IN THE HIGH COURT OF JUDICATURE AT BOMBAY ORDINARY ORIGINAL CIVIL JURISDICTION COMPANY PETITION NO.305 OF 2009 CONNECTED WITH COMPANY APPLICATION NO.394 OF 2009 Vista Film and Packaging Private Limited …………Petitioner / Transferor Company. COMPANY PETITION NO.306 OF 2009 CONNECTED WITH COMPANY APPLICATION NO.395 OF 2009 Positive Packaging Industries Limited …………Petitioner / Transferee Company. In the matter of Sections 391 to 394 the Companies Act, 1956. AND In the matter of Scheme of Amalgamation of Vista Film and Packaging Private Limited (“the Transferor Company”) with Positive Packaging Industries Limited (“the Transferee Company”) and their Respective Shareholders Mr. Rajesh Shah i/b Rajesh Shah & Co., for the Petitioners. Mr. P. Ramarao, Official Liquidator, in Company Petition No.305 of 2009 Ms. Purnima Awasthi and Mr. P. Khosla i/b Mr. S.K. Mohapatra for Regional Director in both the Petitions. CORAM: A. M. Khanwilkar, J. DATE: 3rd July, 2009 PC: 1. The sanction of the Court is sought under Sections 391 to 394 of the Companies Act, 1956, to the Scheme of Amalgamation of Vista 2 Film and Packaging Private Limited with Positive Packaging Industries Limited and their Respective Shareholders. 2. Advocate appearing on behalf of the Petitioners has stated that they have complied with all requirements as per directions of this Court and they have filed necessary affidavits of compliance in the Court. Moreover, Petitioner Companies also undertake to comply with all statutory requirements, if any, as required under the Companies Act, 1956 and the Rules made there under. 3. The Regional Director has filed his Affidavit stating therein that the scheme is not prejudicial to the interest of shareholders, creditors and public. However, in paragraphs 6 (a) and 6 (b) of the said Affidavit, he has raised certain objections. In paragraph 6(a) he has submitted that, there is substantial foreign holding in Transferor and Transferee Company and post amalgamation the Transferee Company would almost have 100% foreign holding and that the petitioner company may be directed to file copy of the Scheme along with the Order sanctioning the Scheme within 30 days from the date of passing of such order with the Reserve Bank of India. Further, in paragraph 6(b) of the said Affidavit, the Regional Director has submitted that Clause 12.3 of the Scheme, the excess, if any, of the value of the assets over the value of the liabilities of the Transferor 3 Company vested in Transferee Company, after adjusting the aggregate face value of the new shares issued by the Transferee Company to the members of the Transferor Company be credited to the General Reserve Account in the books of the Transferee Company and according to the Regional Director, this accounting treatment is not proper and not in consonance with the generally accepted accounting principle which provide that the profit arising out of capital transaction like merger or de-merger ought to be treated as Capital Profits and hence shall be transferred to Capital Reserve and not to General Reserve. 4. As regards objection in paragraph 6(a), the filing of copy of Scheme and Court order sanctioning the Scheme, the Petitioner Company vide the Additional Affidavit dated 2nd July, 2009 of Ms Sudha Sheth, Authorised Signatory of Transferee Company, the Petitioner Company undertakes that the Company would file a copy of the Scheme and the Court Order sanctioning the Scheme with the Reserve Bank of India within 30 days of the Scheme becoming effective. As regards objection in paragraph 6(b) of the Affidavit of the Regional Director, the Petitioner Company states that Para 42 of Accounting Standard 14 provides that where a Scheme provides for different treatment to be given to the reserves, the Company is 4 required to make certain mandatory disclosures. In furtherance to the above and in view of the said provisions of the Accounting Standard, the Petitioner Company also undertakes that necessary disclosures as required under Accounting Standard 14 shall be complied with in the books of the petitioner company. However, the Counsel appearing for Regional Director is not agreed with the same. Hence, the Advocate for the Petitioners submits that the Transferee Company agrees to transfer such exess arising on amalgamation to Securities Premium Account instead of General Reserve Account. Accordingly, clause 12.3 of the Scheme stands amended to the said extent. In view thereof, the Counsel appearing on behalf of the Regional Director states that the Regional Director does not have any other objection to the scheme being sanctioned. 5. The official liquidator has filed report in Company Petition No. 305 of 2009 stating therein that the affairs of the Transferor Company have been conducted in a proper manner and that the Transferor Company may be ordered to be dissolved. 6. Upon perusal of the entire material placed on records, the Scheme appears to be fair and reasonable and is not violative of any provisions of law and is not contrary to any public policy. None of the parties concerned has come forward to oppose the Scheme. 5 Moreover, the Regional Director has stated that the Scheme as proposed is not prejudicial to the interest of shareholders, creditors and the public and the Official Liquidator has stated that the affairs of the Transferor Company have been conducted in a proper manner. 7. There is no objection to the Scheme and since all the requisite statutory compliances have been fulfilled, Company Petition Nos.305 of 2009 filed by the Transferor Company are made absolute in terms of prayer (a) to (d) and Company Petition No.306 of 2009 filed by the Transferee Company is made absolute in terms of prayer clauses (a) to (c). 8. The Petitioner Companies to lodge a copy of this order and the Scheme duly authenticated by the Company Registrar, High Court, Bombay with the concerned Superintendent of Stamps for the purpose of adjudication of stamp duty payable, if any, on the same within 30 days from the date of the order. 9. The Petitioners in both the Company Petitions to pay cost of Rs.7,500/- each to the Regional Director and the Petitioner in the Company Petition No.305 of 2009 filed by the Transferor Company to pay cost of Rs.7,500/- to the Official Liquidator. Costs to be paid within four weeks from today. 10. Filing and issuance of the drawn up order is dispensed with. 6 11. All concerned authorities to act on a copy of this order along with Scheme duly authenticated by the Company Registrar, High Court, Bombay. (A. M. Khanwilkar, J.) 7