IN THE HIGH COURT OF JUDICATURE AT BOMBAY ORDINARY ORIGINAL CIVIL JURISDICTION COMPANY PETITION NO. 520 OF 2008 CONNECTED WITH COMPANY APPLICATION NO.557 OF 2008 SATGURU CORPORATE SERVICES ...Petitioner/ PRIVATE LIMITED Transferor Company WITH COMPANY PETITION NO. 521 OF 2008 CONNECTED WITH COMPANY APPLICATION NO. 558 OF 2008 SUNTECK REALTY LIMITED ...Petitioner/ Transferee Company In the matter of the Companies Act, 1 of 1956; AND In the matter of Sections 391 to 394 of the Companies Act, 1956; AND In the matter of Scheme of Amalgamation of SATGURU CORPORATE SERVICES PRIVATE LIMITED with SUNTECK REALTY LIMITED ...... Mr.S.H.Doctor, Senior Advocate alongwith Mr.Virag V.Tulzapurkar, Senior Counsel with Mr.Rajesh Shah i/b Rajesh Shah & Co. for the Petitioners. Mr.S.Ramakantha, Dy.Official Liquidator in CP No.520 of 2008. Mr.M.S.Bardwaj and Mrs.Heena P.Shah i/b Mr.S.K.Mohapatra for Regional Director in both the Petitions. : 2 : ...... CORAM: A.M.KHANWILKAR, J. CORAM: A.M.KHANWILKAR, J. CORAM: A.M.KHANWILKAR, J. NOVEMBER 24, 2008. NOVEMBER 24, 2008. NOVEMBER 24, 2008. P.C. P.C. P.C. 1. Heard learned counsel for the parties. 2. The sanction of the Court is sought under Sections 391 to 394 of the Companies Act, 1956 to the Scheme of Amalgamation of SATGURU CORPORATE SERVICES PRIVATE LIMITED with SUNTECK REALTY LIMITED. 3. Counsel 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 thereunder. : 3 : 4. The Regional Director has filed Affidavit dated 1st October, 2008 stating therein that the scheme is not prejudicial to the interest of creditors, shareholders and public. However in paragraph 5 of the said affidavit he has raised an objection stating that as per the Balance Sheet as at 31/03/2007 of the Transferee Company and also from the letters dated 05/08/2008 and 08/08/2008 of M/s.Sunteck Realty Limited, there is violation of Section 295 of the Companies Act, 1956 by the Transferee Company and its directors because loans/advances have been given by the Transferee Company to M/s.Keytone Corporate Services Private Limited, without the previous approval of the Central Government in that behalf. The Transferee Company in their letter dated 08/08/2008 have stated that the company is in process of initiation of compounding the violation under section 621 A of the Act. He has further stated that the office of the directors has become vacant under the provisions of section 283 (1) (h) on contravention of the the provisions of Section 295 of Act and M/s.Sunteck Realty Limited in their letter dated 05/08/2008 and 08/08/2008 have admitted the : 4 : violation of the provisions of Section 295 of the Companies Act, 1956 and the Registrar of Companies, Mumbai, has been directed to take necessary penal action against the Transferee Company and its directors. He has further submitted that the above facts being material facts of the affairs of the company have not been disclosed in the Petition as required under Section 391 (2) proviso of the Act. The Regional Director has also raised an objection stating that the Petitioner company may be directed to furnish an undertaking as regards compliance with Accounting Standard 14 issued by the Institute of Chartered Accountants of India. 5. Mr. Doctor, the learned Senior Counsel appearing for the Petitioner Company has pointed out to the Court that the Petitioner Companies have already filed their affidavit in reply dated 23rd October, 2008 stating that the Transferee Company has already repaid the aforesaid amount and sought the compounding order u/s 621 A of the Companies Act, 1956 dated 13th October, 2008 passed by the Company Law Board, Mumbai for the violation of section 295 and 283 of the Companies : 5 : Act, 1956. As regards the compliance with accounting standard 14 issued by the Institute of Chartered Accountant of India, the learned Counsel stated that the aforesaid affidavit filed by the Petitioner Company also contained the undertaking to comply with necessary disclosure requirements under the said accounting standard within the period of six months. The said undertaking is accepted. 6. However, in reply to the aforesaid affidavit dated 23rd October, 2008 filed by the Petitioner Company, the Regional Director has filed his further affidavit dated 12th November, 2008 stating that the Transferee Company vide two separate orders dated 13th October, 2008 has got compounded the violations under Section 295 and 283 (1) (h) of the Companies Act, for the financial year 2006-2007 and 2007-2008 as per Section 621A of the Companies Act, 1956. . Indeed, in the subsequent affidavit dated 12th November 2008, in paragraph 5, the Regional Director has stated that earlier violations have : 6 : not been disclosed in the Petition as required under Section 391(2) proviso of the Act. However, when the Counsel was called upon to explain that statement occurring in the affidavit, reliance was placed on Paragraph 5 of the affidavit dated 18th October 2008. It mentions about the violation of Section 295 of the Companies Act by Transferee Company and its directors because of loans/advances given by the Transferee Company to M/s.Keytone Corporate Services Private Limited, without the prior approval of the Central Government in that behalf. The fact remains that this violation has been later on compounded. That matter is not in dispute. Once that violation has been compounded, the same cannot be made the basis to reject the scheme propounded by the company. It is a different matter that the Company ought to have disclosed that fact in the Petition itself. Be that as it may, since the violation has now been compounded, the same recedes in the background and the Scheme can be considered on its own merits. 7. The Official Liquidator has filed report in Company Petition No.520 of 2008 stating therein : 7 : that the affairs of the Transferor Company has been conducted in a proper manner and that the Transferor Company may be ordered to be dissolved. 8. There is no objection to the Scheme, save and except, as stated in paragraph 4 to 6 herein above and since all the requisite statutory compliances have been fulfilled and in view of compounding of offences, the Company Petition No.520 of 2008 filed by the Transferor Company is made absolute in terms of prayer clauses (a) to (j) and Company Petition No.521 of 2008 filed by the Transferee Company is made absolute in terms of prayer clauses (a) to (i). 9. The Petitioner Companies to lodge a copy of this order and the Scheme with the concerned Superintendent of Stamps for the purpose of adjudication of stamp duty payable, if any, on the same within 30 days of obtaining the certified copy and/or an authenticated copy of the order. 10. The Petitioners in Company Petition No.521/2008 to pay cost of Rs.7,500/- (Rupees Seven : 8 : Thousand Five Hundred) to the Regional Director. The Petitioners in Company Petition No.520 of 2008 to pay cost of Rs.7,500/- (Rupees Seven Thousand Five Hundred) each to the Regional Director and the Official Liquidator respectively. Costs to be paid within four weeks from today. 11. Filing and issuance of the drawn up order is dispensed with. 12. All authorities concerned to act on a copy of this order along with Scheme duly authenticated by the Company Registrar, High Court, Mumbai. A.M.KHANWILKAR, J.