In Re: Adishree Tradelinks Private Limited, Sanidhya Commodities Private Limited and Adani Agro Private Ltd.

K.M. Thaker, J.—These are the petitions filed by the petitioner companies for sanction of a scheme of arrangement in the nature of amalgamation of Adishree Tradelinks Private Limited and Sanidhya Commodities Private Limited with Adani Agro Private Limited, u/s 391 read with section 394 of the Companies Act, 1956. It has been contended that the commercial activities of all the three companies are similar in nature as all of them are engaged in trading activities of various commodities and agro products. The amalgamation is proposed in order to achieve synergic benefits. The petitions give in details the benefits envisaged due to the scheme. It has been pointed out that vide the orders dated 6 September, 2011, passed in the Company Application No. 440 of 2011 and 441 of 2011, the meeting of the equity shareholders, preference shareholders and the unsecured creditors of the transferor companies were dispensed with in view of the written consent letters placed on record. It has been pointed out that there are no secured creditors of either of these companies. Similarly, vide the order dated 6 September, 2011, passed in Company Application No. 442 of 2011, the meeting of the equity shareholders of the transferee company was also dispensed with in view of the written consent letters from all of them being placed on record.

The substantive petitions were admitted vide order 22 September, 2011. The public notices for the same were duly advertised in the newspaper ''Indian Express'' English daily, and ''Sandesh'' Gujarati daily, both Ahmedabad editions dated 17 October, 2011, and the publication in the Government gazette was dispensed with. Affidavits dated 9 November, 2011, confirm the same. No one has come forward with any objections to the said petitions even after the publication. The same has been further confirmed by the additional affidavit dated 2 December, 2011.

Notice of the petition of the transferor companies were served upon the Official Liquidator attached to Gujarat High Court. Vide the respective reports dated 21 November, 2011, filed by the official liquidator, it is observed that the affairs of the transferor companies have not been conducted in a manner prejudicial to the interest of their members or to the public interest. However, the official liquidator has requested this court to direct the transferor companies to maintain its books of accounts and records for a period of 8 years from the date of sanctioning the scheme and not to dispose of the same without prior permission of the Central Government. The transferor companies are accordingly directed to keep their books and records for a period of 8 years from the date of sanctioning the scheme and not to dispose off the same without prior permission of the Central Government.

Notice of the petitions have been served upon the Central Government and Shri Y.V. Waghela, learned standing counsel appear for the Central Government. An affidavit dated 25 October, 2011, has been filed by Mr. Kashmir Lal Kamboj, the Regional Director, (In-charge), North-Western Region, Ministry of Corporate Affairs, whereby the only observation made pertain to the compliance of the Accounting Standard-14 read with section 211(3A) of the Companies Act, 1956, by the transferee company.

The attention of this court is drawn to the additional affidavit dated 2 December 2011, whereby the said issue has been dealt with and it has been submitted that section 211(3B) of the Companies Act permits the non-compliance of accounting standards and prescribes necessary disclosure requirements with regard to deviations, reasons thereof and financial effect thereof. The transferee company has chosen to opt for compliance with the provisions of section 211(3B) and has undertaken to make necessary disclosures in its financial statements. It has been submitted that the said issue has been well settled in case of a scheme u/s 391 by the view taken by the Hon''ble Bombay High Court in case of In Re: Hindalco Industries Ltd., , now largely followed even by this court. Considering the said submission, the petitioner transferee company is hereby directed that the petitioner company shall make entries and adjustments and maintain the accounts, books and P & L account as per Accounting Standard 14 read with section 211(3A) of the Act and to not to resort to clause 10.5. It is clarified that in very rare and for unavoidable reason and circumstances, and if it is not possible to ensure that the profit and loss account and the balance sheet of the company comply with Accounting Standard-14 and section 211(3A) of the Act, then, in unavoidable circumstances, only the transferee company shall, upon scheme being effective, disclose in its first profit and loss account and balance sheet, the following namely: the deviation from the accounting standards; the reasons for such deviation; and the financial effect, if any, arising due to such deviation.

In view of the provision made under clause 10.5 it appears that there would be ''amalgamation reserve'' upon implementation of the scheme. Therefore, it is also directed that ''amalgamation reserve'' shall not be used, in any manner for declaring dividend and the petitioner companies shall not utilize the ''amalgamation reserve'', if any, for declaring dividend. Appropriate modification in the scheme shall be made so as to delete the provision, permitting the company to declare dividend from ''amalgamation reserve''.

It has been further pointed out that clause 10.7 of the scheme, is only enabling clause and is not contradictory to the said compliance. Considering the said explanation, and in view of the aforesaid direction issued by this court, observation of the Regional Director does not survive.

Heard Mrs. Swati Soparkar, learned advocate for the petitioner company and Mr. Y.V. Waghela, learned standing counsel appearing for the Central Government. It has emerged from the record that any objection has not been raised and received either by any shareholder or by any creditor, pursuant to the publication of the advertisement. The office of Registrar of Companies has also declared that the said office has not received any objection from any shareholder or any creditor. Similar stipulation is made by learned advocate for the petitioner company. Furthermore, the Regional Director has also mentioned that the said office does not have any objection against the proposed scheme except those discussed hereinabove. The Regional Director has also observed that the proposed scheme is not against the interest of shareholder or a company or public. Having regard to the aforesaid aspects and also considering the fact that both the companies are private limited companies, the public exposure is nil or minimal. Thus, any reason to decline the scheme as prayed for does not emerge from the record or has not been brought to the notice of the court. It is also clarified that this order is also subject to compliance of all applicable provisions under all applicable laws, rules and regulations including the provisions of Stamp Act and Registration Act and the petitioner shall, if required by law, pay, on implementation of Scheme, requisite stamp duty and get the order registered in accordance with applicable provision. The company shall also obtain all necessary permissions, licences, registrations, as may be required on implementation of the scheme. Subject to the clarifications, observations and directions contained in this order Prayers in terms of paragraph 15(1) of the Company Petition Nos. 132, 133 and 134 of 2011 are hereby granted. The petitions are disposed of accordingly. So far as the costs to be paid to the Central Government Counsel is concerned, the same are quantified at Rs. 7,500/- per petition. The same may be paid to the Counsel appearing for the Central Government. Cost of Rs. 5,000 be paid to the office of the official liquidator towards cost for the transferor companies.