2017 (2) TMI 41 - HC - Companies Law

Scheme of arrangement - Held that - Upon considering the approval accorded by the members and creditors of the Petitioner Companies to the proposed Scheme, and the affidavits filed by the Regional Director, Northern Region, Ministry of Corporate Affairs and the Official Liquidator attached to this Court, whereby no objections have been raised to the proposed Scheme, there appears to be no impediment to the grant of sanction to the Scheme. Consequently, sanction is hereby granted to the Scheme under sections 391 and 394 of the Act. The Petitioner Companies will however, comply with the statutory requirements, in accordance with law. A certified copy of this order, sanctioning the Scheme, be filed with the ROC, within thirty (30) days of its receipt. Resultantly, it is hereby directed that the Petitioner Companies will comply with all provisions of the Scheme and, in particular, those which are referred to hereinabove. In any event, notwithstanding what has been stated on behalf of the Petitioner Companies hereinabove, the Transferee Company will file an undertaking with this Court, within two weeks from today, stating therein, that it will take over and defray all liabilities of the Transferor Company. It is also made clear, that the concerned Statutory Authority will be entitled to proceed against the Transferee Company qua any liability which it would have fastened onto the Transferor Company for the relevant period, and that, which may arise on account of the Scheme being sanctioned. The Transferor Company shall stand dissolved without being wound up.

Summary

Issues Involved:
1. Condonation of Delay in Filing Affidavit
2. Condonation of Delay in Filing Rejoinder in Reply to Affidavit
3. Condonation of Delay in Filing Report
4. Approval of Scheme of Amalgamation under Sections 391 and 394 of the Companies Act, 1956

Issue-wise Detailed Analysis:

1. Condonation of Delay in Filing Affidavit:

The present is an application under Rule 7 read with Rule 9 of the Companies (Court) Rules, 1959 seeking condonation of delay of 80 days in filing the affidavit of the Regional Director, Northern Region, under Section 394-A of the Companies Act, 1956, in compliance to the directions issued by this Court by way of order dated 18.11.2015.

After hearing counsel for the parties and in view of the reasons stated in the application, which are duly supported by an affidavit, the delay of 80 days in filing the aforestated affidavit is condoned. The affidavit is taken on record.

The application is disposed of accordingly.

2. Condonation of Delay in Filing Rejoinder in Reply to Affidavit:

The present application under Rule 9 of the Company (Court) Rules, 1959 read with Section 151 of the Code of Civil Procedure Code, 1908 seeks condonation of delay 93 days in filing the rejoinder affidavit in reply to the representation/affidavit dated 11.04.2016 of the Regional Director, Northern Region, Ministry of Corporate Affairs, Delhi under Section 394-A of the Companies Act, 1956.

For the reasons stated in the application, which are duly supported by an affidavit, the delay of 93 days in filing rejoinder in reply to the affidavit dated 11.04.2016 of the Regional Director, Northern Region is condoned.

The rejoinder be taken on record.

The application is disposed of accordingly.

3. Condonation of Delay in Filing Report:

The present is an application under Rule 9 of the Companies (Court) Rules, 1959 seeking condonation of delay of 94 days in filing the report of the Official Liquidator under second proviso to Section 394(1) of the Companies Act, 1956.

After hearing counsel for the parties and in view of the reasons stated in the application, which are duly supported by an affidavit, the delay of 94 days in filing the aforesaid report is condoned. The report is taken on record.

The application is disposed of accordingly.

4. Approval of Scheme of Amalgamation under Sections 391 and 394 of the Companies Act, 1956:

1. The present is a Second Motion Petition filed jointly by Sharma Farms Private Limited (Transferor Company) with Globus Projects Private Limited (Transferee Company) under Sections 391 and 394 of the Companies Act, 1956 for approval of the Scheme of Amalgamation (the Scheme).

2. The Transferor Company and the Transferee Company are jointly referred to as Petitioner Companies.

3. The registered offices of the Petitioner Companies are situated in the National Capital Territory of Delhi, and therefore, this Court has the necessary jurisdiction to adjudicate the present petition.

4. The details of the authorized share capital, issued, subscribed and paid up capital qua Petitioner Companies, have been set out in paragraph 1.9 of the Scheme.

5. The Transferor Company was originally incorporated under the Act, on 7th June, 2005 with the Registrar of Companies, State of Punjab. The Registered Office of the Transferor Company was shifted from the State of Punjab to NCT of Delhi and a certificate was obtained in this regard from the Registrar of Companies, NCT of Delhi & Haryana at New Delhi on 7th January, 2014.

6. The present authorized share capital of the Transferor Company is ?2,00,00,000/-, divided into 20,00,000 Equity Shares of ?10/- each. The issued, subscribed and paid-up share capital of the Transferor Company is ?1,54,70,000/-, divided into 15,47,000 Equity Shares of ?10/- each.

7. The Transferee Company was originally incorporated under the Companies Act, 1956 on 13th September, 2005 with the Registrar of Companies, State of Punjab. The Registered Office of the Transferee Company was shifted from the State of Punjab to NCT of Delhi and a certificate was obtained in this regard from the Registrar of Companies, NCT of Delhi & Haryana at New Delhi 19th November, 2013.

8. The present authorized share capital of Transferee Company is ?10,00,00,000/-, divided into 1,00,00,000 Equity Shares of ?10/- each. The issued, subscribed and paid-up share capital of the Transferee Company is ?7,44,60,000/-, divided into 74,46,000 Equity Shares of ?10/- each.

9. It has been averred on behalf of the Petitioner Companies that there are no proceedings pending against them, under Sections 235 to 251 of the Act (including their corresponding sections of the Companies Act, 2013).

10. It has been further submitted on behalf of the Petitioner Companies that the Scheme has been approved by the respective Board of Directors (BOD) of the Petitioner Companies. Copies of the BOD resolutions dated 16.02.2015 have been filed and the same are on record.

11. The Copies of the Memorandum of Association and Articles of Association, of each of the Petitioner Companies, have been duly filed as Annexures to Company Application (M) No. 58 of 2015 (Application for First Motion), which earlier came to be filed by the Petitioner Companies. The same are on record. The audited financial statements, as on 31st March, 2014, alongwith the auditors’ reports, pertaining to each of the Petitioner Companies have also been duly filed by the Petitioner Companies and the same are on record.

12. A copy of the Scheme has been duly placed on record and the salient features of the Scheme, have been incorporated and detailed, in the present petition and the accompanying affidavit. It has been averred on behalf of the Petitioner Companies that the proposed amalgamation would result in enhancement of business synergy and consolidation of these companies into one large company with a stronger asset base. It has been further submitted on behalf of the Petitioner Companies that the proposed amalgamation will result in usual economies of a centralized and a large company including elimination of duplicate work, reduction in overheads, better and more productive utilization of human and other resources and enhancement of overall business efficiency. It will aid in further expansion, growth and stabilisation of business, by combining the managerial and operating strength of the two companies by building a wider capital and financial base.

13. The Share Exchange Ratio for the Amalgamation has been provided for in the Scheme. The relevant terms of Clause 2.3.1 of the Scheme, providing for the same, are summarized herein below:

o 68 equity shares of ?10/- each, of the Transferee Company, credited as fully paid up, for every 100 fully paid up equity shares of ?10/- each held by the shareholders in the Transferor Company.

14. To recapitulate, the Petitioner Companies had, in the earlier round, filed an application (i.e. application for the First Motion), being Company Application (M) No. 58 of 2015, whereby a prayer was sought, to dispense with the requirement of convening the meetings of the equity shareholders and unsecured creditors of the Transferor Company and the equity shareholders of the Transferee Company and for convening a meeting of the unsecured creditors of the Transferee Company.

15. This Court vide order dated 18.08.2015, allowed the abovementioned application and dispensed with the requirement of convening meeting of equity shareholders and unsecured creditors of Transferor Company and equity shareholders of the Transferee Company. Further, vide order dated 18.08.2015, directions were given for convening of meeting of Unsecured Creditors of the Transferee Company.

16. A perusal of the report of the Chairperson dated 03.10.2015, qua the meeting of Unsecured Creditors of the Transferee Company reveals that it is apparent that the Scheme was approved unanimously by the Unsecured Creditors of the Transferee Company.

17. Pursuant to the same, the Petitioner Companies have filed the instant petition (i.e. Second Motion Petition). Notice in the present petition was issued by this Court, by way of the order dated 18.11.2015, and the said order dated 18.11.2015 was modified, vide order of this Court dated 19.02.2016. Notice in the present petition was accepted on behalf of the Official Liquidator (OL) and the Regional Director (RD), Northern Region.

18. Furthermore, vide order of this Court dated 19.02.2016, citations were directed to be published. It has been noted that Citations were published, in Delhi Editions of the newspapers, namely, ‘Indian Express’ (English, Delhi Edition) and ‘Jansatta’ (Hindi, Delhi Edition) on 19.03.2016, in compliance with the order of this Court dated 19.02.2016. An affidavit dated 07.04.2016 demonstrating service of the petition on the Official Liquidator, Registrar of Companies and the Regional Director, Northern Region.

19. Pursuant to the issuance of notices in the present petition, report of the Official Liquidator (OL) dated 06.04.2016 has been filed, wherein, inter alia, it has been stated that no complaint qua the Scheme, has been received from any person/party interested in the Scheme. Further, it has been stated in the said report dated 06.04.2016, that on the basis of the information supplied by the Petitioner Companies, it appears, that the affairs of the Petitioner Companies have been conducted in a manner which could not be construed as being prejudicial to either the interest of their members or the public at large.

20. In other words, it has been averred by the OL in the report dated 06.04.2016, that the affairs of the Petitioner Companies, do not fall foul of the provisions of the Second Proviso to Section 394(1) of the Act. Thus, it has been submitted on behalf of the OL, in effect, that no objection would be raised on behalf of the OL, if this Court were to sanction the Scheme.

21. Further, in response to the notices issued in the present Petition, Sh. A. K. Chaturvedi, Regional Director, Northern Region, Ministry of Corporate Affairs, filed his affidavit dated 11.04.2016 wherein, inter alia, it has been stated vide para 5 of the said Affidavit, that the Transferee Company has not appointed Whole time Company Secretary in the past, thus violating the provisions of section 383A of the Act. It has further been stated by the Regional Director in his affidavit dated 11.04.2016, that the Transferee Company has also not filed its balance sheet and annual return for the financial year ended on 31.03.2015 and thus prima facie violating the provisions of section 92 & 137 read with section 403 of the Companies Act, 1956/2013.

22. It has been noted that in response to the objection raised by the Regional Director, Mr. Mayur Shah, Director of the Transferee Company filed an affidavit dated 11.08.2016, on behalf of the Petitioner Companies. Counsel appearing on behalf of the Petitioner Companies has invited my attention to paragraph 3 of their affidavit dated 11.08.2016, in reply to the affidavit dated 11.04.2016 of the Regional Director, Northern Region to urge that the transferee company has already appointed a Whole Time Company Secretary on 01.08.2016 and filed Form DIR-12 qua his appointment and that the only annual return for the financial year ending 31.03.2015 has been filed on 08.04.2016 as is evidenced by the copy of the form MGT-7. Lastly, it is submitted that the Balance Sheet and Annual Return for the financial year ended on 31.03.2015, pertaining to the Transferee Company, have been field on 04.08.2016 and 08.04.2016, respectively. The copies of the aforestated documents have been placed on record as Annexures A (Colly.), Annexure B (Colly.) and Annexure C (Colly.) to the said affidavit. The copies of Form AOC-4 and Form MGT-7, evidencing the due filing of Balance Sheet and Annual Return, have also been placed on record.

23. In view of the aforesaid, the objections raised by the Regional Director stand satisfied. Thus, it is evident that neither the Regional Director nor the Official Liquidator has any objection remaining to the grant of relief, as prayed for by the petitioner, in the present petition.

24. It has been noted that no objections have been received to the Scheme from any other party. The Petitioner Companies, vide affidavit dated 07.04.2016, have submitted that neither the Petitioner Companies nor their counsel have received any objection pursuant to the citations published in the newspapers dated 19.03.2016.

25. In view of the foregoing, upon considering the approval accorded by the members and creditors of the Petitioner Companies to the proposed Scheme, and the affidavits filed by the Regional Director, Northern Region, Ministry of Corporate Affairs and the Official Liquidator attached to this Court, whereby no objections have been raised to the proposed Scheme, there appears to be no impediment to the grant of sanction to the Scheme. Consequently, sanction is hereby granted to the Scheme under sections 391 and 394 of the Act. The Petitioner Companies will however, comply with the statutory requirements, in accordance with law.

26. A certified copy of this order, sanctioning the Scheme, be filed with the ROC, within thirty (30) days of its receipt.

27. Resultantly, it is hereby directed that the Petitioner Companies will comply with all provisions of the Scheme and, in particular, those which are referred to hereinabove.

28. In any event, notwithstanding what has been stated on behalf of the Petitioner Companies hereinabove, the Transferee Company will file an undertaking with this Court, within two weeks from today, stating therein, that it will take over and defray all liabilities of the Transferor Company. It is also made clear, that the concerned Statutory Authority will be entitled to proceed against the Transferee Company qua any liability which it would have fastened onto the Transferor Company for the relevant period, and that, which may arise on account of the Scheme being sanctioned.

29. Notwithstanding the above, if there is any deficiency found or, violation committed qua any enactment, statutory rule or regulation, the sanction granted by this Court to the Scheme will not come in the way of action being taken, albeit, in accordance with law, against the concerned persons, directors and officials of the Petitioner Companies.

30. The Transferor Company shall stand dissolved without being wound up.

31. It is made clear, that this order shall not be construed as an order granting exemption, inter alia, from, payment of stamp duty or, taxes or, any other charges, if, payable, as per the relevant provisions of law or, from any applicable permissions that may have to be obtained or, even compliances that may have to be made, as per the mandate of law.

32. Learned counsel appearing on behalf of the Official Liquidator prays that costs of at least ?1,00,000/- may be paid by the Petitioner Companies, keeping in view the fact, that the matter called for examination of extensive records and prioritised hearings. Learned counsel appearing on behalf of the Petitioner Companies state that the same is acceptable to them.

33. In view of the foregoing, the Petitioner Companies shall deposit a sum of ?1,00,000/-, by way of costs, in Common Pool Fund of the Official Liquidator, Delhi.

34. Consequently, the petition is allowed and disposed of, in the aforesaid terms.