In Re: Zydus BSV Research and Devlopment P. Ltd.

K.A. Puj, J.—The present company petition is filed for sanctioning the arrangement embodied in the scheme of amalgamation of Zydus BSV Research and Development P. Ltd. (transferor company) with Zydus BSV Pharma P. Ltd. (transferee company) whereby the undertaking of the transferor company (as defined in the scheme) shall stand transferred to and vested in the transferee company on the terms and conditions as stated in the scheme of amalgamation and whereby all the assets and liabilities of the transferor company would be transferred to the transferee company on the terms and conditions, as stated in the scheme of amalgamation. I have heard Mr. Sandeep Singhi, learned advocate appearing for the petitioner. I have considered the contents of the petition and the totality reflected from the annexures annexed with the petition.

Earlier, by order dated December 26, 2007, in Company Application No. 572 of 2007 preferred by the petitioner-company, i.e., the transferor company for sanctioning the scheme of amalgamation, this Court had dispensed with the meetings of equity shareholders and unsecured creditors for the purpose of considering, and if thought fit, approving, with or without modifications, the said scheme of amalgamation.

By order dated January 7, 2008, the present petition was admitted and notices were issued to the Central Government through Regional Director, Department of Company Affairs and the official liquidator attached to this Court. The notices were served on the Central Government through Regional Director, Department of Company Affairs on January 16, 2008, and on the official liquidator on January 11, 2008. The notices were also ordered to be published in two newspapers. Pursuant to the same, an affidavit of one Mr. Manubhai Khodidas Patel, director of the petitioner-company, dated February 4, 2008, has been filed confirming the publication of the notice in two newspapers as directed and service of notices to the Regional Director and official liquidator.

The affidavit of one Mr. R.K. Dalmia, Deputy Registrar of Companies dated March 21, 2008, has been placed on record by Mr. Harin Rawal, learned Assistant Solicitor General of India appearing for the Central Government. In the said affidavit, it is stated that the petitioner-company be directed to submit its latest financial statements before this Court. Mr. Sandeep Singhi, learned advocate appearing for the petitioner has submitted that the audited balance-sheet as on March 31, 2007, is placed on record. He has further placed on record the provisional balance-sheet as on February 29, 2008. There is no material difference between the figures given in the audited balance-sheet as on March 31, 2007, as well as provisional balance-sheet as on February 29, 2008. Mr. Rawal has also submitted that except this, there is no other objection, raised by the Deputy Registrar, Registrar of Companies and the only objection raised is taken care of by furnishing the provisional balance-sheet as on February 29, 2008. The court is, therefore, of the view that the observations made in the affidavit of the Deputy Registrar of Companies are already taken care of.

The official liquidator has placed his report dated March 26, 2008. His report is based on the report submitted by M/s. Dhirajlal Shah and Co., chartered accountants. The said chartered accountant has observed in his report as under:

Stamp duty payable on issue and allotment of shares : The board of the company has resolved in its meeting dated April 7, 2006, to issue fresh equity shares to its existing shareholders. The allotment of equity shares was done on July 17, 2006. As per the Bombay Stamp Act, 1958, as adopted by the State of Gujarat, the issuer is required to pay stamp duty at 1 rupee per 1,000 rupees for value of shares. The required stamp duty is for Rs. 9,800. At the time of verification of books, we have observed that the above proper stamp duty is not paid by the company. The company has now paid the required stamp duty of Rs. 9,800 on March 21, 2008, by franking on shares certificates.

The chartered accountant has further stated in his report that any violation of the legislation is against public policy and thereby against public interest. While dealing with the process u/s 394 of the Companies Act, 1956, public interest is not to be construed in a narrow sense that takes into account only the shareholding pattern. While commenting on the observations made by the chartered accountant, the official liquidator has stated that the stamp duty of Rs. 9,800 was not paid on share certificates, issued by the company on July 17, 2006. Non-payment of stamp duty on share certificates may not amount to conducting the affairs of the company in a manner which can be said to be against the public interest. At the most, non-payment of stamp duty on share certificates would invalidate the share certificates but not the allotment of shares. Even otherwise, from material point of view also, the amount involved was Rs. 9,800 only which has also been, in fact, paid by the company on March 21, 2008. The official liquidator has, therefore, observed in his report that the objection raised by the chartered accountant was properly taken care of and it was not adverse to the proposed scheme of amalgamation. In this view of the matter, the official liquidator has submitted that the affairs of the petitioner-company have not been conducted in a manner prejudicial to the interests of its members or public.

In view of the above, the court is of the view that there are no grounds or circumstances which require this Court to refuse approval to the scheme of amalgamation. On going through the scheme, it appears that the requirement of the provisions of Sections 391 to 394 of the Companies Act, 1956, are satisfied. The scheme is genuine and bona fide and in the interest of shareholders and creditors of the petitioner-company. The court, therefore, allows this petition and approves the arrangement embodied in the scheme of amalgamation. The scheme of amalgamation is accordingly sanctioned. Reliefs in terms of paragraph 17 (a) and (b) in Company Petition No. 1 of 2008 are hereby granted.

The fees of learned Assistant Solicitor General of India is quantified at Rs. 3,500 which should be directly paid by the petitioner-company to Mr. Harin Rawal. This petition shall stand disposed of accordingly.