Company Petition No. 58 of 2009. Case: In Re: Sasken Communication Technologies Ltd. Vs. High Court of Karnataka (India)
| Case Number | Company Petition No. 58 of 2009 |
| Counsel | For Appellant: K.G. Raghavan, Adv. forDua Associates and For Respondents: B. Pramod, Central Government Counsel for Regional Director |
| Judges | H.N. Nagamohan Das, J. |
| Issue | Companies Act, 1956 - Sections 211, 211(3B), 349 and 391 to 394 |
| Citation | [2010] 155 CompCas 463 (Kar) |
| Judgement Date | March 31, 2010 |
| Court | High Court of Karnataka (India) |
Judgment:
H.N. Nagamohan Das, J.
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The petitioner-company has filed this petition under Sections 391 to 394 of the Companies Act, 1956 (for short "the Act"), seeking sanction of the scheme of arrangement as per annexure A.
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The petitioner-company was incorporated under the Companies Act, 1956, in the year 1989 in the State of Gujarat. Between 1989 and 2000 the petitioner-company changed its name several times and also its registered office. At present the name of the petitioner-company is Sasken Communication Technologies Ltd., and its registered office is situated at Bangalore in the State of Karnataka. The main objects of the petitioner-company as set out in the memorandum of association are as under:
(a) to establish, acquire, run, operate, provide services and design, development and implementation of turn key solutions both in hardware and software for infocom markets.
(b) To manufacture, produce, work, distribute, buy and sell, import and export or otherwise to deal in all kinds of electronic hardware and software for computer systems and allied products.
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The annual report 2007-08 containing the audited profit and loss account and the balance-sheet of the petitioner-company is at annexure C.
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The board of directors of the petitioner-company in their meeting held on January 17, 2009, passed a resolution approving the draft scheme of arrangement as per annexure D. Under the draft scheme of arrangement the petitioner-company proposes to create a business restructuring reserve from out of the securities premium account to an extent of 50 per cent, and to use the said reserve for restructuring expenses. The salient features of the draft scheme of arrangement are as follows:
(A) The scheme of arrangement is between the petitioner-company and its equity shareholders, wherein the petitioner-company shall set off the restructuring expenses incurred/to be incurred in the process of business restructuring of the petitioner-company, against the business restructuring reserve to be created from the securities premium account of the petitioner-company, pursuant to Sections 391 to 394 and other applicable provisions of the Act.
(B) The scheme, shall come into operation from the appointed date, i.e., April 1, 2008, or such other date as the hon'ble High Court may fix and shall however become effective only from the effective date.
(C) Pursuant to the scheme of arrangement, the treatment in the books of account of the petitioner-company will be as follows:
(i) With effect from the appointed date, a sum being 50 per cent, of the amount lying to the credit of the securities premium account, as appearing in the books of account of the petitioner-company as at the appointed date, shall be credited to the "business restructuring reserve account (BRB).
(ii) With effect from the appointed date, the restructuring expenses, as defined in Clause 1.5 of the scheme of arrangement, to the extent incurred by the petitioner-company and till the availability of balance in the business restructuring reserve account, shall be debited to the "business restructuring reserve account" in the stand alone and consolidated financials of the petitioner-company and consequently such expenses shall not be charged to the debit of the profit and loss account of the petitioner-company.
(iii) With effect from the appointed date, for the limited purpose of consolidation of the financials of the petitioner-company on every balance-sheet date, such expenses as are in the nature of restructuring expenses but are incurred by the subsidiaries of the petitioner-company and debited to their respective profit and loss accounts, shall be disclosed as adjustment against the balance in the business restructuring reserve account of the petitioner-company, if any, as on the relevant balance-sheet date as if such expenses were incurred by the petitioner-company and corresponding adjustment will be made by reducing the relevant expense in the consolidated profit and loss account.
(iv) The amounts credited to the business restructuring reserve account as mentioned in Clause (i) above, shall be utilised by the petitioner-company to adjust the restructuring expenses in the manner specified in Clause (ii) and Clause (iii) above, on an ongoing basis.
(v) All the expenses shall be adjusted to the business restructuring reserve account until such date as may be determined by the board and consequently such expenses shall not be charged to the debit of the profit and loss account of the petitioner-company.
(vi) After the adjustment is made, in the manner as set out in Clause (ii) and Clause...
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