IN THE HIGH COURT OF DELHI
COMPANY PETITION NO. 423/2016
Reserved on 2nd August, 2016
Date of pronouncement: 2nd September, 2016
In the matter of
The Companies Act, 1956 & the Companies Act, 2013 (to the extent
applicable):
And
Petition under Sections 391 to 394 read with
Section 100 of the Companies Act, 1956
Composite Scheme of Capital Reduction and Amalgamation of:
Medicare Investments Limited
Petitioner/Transferor Company No. 1
Maxopp Investments Limited
Petitioner/Transferor Company No. 2
Cheminvest Limited
Petitioner/Transferor Company No. 3
Pen Investments Limited
Petitioner/Transferor Company No. 4
P.V.T. Investment Limited
Petitioner/Transferor Company No. 5
Pivet Finances Limited
Petitioner/Transferor Company No. 6
Maxpak Investment Limited
Petitioner/Transferor Company No. 7
Moav Investment Limited
Petitioner/Transferor Company No. 8
WITH
Max Ventures Investment Holdings Private Limited
Petitioner/Transferee Company
Through Mr. Mukul Talwar, Sr.
Advocate with Mr. Vatsalya Rai,
Advocate for the petitioners
Ms. Aparna Mudiam, Asstt. Registrar
of Companies for the Regional Director
Mr. Sanjay Kayal, Advocate for the
Official Liquidator
CP 423/2016 Page 1 of 18
SUDERSHAN KUMAR MISRA, J.
1. This joint petition has been filed under Sections 391 to 394 read with Section 100 of the Companies Act, 1956 by the petitioner companies seeking sanction of the Composite Scheme of Capital Reduction and Amalgamation of Medicare Investments Limited (hereinafter referred to as the transferor company no. 1); Maxopp Investments Limited (hereinafter referred to as the transferor company no. 2); Cheminvest Limited (hereinafter referred to as the transferor company no. 3); Pen Investments Limited (hereinafter referred to as the transferor company no. 4); P.V.T. Investment Limited (hereinafter referred to as the transferor company no. 5); Pivet Finances Limited (hereinafter referred to as the transferor company no. 6); Maxpak Investment Limited (hereinafter referred to as the transferor company no. 7) and Moav Investment Limited (hereinafter referred to as the transferor company no.8) with Max Ventures Investment Holdings Private Limited (hereinafter referred to as the transferee company).
2. The registered offices of the transferor and transferee companies are situated at New Delhi, within the jurisdiction of this court.
3. The transferor company no. 1 was incorporated under the Companies Act, 1956 on 21st December, 1983 with the Registrar of Companies, NCT of Delhi & Haryana at New Delhi.
CP 423/2016 Page 2 of 18
4. The transferor company no. 2 was originally incorporated under the Companies Act, 1956 on 21st December, 1983 with the Registrar of Companies, NCT of Delhi & Haryana at New Delhi under the name and style of Ranbaxy Investments Limited. The company changed its name to Maxopp Investments Limited and obtained the fresh certificate of incorporation on 14th February, 1991.
5. The transferor company no. 3 was incorporated under the Companies Act, 1956 on 21st December, 1983 with the Registrar of Companies, NCT of Delhi & Haryana at New Delhi.
6. The transferor company no. 4 was originally incorporated under the Companies Act, 1956 on 24th February, 1988 with the Registrar of Companies, Punjab, H.P. & Chandigarh at Jalandhar. Thereafter, the company shifted its registered office from the State of Punjab to Delhi and obtained a certificate in this regard from the Registrar of Companies, NCT of Delhi & Haryana at New Delhi on 4th August, 2003.
7. The transferor company no. 5 was originally incorporated under the Companies Act, 1956 on 2nd March, 1988 with the Registrar of Companies, Punjab, H.P. & Chandigarh at Jalandhar. Thereafter, the company shifted its registered office from the State of Punjab to Delhi CP 423/2016 Page 3 of 18 and obtained a certificate in this regard from the Registrar of Companies, NCT of Delhi & Haryana at New Delhi on 4th August, 2003.
8. The transferor company no. 6 was originally incorporated under the Companies Act, 1956 on 2nd March, 1988 with the Registrar of Companies, Punjab, H.P. & Chandigarh at Jalandhar. Thereafter, the company shifted its registered office from the State of Punjab to Delhi and obtained a certificate in this regard from the Registrar of Companies, NCT of Delhi & Haryana at New Delhi on 4th August, 2003.
9. The transferor company no. 7 was incorporated under the Companies Act, 1956 on 20th May, 1988 with the Registrar of Companies, NCT of Delhi & Haryana at New Delhi.
10. The transferor company no. 8 was incorporated under the Companies Act, 1956 on 20th May, 1988 with the Registrar of Companies, NCT of Delhi & Haryana at New Delhi.
11. The transferee company was originally incorporated under the Companies Act, 1956 on 26th February, 1988 with the Registrar of Companies, NCT of Delhi & Haryana at New Delhi under the name and style of Dynavest India Private Limited. The company changed its name CP 423/2016 Page 4 of 18 to Max Ventures Investment Holdings Private Limited and obtained the fresh certificate of incorporation on 1st May, 2015.
12. The present authorized share capital of the transferor company no.1 is Rs.11,90,00,000/- divided into 3,10,00,000 equity shares of Rs.1/- each aggregating to Rs.3,10,00,000/-; 2,50,000-12.5% non cumulative redeemable preference shares of Rs.100/- each aggregating to Rs.2,50,00,000/-; 3,80,000-5% non cumulative redeemable preference shares of Rs.100/- each aggregating to Rs.3,80,00,000/-; and 2,50,000- 7% compulsory convertible preference shares of Rs.100/- each aggregating to Rs.2,50,00,000/-. The issued, subscribed and paid-up share capital of the company is Rs.9,32,24,706/- divided into 3,03,79,940 equity shares of Rs.1/- each aggregating to Rs.3,03,79,940/- less allotment money receivable of Rs.1,55,234/-; 3,80,000-5% non cumulative redeemable preference shares of Rs.100/- each aggregating to Rs.3,80,00,000/-; and 2,50,000-7% compulsory convertible preference shares of Rs.100/- each aggregating to Rs.2,50,00,000/-.
13. The present authorized share capital of the transferor company no.2 is Rs.8,50,00,000/- divided into 3,10,00,000 equity shares of Rs.1/- each aggregating to Rs.3,10,00,000/-; 2,50,000-12.5% non cumulative redeemable preference shares of Rs.100/- each aggregating to Rs.2,50,00,000/-; 40,000-5% non cumulative redeemable preference CP 423/2016 Page 5 of 18 shares of Rs.100/- each aggregating to Rs.40,00,000/-; and 2,50,000-7% compulsory convertible preference shares of Rs.100/- each aggregating to Rs.2,50,00,000/-. The issued, subscribed and paid-up share capital of the company is Rs.5,91,55,192/- divided into 3,03,79,940 equity shares of Rs.1/- each aggregating to Rs.3,03,79,940/- less allotment money receivable of Rs.2,24,748/-; 40,000-5% non cumulative redeemable preference shares of Rs.100/- each aggregating to Rs.40,00,000/-; and 2,50,000-7% compulsory convertible preference shares of Rs.100/- each aggregating to Rs.2,50,00,000/-.
14. The present authorized share capital of the transferor company no.3 is Rs.14,92,50,000/- divided into 3,10,00,000 equity shares of Rs.1/- each aggregating to Rs.3,10,00,000/-; 2,50,000-12.5% non cumulative redeemable preference shares of Rs.100/- each aggregating to Rs.2,50,00,000/-; 6,82,500-5% non cumulative redeemable preference shares of Rs.100/- each aggregating to Rs.6,82,50,000/-; and 2,50,000- 7% compulsory convertible preference shares of Rs.100/- each aggregating to Rs.2,50,00,000/-. The issued, subscribed and paid-up share capital of the company is Rs.12,35,19,279/- divided into 3,03,79,940 equity shares of Rs.1/- each aggregating to Rs.3,03,79,940/- less allotment money receivable of Rs.1,10,661/-; 6,82,500-5% non cumulative redeemable preference shares of Rs.100/- each aggregating CP 423/2016 Page 6 of 18 to Rs.6,82,50,000/-; and 2,50,000-7% compulsory convertible preference shares of Rs.100/- each aggregating to Rs.2,50,00,000/-.
15. The present authorized share capital of the transferor company no.4 is Rs.7,50,00,000/- divided into 60,00,000 equity shares of Rs.10/- each aggregating to Rs.6,00,00,000/- and 1,50,000-7% non cumulative compulsory convertible preference shares of Rs.100/- each aggregating to Rs.1,50,00,000/-. The issued, subscribed and paid-up share capital of the company is Rs.4,62,85,248/- divided into 31,53,150 equity shares of Rs.10/- each aggregating to Rs.3,15,31,500/- less allotment money receivable of Rs.2,46,253/- and 1,50,000-7% non cumulative compulsory convertible preference shares of Rs.100/- each aggregating to Rs.1,50,00,000/-.
16. The present authorized share capital of the transferor company no.5 is Rs.6,50,00,000/- divided into 34,95,000 equity shares of Rs.10/- each aggregating to Rs.3,49,50,000/-; 500-9% non cumulative redeemable preference shares of Rs.100/- each aggregating to Rs.50,000/-; 1,50,000-12.5% non cumulative redeemable preference shares of Rs.100/- each aggregating to Rs.1,50,00,000/-; 1,00,000-10% non cumulative redeemable preference shares of Rs.100/- each aggregating to Rs.1,00,00,000/-; and 50,000-7% compulsory convertible preference shares of Rs.100/- each aggregating to Rs.50,00,000/-. The CP 423/2016 Page 7 of 18 issued, subscribed and paid-up share capital of the company is Rs.4,63,72,658/- divided into 31,53,150 equity shares of Rs.10/- each aggregating to Rs.3,15,31,500/- less allotment money receivable of Rs.1,58,843/-; 1,00,000-10% non cumulative redeemable preference shares of Rs.100/- each aggregating to Rs.1,00,00,000/-; and 50,000-7% compulsory convertible preference shares of Rs.100/- each aggregating to Rs.50,00,000/-.
17. The present authorized share capital of the transferor company no.6 is Rs.12,25,00,000/- divided into 94,95,000 equity shares of Rs.10/- each aggregating to Rs.9,49,50,000/-; 500-9% non cumulative redeemable preference shares of Rs.100/- each aggregating to Rs.50,000/-; 1,50,000-12.5% non cumulative redeemable preference shares of Rs.100/- each aggregating to Rs.1,50,00,000/-; 75,000-10% non cumulative redeemable preference shares of Rs.100/- each aggregating to Rs.75,00,000/-; and 50,000-7% compulsory convertible preference shares of Rs.100/- each aggregating to Rs.50,00,000/-. The issued, subscribed and paid-up share capital of the company is Rs.4,22,38,563/- divided into 31,53,150 equity shares of Rs.10/- each aggregating to Rs.3,15,31,500/- less allotment money receivable of Rs.1,92,938/-; 59,000-10% non cumulative redeemable preference shares of Rs.100/- each fully paid up aggregating to Rs.59,00,000/-; and CP 423/2016 Page 8 of 18 50,000-7% compulsory convertible preference shares of Rs.100/- each aggregating to Rs.50,00,000/-.
18. The present authorized share capital of the transferor company no.7 is Rs.6,11,50,000/- divided into 1,00,000 equity shares of Rs.10/- each aggregating to Rs.10,00,000/-; 20,000-12% non cumulative redeemable preference shares of Rs.100/- each aggregating to Rs.20,00,000/-; and 5,81,500-5% non cumulative redeemable preference shares of Rs.100/- each aggregating to Rs.5,81,50,000/-. The issued, subscribed and paid-up share capital of the company is Rs.6,01,50,900/- divided into 90 equity shares of Rs.10/- each fully paid up aggregating to Rs.900/-; 20,000-12% non cumulative redeemable preference shares of Rs.100/- each aggregating to Rs.20,00,000/-; and 5,81,500-5% non cumulative redeemable preference shares of Rs.100/- each aggregating to Rs.5,81,50,000/-.
19. The present authorized share capital of the transferor company no.8 is Rs.5,46,50,000/- divided into 1,00,000 equity shares of Rs.10/- each aggregating to Rs.10,00,000/-; 20,000-12% non cumulative redeemable preference shares of Rs.100/- each aggregating to Rs.20,00,000/-; 4,30,000-5% non cumulative redeemable preference shares of Rs.100/- each aggregating to Rs.4,30,00,000/- and 86,500-6% non cumulative redeemable preference shares of Rs.100/- each CP 423/2016 Page 9 of 18 aggregating to Rs.86,50,000/-. The issued, subscribed and paid-up share capital of the company is Rs.5,36,50,900/- divided into 90 equity shares of Rs.10/- each fully paid up aggregating to Rs.900/-; 20,000-12% non cumulative redeemable preference shares of Rs.100/- each aggregating to Rs.20,00,000/-; 4,30,000-5% non cumulative redeemable preference shares of Rs.100/- each aggregating to Rs.4,30,00,000/- and 86,500-6% non cumulative redeemable preference shares of Rs.100/- each aggregating to Rs.86,50,000/-.
20. The present authorized share capital of the transferee company is Rs.87,20,00,000/- divided into 8,72,00,000 equity shares of Rs.10/- each. The issued, subscribed and paid-up share capital of the company is Rs.1,00,000/- divided into 10,000 equity shares of Rs.10/- each.
21. Copies of the Memorandum and Articles of Association of the transferor and transferee companies have been filed on record with the joint application, being CA(M) 27/2016, earlier filed by the petitioners. The audited balance sheets, as on 31st March, 2015, of the transferor and transferee companies, along with the report of the auditors, had also been filed.
22. A copy of the Composite Scheme of Capital Reduction and Amalgamation has been placed on record and the salient features of the CP 423/2016 Page 10 of 18 Scheme have been incorporated and detailed in the petition and the accompanying affidavit. It is claimed by the petitioners that the proposed amalgamation will simplify the promoters holding in the Max India, eliminating multiple entities and the inter se cross-holding amongst them. It is further claimed the proposed amalgamation will lead to reduction of administrative cost and overhead expenses which would further lead to greater and effective executive control, synergy of operations and optimum utilization of the available resources.
23. So far as the share exchange ratio is concerned, the Scheme provides that, upon coming into effect of this Scheme, the transferee company shall issue and allot equity shares to the shareholders of the transferor companies in the following ratio:
"01 equity share of Rs.10/- each of the transferee company for every 2423 equity shares of Rs.1/- each held in the transferor company no. 1."
"01 equity share of Rs.10/- each of the transferee company for every 2158 equity shares of Rs.1/- each held in the transferor company no. 2."
"01 equity share of Rs.10/- each of the transferee company for every 2854 equity shares of Rs.1/- each held in the transferor company no. 3."
"01 equity share of Rs.10/- each of the transferee company for every 1417 equity shares of Rs.10/- each held in the transferor company no. 4."
"01 equity share of Rs.10/- each of the transferee company for every 2278 equity shares of Rs.10/- each held in the transferor company no. 5."CP 423/2016 Page 11 of 18
"01 equity share of Rs.10/- each of the transferee company for every 51,111 equity shares of Rs.10/- each held in the transferor company no. 6."
"05 equity shares of Rs.10/- each of the transferee company for every 01 equity share of Rs.10/- each held in the transferor company no. 7."
"01 equity share of Rs.10/- each of the transferee company for every 27,244 equity shares of Rs.10/- each held in the transferor company no. 8."
Further, upon coming into effect of this Scheme, the transferee company shall issue and allot preference shares to the preference shareholders of the transferor companies in the following ratio:
"3,80,000 5% non-cumulative convertible preference shares of Rs.100/- each for every 01 fully paid up preference share of Rs.100/- each held in the transferor company no. 1."
"40,000 5% non-cumulative convertible preference shares of Rs.100/- each for every 01 fully paid up preference shares of Rs.100/- each held in the transferor company no. 2."
"6,82,500 5% non-cumulative convertible preference shares of Rs.100/- each for every 01 fully paid up preference share of Rs.100/- each held in the transferor company no. 3."
"1,00,000 10% non-cumulative convertible preference shares of Rs.100/- each for every 01 fully paid up preference share of Rs.100/- each held in the transferor company no.5."
"59,000 10% non-cumulative convertible preference shares of Rs.100/- each for every 01 fully paid up preference share of Rs.100/- each held in the transferor company no. 6."
"20,000 12% non-cumulative convertible preference shares of Rs.100/- each and 5,81,500 5% non-cumulative convertible preference shares of Rs.100/- each for every 01 fully paid up preference share of Rs.100/- each held in the transferor company no. 7; and CP 423/2016 Page 12 of 18 "20,000 12% non-cumulative convertible preference shares of Rs.100/- each; 86,500 6% non-cumulative convertible preference shares of Rs.100/- each and 4,30,000 5% non-
cumulative convertible preference shares of Rs.100/- each for every 01 fully paid up preference share of Rs.100/- each held in the transferor company no. 8; and 24 It has been submitted by the petitioners that no proceedings under Sections 237, 250, 250A and 251 of the Companies Act, 1956 and Sections 235, 236, 238, 239 and 241-247 of the Companies Act, 2013 are pending against the transferor and transferee companies.
25. The Board of Directors of the transferor and transferee companies in their separate meetings held on 10th August, 2015 have unanimously approved the proposed Composite Scheme of Capital Reduction and Amalgamation. Copies of the Resolutions passed at the meetings of the Board of Directors of the transferor and transferee companies have been placed on record.
26. The petitioner companies had earlier filed CA (M) No. 27/2016 seeking directions of this court to dispense with the requirement of convening the meetings of their shareholders, secured and unsecured creditors, which are statutorily required for sanction of the Composite Scheme of Capital Reduction and Amalgamation. Vide order dated 16th March, 2016, this court allowed the application and dispensed with the requirement of convening and holding the meetings of the shareholders CP 423/2016 Page 13 of 18 and creditors of the transferor and transferee companies; there being no secured creditors of the transferor companies no. 1, 3 to 8 and the transferee company, to consider and, if thought fit, approve, with or without modification, the proposed Composite Scheme of Capital Reduction and Amalgamation.
27. The petitioner companies have thereafter filed the present petition seeking sanction of the Composite Scheme of Capital Reduction and Amalgamation. Vide order dated 16th May, 2016, notice in the petition was directed to be issued to the Regional Director, Northern Region, and the Official Liquidator. Citations were also directed to be published in 'Business Standard' (English) and 'Jansatta' (Hindi) editions. An affidavit has been filed by the petitioners showing compliance regarding publication of citations in the aforesaid newspapers on 26th June, 2016. Copies of the newspaper clippings containing the publications have been filed along with the said affidavit.
28. Pursuant to the notices issued, the Official Liquidator sought information from the petitioner companies. Based on the information received, the Official Liquidator has filed a report dated 18th July, 2016 wherein he has stated that he has not received any complaint against the proposed Composite Scheme of Capital Reduction and Amalgamation from any person/party interested in the Scheme in any manner and that CP 423/2016 Page 14 of 18 the affairs of the transferor companies do not appear to have been conducted in a manner prejudicial to the interest of their members, creditors or public interest, as per second proviso of Section 394(1) of the Companies Act, 1956.
29. In response to the notices issued in the petition, Mr. Narender Kumar Bhola, Regional Director, Northern Region, Ministry of Corporate Affairs has filed his report dated 1st August, 2016 stating that the Regional Director has no objection to the proposed Scheme of Amalgamation subject to the objections raised by the Income Tax Department and compliance of the provisions of the company law by the petitioner companies. The Regional Director in para 5 of this report has submitted that an appeal filed by the Revenue against the order of ITAT passed in the case of transferor company no. 5 is pending adjudication before the High Court of Punjab & Haryana on the issue of penalty under Section 271AA of the Act. He has further submitted that the jurisdictional AO has no objection to the proposed Scheme subject to the condition that the aforesaid appeal pending against the transferor company no. 5 may be continued against the transferee company and the penalty amount of Rs.34,67,960/- levied under Section 271AA of the Act along with interest may be recovered from the transferee company after amalgamation, in case the Revenue succeeds in appeal in future. Further, the Regional Director in para 7 of his report has submitted that CP 423/2016 Page 15 of 18 the transferor companies no. 1, 2, 3, 5 & 6 are non-banking finance companies and are required to obtain prior approval from Reserve Bank of India.
30. In response to the aforesaid observations, learned senior counsel for the petitioners has submitted that although the Scheme propounded itself says so, however, with a view to remove any doubts, the transferee company shall meet all outstanding liabilities, inter alia, of the transferor company towards income tax dues, if any. Learned senior counsel further submitted that his client is a non-banking finance company (NBFC) which already stands registered with the Reserve Bank of India and that the RBI has not raised any objection to the instant Scheme. He has further submitted that the petitioner company will function as a core investment company and that it has also sought registration as a core investment company and shall take all necessary steps in this behalf pursuant to sanction of the Scheme by this Court. Since the transferee company is not the subject matter of dissolution and will remain in existence even after the sanction of the Scheme, therefore, in case of any default by the company, the ROC/other statutory authorities would be at liberty to take appropriate action, as permissible in law, against the petitioner company.
31. No objection has been received to the Composite Scheme of Capital Reduction and Amalgamation from any other party. The petitioner CP 423/2016 Page 16 of 18 companies in the affidavits dated 3rd August, 2016 of Sh. Alok Goel, authorized signatory of the transferor companies no. 1, 3 and transferee company and Sh. Arvind Aggarwal, authorized signatory of the transferor companies no. 2, 4, 5, 6, 7 and 8 have submitted that neither the petitioner companies nor their counsel have received any objection pursuant to the citations published in the newspapers on 26th June, 2016.
32. Considering the approval accorded by the shareholders and creditors of the petitioner companies to the proposed Composite Scheme of Capital Reduction and Amalgamation and the affidavits filed by the Regional Director, Northern Region, and the Official Liquidator not raising any objection to the proposed Composite Scheme of Capital Reduction and Amalgamation, there appears to be no impediment to the grant of sanction to the Composite Scheme of Capital Reduction and Amalgamation. Consequently, sanction is hereby granted to the Composite Scheme of Capital Reduction and Amalgamation under Sections 391 and 394 of the Companies Act, 1956. The petitioner companies will comply with the statutory requirements in accordance with law. Certified copy of this order be filed with the Registrar of Companies within 30 days. It is also clarified that this order will not be construed as an order granting exemption from payment of stamp duty as payable in accordance with law. Upon the sanction becoming effective from the appointed date of Amalgamation, i.e. 1st April, 2015, the transferor CP 423/2016 Page 17 of 18 companies no. 1 to 8 shall stand dissolved without undergoing the process of winding up.
33. Learned counsel for the Official Liquidator prays that costs of at least Rs.1,00,000/- should be paid by the petitioners keeping in view the fact that the matter has involved examination of extensive records and also prioritized hearings. Learned counsel for the petitioner companies states that the same is acceptable to him. As already directed vide order dated 02.08.2016, the petitioners shall deposit a sum of Rs.1,00,000/- by way of costs with Delhi High Court Bar Association Lawyers Social Security and Welfare Fund, New Delhi.
34. The petition is allowed in the above terms.
Dasti.
SUDERSHAN KUMAR MISRA, J.
September 02, 2016 CP 423/2016 Page 18 of 18