Case Law Details
M/s. Gillette India Limited Vs Delhi Development Authority (Delhi High Court)
It is well settled that shares of a company are a separate asset wholly distinct from the assets held by the company.
In the present case, there was dilution of the share capital of TGC as well as transfer of shares held by the TGC in the petitioner company. The transfer of shares of the petitioner company cannot be construed as transfer of the assets of the petitioner company.
In a recent decision of the Supreme Court in Vodafone International Holdings B.V. v. Union of India and Anr.: (2012) 6 SCC 613, the Supreme Court rejected the contention that a transfer of shares of an overseas holding company would amount to transfer of assets held by the subsidiary in India. In the said case, the Supreme Court applied the “look at” test to view the transaction relating to transfer of shares by overseas holding companies. The transaction must be viewed as it looks and a dissecting approach is not warranted.
Essentially, DDA seeks to lift the corporate veil of the petitioner in order to establish transfer of assets of the petitioner to the Procter & Gamble Group. Clearly, no grounds for lifting of the corporate veil are established in this case. It is nobody‟s case that the transaction relating to dilution of equity of TGC in favour of Procter & Gamble, USA by virtue of the merger of AAC with TGC or the transfer of shares held by TGC in the petitioner company to Procter & Gamble, Netherlands is a subterfuge to transfer the subject property to another entity. The takeover of the Gillette Group by Procter & Gamble, USA was obviously for commercial reasons and the said transaction was not crafted for transferring of the subject property. Clearly, there is no occasion for this Court to overlook the legal form of the transaction which, as simply stated, is the dilution of shares of the parent company of the petitioner, namely, the Gillette Company, USA (TGC) and the transfer of 41.02% shareholding of the petitioner company held by TGC to Procter & Gamble, Netherlands.
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