M/S Bharti Enterprises ... vs M/S Bharti Enterprises Ltd.
2008 Latest Caselaw 1614 Del

             IN THE HIGH COURT OF DELHI

             COMPANY PETITION No.155/2008

                  Date of decision: 11th September, 2008.

In the matter of
The Companies Act, 1956:

And

Petitions under Sections 391/394
of the Companies Act, 1956


Scheme of Arrangement between :

M/s Bharti Enterprises (Holdings) Pvt. Ltd. .. Transferor
                          Company/Petitioner Company
                                     No. 1

      WITH


M/s Bharti Enterprises Ltd. ..    Transferee Company/
                            Petitioner Company no. 2

                     Through Mr. Sandeep Sethi, Sr.
                     Adv. with Mr. Lakshay Sawhney,
                     Advocates, for the petitioners
                     Mr. Riasuddin, Asstt. Registrar
                     of Companies
                     Ms. Manisha Tyagi, Adv. for the
                     Official Liquidator


GITA MITTAL, J (Oral)


1.

This is a joint petition by the transferor and

transferee companies under section 391/394 of the

Companies Act, 1956 seeking sanction of the Scheme of

Arrangement between M/s. Bharti Enterprises (Holdings)

Pvt. Ltd. (hereinafter referred to as the 'Transferor

Company') with M/s Bharti Enterprises Ltd. (hereinafter

referred to as the 'transferee company') whereby the

communication and media device, software business

undertaking and infrastructure facility business

undertaking of the transferor company shall get

demerged from the transferor company and vest with the

transferee company on a going concern basis.

2. The registered offices of the transferor and the

transferee companies are situated at New Delhi which is

within the jurisdiction of this court.

3. The Memorandum and Articles of Association of the

transferor and transferee companies have been placed on

record.

4. The authorized share capital of the Transferor

Company as on 31st March, 2007, as certified by their

Chartered Accountants, was Rs.45,00,00,000/- divided

into 3,50,00,000 equity shares of Rs.100/- each and

1,00,00,000 redeemable preference shares of Rs.10/-

each. The issued, subscribed and paid up capital of the

Transferor Company as on March 31, 2007 was

Rs.30,59,52,500/- divided into 3,05,95,250 fully paid up

equity shares of Rs.10/- each. The audited Financial

Accounts of the Transferor Company as on 31st March,

2007 have been placed on record.

5. The authorized share capital of the Transferee

Company, as certified by their Chartered Accountants, is

Rs.100,00,00,000 divided into 10,00,000 equity shares of

Rs.10/- each and 9,90,00,000 redeemable preference

shares of Rs.10/- each. The issue/ subscribed and paid up

capital of the applicant company is Rs.5,00,000/-. The

audited Financial Accounts of the Transferee Company as

on 30th April, 2007 have also been placed on record.

6. The Scheme of Arrangement has been filed

alongwith the petition. The salient features of the scheme

are detailed in the petition and the accompanying

affidavit. It is submitted that the proposed demerger of

the transferor company will be in the best interests of the

transferor company and its shareholders and that the

proposed segregation will create enhanced value for

shareholders and allow a focused strategy in operations,

which would be in the best interest of Business

Undertakings proposed to be demerged, and all

stakeholders connected with it. It will enable investors to

separately hold investments in business with different

investment characteristics thereby enabling them to

select investments which best suit their investment

strategies and risk profiles.

So far as the share exchange ratio is concerned it is

submitted that the transferee company shall issue and

allot to each member of the transferor company

66,30,118 equity shares in the transferee company for

every 1,00,00,000 shares held in the transferor company.

7. It is further claimed that no investigation

proceedings have been instituted or are pending in

relation to the petitioner companies under Sections 235

and 251 of the Companies Act, 1956.

8. The Board of Directors of the petitioner companies in

their separate meetings held on 24th March, 2008 have

approved the proposed Scheme of Arrangement. A copy

each of the said Board Resolutions has been placed on

record.

9. The petitioner companies had earlier filed CA (M)

77/2008 seeking dispensation of the requirement to

convene meetings of its equity shareholders and the

unsecured creditors. The petitioner companies have no

secured creditors. The said application was allowed vide

order dated 16th May, 2008 and the requirement of

convening and holding the meetings of equity

shareholders and unsecured creditors of the applicant

companies to consider and, if thought fit, approve, with or

without modification, the proposed Scheme of

Arrangement was dispensed with.

10. Thereafter, the petitioner companies have filed the

present petition seeking sanction of the Scheme of

Arrangement. Notice of the petition was directed to be

issued to the Official Liquidator and Regional Director,

Northern Region. Citations were also directed to be

published in 'Statesman (English)' and 'Veer Arjun(Hindi)'

in terms of the Company (Court) Rules, 1959. Affidavits

of service have been filed by the petitioners showing

compliance regarding service on the Official Liquidator

and the Regional Director, Northern Region and also

publication of citations in the above said newspapers on

31st May, 2008. Copies of the newspaper clippings

containing publication have been filed alongwith the

affidavit of service.

11. Pursuant to the notices issued, the Official

Liquidator has filed his report dated 29th August, 2008

stating that he has not received any compliant against

the proposed Scheme of Arrangement from any

person/party interested in the Scheme in any manner.

12. Shri Dhan Raj, Regional Director, Northern Region,

Ministry of Corporate Affairs has filed affidavit dated 1st

September, 2008, in response to the notices issued in the

petition. Relying on clause 2.5 of Part II of the Scheme of

Arrangement, it is submitted that all the employees of the

transferor companies shall become the employees of the

transferee company without any break or interruption in

their service upon sanction of the Scheme of

Arrangement. He has further submitted that it has been

observed from the valuation report that the swap ratio or

the proposed arrangement was fixed for 1,00,00,000

equity shares of Rs.10/- each held in the transferor

company for every 66,30,118 equity shares of Rs.10/-

each of the tranferee company. Whereas it has been

observed from the records that after filing the proposed

scheme of arrangement, both the companies have altered

their capital clause by creation of certain redeemable

preference shares of Rs.10/- each in lieu of equity shares

to that extent. It is not clear as to whether and under

which ratio the preference shares shall be allotted to the

members of the transferor company under the proposed

scheme of arrangement.

13. In response thereto the transferee company has

filed an additional affidavit of Sh. Anil Khubchandani S/o

Mr. J.G. Khubchandani stating that the proposed scheme

is a scheme of arrangement and the transferor company

shall not be liquidated on the scheme becoming effective.

Therefore the existing preference shareholders of

transferor company shall continue to hold their preference

shares and their interest will not be affected in any

manner on the scheme of arrangement becoming

effective. It is further submitted that the preference

shares issued by both the companies are redeemable and

have no impact on the Scheme of Arrangement. These

preference shares shall be redeemable in accordance with

their respective terms of the issue and that none of the

companies are publicaly listed and the redeemable

preference shares have also been issued by both the

companies to its common promotor i.e. M/s Bharti

Enterprises a partnership firm. The list of preference

shareholders of both the companies is enclosed with the

petition. The companies have filed the respective Form 2

with the office of the Registrar of Companies, NCT of Delhi

& Haryana. In this manner, the transferor company has

issued 1,00,00,000 while the transferee company has

issued 3,90,000 redeemable preference shares of face

value of Rs.10 each.

14. No objection has been received to the Scheme of

Arrangement from any other party.

15. In view of the approval accorded by the equity

shareholders and the unsecured creditors of the petitioner

companies to the proposed Scheme of Arrangement and

there being no secured creditor and no surviving objection

to the same either of the Official Liquidator or the

Regional Director, Northern Region, there appears to be

no impediment to the grant of sanction to the Scheme of

Arrangement. Consequently, sanction is hereby granted

to the Scheme of Arrangement entered into by the

petitioner companies, under section 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 five weeks. 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 to law.

16. Learned senior counsel appearing for the petitioners

submits that each of the companies would pay an amount

of Rs.1,00,000/- towards costs, which would be deposited

in the following manner:

(i) Bharti Enterprises (Holdings) : (1) Rs.25000/- in the

Pvt.Ltd. Common Pool Fund

maintained by the

Official Liquidator

(2) Rs.75000/- in the

SOS Childrens Villages of

India, A-7, Nizamuddin

West, New Delhi.

(i) Bharti Enterprises Ltd. : (1) Rs.25000/- in the

Delhi Police Welfare

Society, DCP, Provision & Line.

Old Police Line, Delhi.

(2) Rs.75000/- in the

SOS Childrens Villages of

India, A-7, Nizamuddin

West, New Delhi.

It is directed accordingly. Petitioners to deposit the

costs, as aforesaid, within 2 weeks with the organizations

mentioned against their respective names.

Copy of the directions with respect to the costs be

communicated to the organizations concerned. Proof of

deposit to be filed in the Registry. In case of non-deposit

of costs, petitions be placed before court for directions.

17. The petition is disposed of in terms of the above

order.

Dasti.

GITA MITTAL, J September 11, 2008