorised capital on which duty has already been paid by the JPI. 17. Regarding the increase of authorised share capital by merger of the authorised capitals of the two companies, an order can be passed under Section 391 of the Companies Act, 1956 itself. The Bombay High Court in the case of Vasant Investment Corporation Ltd. v. Official Liquidator, Colaba Land and Mill Co. Ltd. reported in, [1981] 51 Comp Cas 20 also approved the same view. 18. In the decision reported in Cavin Plastics and Chemicals P. Ltd. In re : [2006] 129 Comp Cas 915 (Mad), the court held that there was no legal impediment for sanction of amalgamation. The scheme of amalgamation was approved unanimously by the board of directors of the transferor -company as well as transferee -company as favourable and beneficial. There was no objection by the creditors of the transferee -company to the scheme. The scheme did not appear to be contrary to any public policy. The scheme was also not violative of any provisions of law and the procedure laid down under Sections 391 to 394 of the Companies Act, 1956 had also been complied with. 19. In the case reported in Hotline Hoi Celdings P. Ltd. In re : [2005] 127 Comp Cas 165 (Delhi), the court held that in the case of merger where it was provided that the share capital of the transferor -companies became the authorised capital of the transferee -company, no fee to the Registrar of Companies or stamp duty to the State Government was payable. The sanction was granted and consequent on the amalgamation, the transferor -companies would stand dissolved without the process of being wound up. 20. In the case reported in Bysani Consumer Electronics Ltd. In re , the Regional Director, Ministry of Company Affairs, Chennai raised objection as under (page 101): (i) The transferor -companies and the transferee -company are two legal entities, and on amalgamation, only the transferee -companies exist ; thereby, if the transferee -company increases its authorised capital, it has to comply with the provisions of Sections 94 and 97 of the Companies Act by filing relevant returns with the Registrar of Companies; (ii) As per Clause 11 of the scheme, the authorised capital of the transferor -companies would be combined with the authorised capital of the transferee -company, which is not tenable since both are notional limits up to which a company can increase its paid -up capital. It is stated that two notional limits could not be clubbed together. and after considering the submissions made by the petitioner as well as the learned Additional Central Government Standing Counsel and the decisions reported in Hotline Hoi Celdings P. Ltd. In re : [2005] 127 Comp Cas 165 (Delhi) and Jaypee Cement Ltd. In re, [2004] 122 Comp Cas 854, the court allowed the petition. 21. After analysing all these decisions cited before us, we come to the conclusion that the submission made by Mr. Mukherjee has substance and we do not find any substance in the submissions made by Mr. Choudhury. Further, we find no reason to support the order so passed by the hon'ble first court with utmost respect to his Lordship in view of the decisions and the law settled by the different High Courts on that point. Furthermore, we find that the reasoning given in those decisions cannot raise any question to express a different view. We, accordingly, allow the appeal and direct that it is not necessary to pay any fee for giving any effect to the increase in the authorised share capital of the transferee -company pursuant to the said scheme and we also direct that it is not necessary to delete Clause 11.7 as directed by the hon'ble first court and accordingly the scheme is approved without substituting Clause 11.7 thereof. 22. By virtue of the interim order we directed to deposit of money with the advocate -on -record by the appellant and effect was given to the appellant -petitioner. Since we have allowed this appeal there will be no bar to refund the said amount which was deposited in terms of the interim order dated October 16, 2007. That interim order dated October 16, 2007, is vacated. 23. The application is also disposed of on the above terms. Undertakings discharged. All parties are to act on a xerox signed copy of this order on the usual undertaking. Urgent xerox certified copy, if applied for, be given to the parties on usual terms.;