Indiabulls Financial Services ... vs --------------------
2012 Latest Caselaw 7092 Del

*     IN THE HIGH COURT OF DELHI AT NEW DELHI

%                         Date of Judgment:12.12.2012.

+     COMPANY PETITION NO. 457 OF 2012

IN THE MATTER OF:

Indiabulls Financial Services Limited
                                 ... Petitioner/ Amalgamating Company
                                 AND

Indiabulls Housing Finance Limited.
                                  ...Petitioner/Amalgamated Company

             Through:   Mr. Sandeep Sethi, Sr. Advocate with
                        Mr. Anirudh Das and Mr. Rohan Dheman,
                        Advocates for the Petitioner Companies
                        Mr. K.S. Pradhan, Dy. Registrar of Companies
                        for the Regional Director
                        Mr. Rajiv Bahl, Advocate for the Official
                        Liquidator

      CORAM:
      HON'BLE MS. JUSTICE INDERMEET KAUR


INDERMEET KAUR, J. (Oral)

1. This second motion Petition has been filed under Section 391(2)

and 394 of the Companies Act, 1956 ("Act") by the Petitioner

Companies seeking sanction and approval of the Scheme of

Arrangement amongst Indiabulls Financial Services Limited and

Indiabulls Housing Finance Limited and their respective

shareholders and creditors.

2. The registered office of the Petitioner/ Amalgamating Company

and the Petitioner/Amalgamated Company is situated at New

Delhi, within the jurisdiction of this Court.

3. Details with regard to the date of incorporation of the Petitioner/

Amalgamating Company and the Petitioner/Amalgamated

Company, their authorized, issued, subscribed and paid up capital

have been given in the Petition.

4. Copies of the Memorandum and Articles of Association as well as

the accounts of the Petitioner/Amalgamating Company and the

Petitioner/Amalgamated Company for the year ended 31 March

2012, respectively, have also been enclosed with the Petition.

5. Copies of the Resolutions passed by the Board of Directors of the

Petitioner/Amalgamating Company and the

Petitioner/Amalgamated Company approving the Scheme have

also been placed on record.

6. It has been submitted that no proceedings under Sections 235 to

251 of the Act are pending against the Petitioner/Amalgamating

Company and the Petitioner/Amalgamated Company.

7. So far as the share exchange ratio under the Scheme is concerned,

the Scheme provides that upon the same becoming effective,

every Equity Shareholder of the Petitioner/Amalgamating

Company shall be entitled to receive 1 equity shares of face value

Rs. 2/- (Rupees Two Only) each in the equity share capital of the

Petitioner/Amalgamated Company for every 1 equity share of

face value Rs. 2/- (Rupees Two Only) each held in the equity

share capital of the Petitioner/Amalgamating Company.

8. The Petitioner Companies had earlier filed Company Application

(M) No.113 of 2012 seeking dispensation from convening the

meetings of the equity shareholders of the

Petitioner/Amalgamated Company and seeking directions for

convening the meetings of the equity shareholders, secured

creditors and unsecured creditors of the Petitioner/Amalgamating

Company and secured creditors and unsecured creditors of the

Petitioner/ Amalgamated Company. Vide orders dated 10 July

2012 and 20 July 2012, this Court had dispensed with the

requirement of convening meeting of the Equity Shareholders of

the Petitioner/Amalgamated Company. Further this Court had

directed the convening of the meetings of the equity shareholders,

secured creditors and unsecured creditors of the

Petitioner/Amalgamating Company and the secured creditors and

unsecured creditors of the Petitioner/ Amalgamated Company.

9. The said meetings of the equity shareholders and unsecured

creditors of the Petitioner/Amalgamating Company and unsecured

creditors of the Petitioner/ Amalgamated Company were held on

08 September 2012. Further, the meeting of the secured creditors

of the Petitioner/ Amalgamating Company and the Petitioner/

Amalgamated Company were held on 15 September 2012. The

equity shareholders, secured creditors and the unsecured creditors

of the Petitioner/Amalgamating Company and the secured

creditors and unsecured creditors of the Petitioner/ Amalgamated

Company have unanimously approved the Scheme.

10. The Petitioner Companies thereafter filed the present Petition

seeking sanction of the Scheme. Vide order dated 28 September

2012, notice on the Petition was directed to be issued to the

Regional Director (Northern Region), Ministry of Corporate

Affairs, the Registrar of Companies and the Official Liquidator.

Notice of Petition was also directed to be published in Indian

Express (English Edition) and Jansatta (Hindi Edition). Affidavit

of Service and Publication has been filed by the Petitioner

Companies showing compliance regarding service of the Petition

on the Regional Director (Northern Region), the Registrar of

Companies and the Official Liquidator, and also regarding

publications of Notice of Petition in the aforesaid newspapers on

05 December 2012. Copies of the newspaper, in original,

containing the publications have been filed along with the

Affidavit of Service.

11. Pursuant to the notices issued, the Official Liquidator sought

information from the Petitioner Companies. Based on the

information received, the Official Liquidator has filed his report

dated 08 November 2012 wherein he has stated that the affairs of

the Petitioner/Amalgamating Company do not appear to have

been conducted in a manner prejudicial to the interest of its

members, creditors or to public interest.

12. In response to the notices issued in the Petition, Mr. Rakesh

Chandra, learned Regional Director, Northern Region, Ministry of

Corporate Affairs has filed his Representation Affidavit dated 21

November 2012. Relying on Clause 9.1 of Part II of the Scheme,

he has stated that, upon sanction of the Scheme of Arrangement,

all the employees of the Petitioner/ Amalgamating Company shall

become employees of the Petitioner/ Amalgamated Company

without any break or interruption in service upon sanctioning of

the Scheme by the Hon‟ble Court.

The learned Regional Director has in Para 5.1 and 6.1 of the

Representation Affidavit dated 21 November 2012 submitted that

the Petitioner/Amalgamated Company may be asked to follow the

procedure prescribed under the Companies Act, 1956 and file

requisite forms with the Registrar of Companies, Delhi.

The learned Regional Director has in Para 7 of the Representation

Affidavit dated 21 November 2012 submitted that the Petitioner/

Amalgamated Company may be asked to comply with the

conditions raised by the Bombay Stock Exchange and National

Stock Exchange.

The learned Regional Director has in Para 8 of the Representation

Affidavit dated 21 November 2012 submitted that the Petitioner/

Transferor Company is a Non Banking Finance Company

registered with the Reserve Bank of India. The learned Regional

Director stated that the Petitioner/ Amalgamating Company may

be asked to give an undertaking for compliance of all the Rules

and Regulations of Reserve Bank of India, being the concerned

regulator.

The learned Regional Director has in Para 9 of the Representation

Affidavit dated 21 November 2012 submitted that the Petitioner/

Amalgamated Company is a Housing Finance Company regulated

by the National Housing Bank, New Delhi. The learned Regional

Director stated that the Petitioner/ Amalgamated Company may

be asked to give an undertaking for compliance of all the Rules

and Regulations of National Housing Bank, being the concerned

regulator.

The learned Regional Director has in Para 8 of the Representation

Affidavit dated 21 November 2012 submitted that the Petitioner

Companies may be asked to give an undertaking for necessary

compliance of the Provisions of the Competition Act, 2002 with

regard to the proposed Scheme.

13. The Petitioner Companies in response to the Representation

Affidavit dated 21 November 2012, have filed reply dated 04

December 2012. The Petitioner Companies have in the Reply

Affidavit dated 04 December 2012 stated that provisions of

Section 391 (1) of the Act confers the power on a Company to

propose a compromise or arrangement between itself and its

shareholders and creditors on any class of them. In terms of

Section 390 (b) of the Act, the expression „Arrangement‟ includes

re-organization of the share capital of a Company. It is further

submitted that in terms of Section 94 of the Act, a Company has

the power to alter its share capital and subsequently give notice

thereof to the Registrar of Companies under Section 95 of the

Act. It is also submitted that the change to the object clause of the

Petitioner/Transferee Company is being effected as an integral

part of the Scheme. It is further submitted that the Equity

Shareholders of the Petitioner/Amalgamated Company have

approved the Scheme including the proposed change in its

Memorandum of Association and that upon sanction of the

Scheme, the order of this Court shall be filed with the Registrar of

Companies and the same shall be treated as intimation to the

Registrar of Companies for change in the Memorandum of

Association. The Petitioner Companies further rely upon the

judgment of this Court dated 19 July 2007 in Company Petition

No.75 of 2007, judgment dated 02 August 2006 in Company

Petition Nos.102-103 of 2006, judgment dated 03 March 2011 in

Company Petition No.448 of 2010 and judgment dated 17

October 2011 in Company Petition No.318 of 2011. It is

accordingly submitted that there is no requirement to follow the

separate procedure prescribed under the Act for altering the

Memorandum of Association.

14. It has also been stated that the Petitioner/Amalgamated Company

shall comply with the conditions communicated by the Bombay

Stock Exchange Limited in its letter dated 28 June 2012 and of

the NSE letter dated 07 June 2012. It has further been submitted

that the Petitioner/ Amalgamating Company shall comply with

the applicable rules and regulations of the Reserve Bank of India

and the Petitioner/Amalgamated Company shall comply with the

applicable rules and regulations of the National Housing Bank,

New Delhi.

15. It is submitted that the Petitioner Companies shall further comply

with the applicable rules and regulations issued by the Reserve

Bank of India as also the provisions of the Foreign Exchange

Management Act, 1999 with respect to any foreign shareholding

in their respective issued and paid up share capital.

16. It is also submitted on behalf of the Petitioner Companies that the

provisions of the Competition Act, 2002 are not attracted and the

Petitioner Companies are not required to comply with the merger

control provisions contained in Sections 5 and 6 of the

Competition Act, 2002 as the Scheme provides for the merger of

the Petitioner/Amalgamated Company into and with its wholly

owned subsidiary. It is accordingly submitted that in view of the

provisions of Schedule I read with Regulation 4 of the

Competition Commission of India (Procedure in regard to the

Transactions of Business Relating to Combination) Regulations,

2011 and Item 8A as inserted in Schedule 1 of the aforesaid

Regulations, the transactions proposed in the Scheme is exempted

from the purview of the Competition Act, 2002. In any event,

counsel for the Petitioner Companies submits that the

Petitioner/Amalgamated Company undertakes to comply with the

provisions of the Competition Act, 2002 as applicable, subsequent

to the sanction of the Scheme by this Court.

17. This Court is of the view that the objections raised by the learned

Regional Director with respect to the alteration in the share

capital and the alteration of the Memorandum of Association of

the Petitioner/ Amalgamated Company are without merit in view

of the judgments as cited herein-above. This Court has held that

the sanction under Sections 391 to 394 of the Act is a single

window clearance and there is no requirement of separate

procedure to be followed for amendment of Memorandum of

Association under the provisions of the Act. It is pertinent to

mention that sub division of the face value of the equity shares of

the Petitioner/Amalgamated Company and the change in the

object clause is being implemented as an integral part of the

Scheme. The Equity Shareholders of the Petitioner Companies

have approved the Scheme in its entirety. Upon sanction of the

Scheme, the order of the Court shall be filed with the Registrar of

Companies and the same shall constitute compliance of the

provisions of the Act for change in the Memorandum of

Association. Further, the undertakings given at paras 3 (b), 3 (e),

3 (f), 3 (g), 3 (h) and sub-para of para 3 (i) of the Reply Affidavit

dated 04 December 2012 are accepted.

18. The Petitioner Companies in the affidavit dated 04 December

2012 have stated that no objection has been received by the

Petitioner Companies or its Counsel to the Scheme of

Arrangement from any party. It is further submitted by the

counsel for the Petitioner Companies that even as on date, no

objection has been received to the Scheme of Arrangement from

any other party.

19. In view of the approval accorded by the equity shareholders,

secured creditors and unsecured creditors of the Petitioner

Companies, Representation Affidavit filed by the Regional

Director, Northern Region, to the proposed Scheme, there appears

to be no impediments to the grant of sanction to the Scheme.

Consequently, sanction is hereby granted to the Scheme under

Section 391-394 of the Companies Act, 1956. The Petitioner

Companies will comply with the statutory requirements in

accordance with law. Certified copy of the order be filed with the

Registrar of Companies within 30 days from the date of receipt of

the same. In terms of the provisions of Sections 391-394 of the

Companies Act, 1956 and in terms of the Scheme, the whole of

the undertaking, properties, rights and powers of the

Petitioner/Amalgamating Company be transferred to and vest in

the Petitioner/Amalgamated Company without any further act of

deed. Similarly, in terms of the Scheme, all liabilities and duties

of the Petitioner/Amalgamating Company be transferred to the

Petitioner/Amalgamated Company without any further act or

deed. Upon the Scheme coming into effect, the

Petitioner/Amalgamating Company shall stand dissolved without

winding up. It is however clarified that this order will not be

construed as an order granting exemption from payment of stamp

duty or taxes or any other charges, if payable, in accordance with

any law or permission/compliance with any other requirement

which may be specifically required under any law.

20. Learned counsel for the Petitioners states that the Applicant /

transferee Company would voluntarily deposit a sum of Rs. 1 lac

in the Common Pool fund of the Official Liquidator within three

weeks from today. The said statement is accepted.

21. The Petition is disposed off in above terms.

Order Dasti

INDERMEET KAUR, J DECEMBER 12, 2012 A