U. P. Metblast & Energy Limited vs ----
2012 Latest Caselaw 5856 Del

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*      IN THE HIGH COURT OF DELHI AT NEW DELHI

%                          Date of Judgment: 28.09.2012.

+      COMPANY PETITION NO. 309 OF 2012

U. P. METBLAST & ENERGY LIMITED
                             ....... Transferor Company No.1

                                 AND

ARROW RETAIL PRIVATE LIMITED
                         ............ Transferor Company No.2

                                 AND

SHREE BALAJI HEAVY ELECTRICALS
PRIVATE LIMITED            ...... Transferor Company No.3

                                 AND

HIND TRADEX LIMITED............... Transferee Company
                  Through:- Mr. Mukesh Sukhija, Adv. for the
                            petitioner.
                            Mr. K.S. Pradhan, Regional
                            Director (Northern Region)
                            Mr. Rajiv Bahl for the Official
                            Liquidator.
    CORAM:
     HON'BLE MS. JUSTICE INDERMEET KAUR

INDERMEET KAUR, J. (Oral)

1. This joint Petition has been filed under sections 391(2) & 394 of the

Companies Act, 1956 by the Petitioner Transferor Companies and

Transferee Company seeking sanction of the Scheme of

Amalgamation of M/s U. P. METBLAST & ENERGY LIMITED

(Transferor Company No. 1); ARROW RETAIL PRIVATE

LIMITED (Transferor Company No. 2); SHREE BALAJI HEAVY

ELECTRICALS PRIVATE LIMITED (Transferor Company No. 3);

with HIND TRADEX LIMITED (Transferee Company).

2. The registered offices of the Petitioner Transferor Companies and

Transferee Company are situated at New Delhi, within the

jurisdiction of this Court.

3. Details with regard to the date of incorporation of Transferor and

Transferee Companies, 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 latest audited Accounts as at 30th September, 2011 of the

Petitioner Transferor and Transferee Companies have also been

enclosed with the Petition.

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

Petitioner Companies approving the Scheme of Amalgamation have

also been placed on record.

6. It has been submitted that no proceedings under Sections 235 to 251

of the Companies Act, 1956 is pending against the Petitioner

Companies.

7. So far as Share Exchange ratio is concerned, the Scheme provides

that upon amalgamation of the „Transferor Companies No. 1 to 3‟

into the „Transferee Company‟ pursuant to the Scheme of

Amalgamation, the following would be the share Exchange Ratio:

(A) "FOR EVERY 10 (TEN) EQUITY SHARE(S) OF RS.10/-

(RUPEES TEN) EACH FULLY PAID UP OF UP METBLAST & ENERGY LIMITED (TRANSFEROR COMPANY NO. 1) 89 (EIGHTY NINE) EQUITY SHARE(S) OF RS.10/- (RUPEES TEN) EACH FULLY PAID UP OF HIND TRADEX LIMITED (TRANSFEREE COMPANY)."

(B) "FOR EVERY 10 (TEN) EQUITY SHARE(S) OF RS.10/-

(RUPEES TEN) EACH FULLY PAID UP OF ARROW

RETAIL PRIVATE LIMITED (TRANSFEROR COMPANY NO. 2) 91 (NINETY ONE) EQUITY SHARE(S) OF RS.10/- (RUPEES TEN) EACH FULLY PAID UP OF HIND TRADEX LIMITED (TRANSFEREE COMPANY)."

(C) "FOR EVERY 10 (TEN) EQUITY SHARE(S) OF RS.10/-

(RUPEES TEN) EACH FULLY PAID UP OF SHREE BALAJI HEAVY ELECTRICALS PRIVATE LIMITED (TRANSFEROR COMPANY NO. 3) 13 (THIRTEEN) EQUITY SHARE(S) OF RS.10/- (RUPEES TEN) EACH FULLY PAID UP OF HIND TRADEX LIMITED (TRANSFEREE COMPANY)."

8. The Petitioner Companies had earlier filed CA (M) No. 101 seeking

directions of this Court for dispensation/convening of meetings. Vide

order dated May 29, 2012, this Court allowed the Application and

dispensed with the requirement of convening meetings of

Shareholders and Un-secured Creditors of the Transferor Companies

and the Transferee Company and also the Secured Creditors of the

Transferor Company No. 1 and Transferee Company, while the

Transferor Company No. 2 and Transferor Company No. 3 had no

Secured Creditor.

9. The Petitioner Transferor Companies and the Transferee Company

have thereafter filed the present Petition seeking sanction of the

Scheme of Amalgamation. Vide order dated July 09, 2012, 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 the „Statesman‟ (English, Delhi Edition)

and „Vir Arjun‟ (Hindi, Delhi Edition). Affidavit of Service and

Publication has been filed by the Petitioners showing compliance

regarding service of the Petition on the Regional Director, Northern

Region and the Official Liquidator, and also regarding publication of

citations in the aforesaid newspaper on August 25, 2012. Copies of

the newspaper cuttings, in original, containing the publications have

been filed along with the Affidavit of Service.

10. 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 September 21, 2012 wherein he has stated that he has not

received any complaint against the proposed Scheme from any

person/party interested in the Scheme in any manner and that the

affairs of the Transferor Companies No, 1 to 3 do not appear to have

been conducted in a manner prejudicial to the interest of its

members, creditors or to public interest.

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

Learned Regional Director, Northern Region, Ministry of Corporate

Affairs has filed his Affidavit dated September 13, 2012. Relying on

Clause 7 of the Scheme of Amalgamation, he has stated that, upon

sanction of the Scheme of Amalgamation, all the employees of the

Transferor Companies No. 1 to 3 shall become the employees of the

Transferee Company without any break or interruption in their

services upon sanctioning of the Scheme of Amalgamation by the

Hon‟ble Court and on perusal of the Balance Sheet as at 31.03.2011

of the Transferor Company No. 1 viz. M/s U.P. Metblast & Energy

Limited., it has been observed that the company has granted a loan

amounting to Rs 15,80,000/- to Ms. Manju Goel, relative of director

which fall within the purview of the Provisions of Section 295 of the

Act. Thus, the Company has violated the Provisions of Section 295.

Further, by contravening the Provisions of Section 295 of the Act by

the Director of the Company, the concerned Directors vacate his

office by operation of law pursuant to the Provisions of Section

283(1)(h) of the Companies Act, 1956, which is a material in the

affairs of the Company. The Transferee Company vide its letter-

dated 06.09.2012 has given undertaking that they will move

Compounding Application under Section 621-A of the Companies

Act, 1956 for the default committed under Section 295 of the

Companies Act, 1956 with the Registrar of Companies, New Delhi.

Mr. Anuj Goyal, Director of Transferor Company No.1 filed an

affidavit dated 05.07.2012 in response to the affidavit filed by

Regional Director stating that-

1. That the Transferor Company No. 1 had given loan of Rs. 15,80,000/- to Ms. Manju Goel in non-compliance of the provisions of section 295 of the Companies Act, 1956.

2. That the above non-compliance has occurred inadvertently and

due to oversight; without any mala-fide intention on the part of the Board of Directors of the Transferor Company No. 1.

3. That the whole amount of Rs. 15,80,000/- has been repaid on

09.11.2011 by Ms. Manju Goel to the Transferor Company No. 1.

4. That the Transferor Company No. 1 has filed a compounding

application under section 621A read with Section 295 of the Companies Act, 1956 in the prescribed e-form 61 vide SRN B57956252 dated 20.09.2012 in respect of the loan of Rs. 15,80,000/- given by the Transferor Company No. 1 to Ms. Manju Goel. A copy form 61 along with its challan was attached with this affidavit.

5. That as per clause 4 of the Scheme of Amalgamation filed before

the Hon‟ble Court, none of the proceedings filed by or against the Transferor Company No. 1 would be abated or discontinued by the reason of amalgamation of the Transferor Company No. 1 with the Transferee Company. Clause 4 of the scheme of Amalgamation is reproduced herein below for ready reference-

"4. Legal Proceedings All legal proceedings of whatever nature by or against the Transferor Companies pending on the Effective Date, shall not be abated, be discontinued or be, in any way, prejudicially affected by reason of the transfer of the undertaking of the Transferor Companies or of anything contained in this Scheme but the

proceedings may be continued, prosecuted and enforced by or against the Transferee Company in the same manner and to the same extent as it would or might have been continued, prosecuted and enforced by or against the Transferor Companies as if the Scheme had not been made."

6. The observations raised by the Ld. RD on this point no longer

survives.

12. Moreover the counsel for the Petitioner Companies placed

reliance on the judgment of this Hon‟ble Court in the matter of

Salil Industries Limited Vs.Nabhganja Buildwell Pvt. Ltd. in CP

No. 149/2010, delivered on 06.9.2010; para no. 17:

In support of the above submission, learned counsel relied on the judgment of Single Judge of the Gujarat High Court in the matter of Core Healthcare Limited Vs. Nirma Limited [(2007) 138 Comp Cas 204 (Gujarat)] wherein the court has held that "the Scheme can always be sanctioned subject to and without prejudice to the liability, if any, in the Civil and Criminal proceedings in respect of past transactions and the liability, if any, of the Board, Directors, Management etc., in civil and criminal proceedings would continue."

In view of the submissions made at the bar and the settled law on the subject, the objection raised by the Regional Director is rejected and the Scheme is sanctioned subject to and without prejudice to the liability, if any, in the civil and criminal proceedings in respect of past transactions. It is further clarified that the proceedings pending before the ACMM, Tis Hazari, Delhi

against the transferor company and/or its Board, Directors and management etc. shall continue and the liability, if any, of the Board, Directors, Management etc., in the said proceedings would continue as if the Scheme has not been made.

13. No objection has been received to the Scheme of Amalgamation

from any other party by either of the Petitioner Company or the

counsel. Mr. Anuj Goyal & Mr. Ramesh Kumar Goyal, the Directors

of the respective companies given their affidavits both dated

05.07.2012 confirming that neither the Petitioner Companies nor the

counsel has received any objection pursuant to citations published in

the newspapers.

14. In view of the approval accorded by the Shareholders and Creditors

of the Petitioner Companies; representation/reports filed by the

Regional Director, Northern Region and the Official Liquidator,

attached with this Court to the proposed Scheme of Amalgamation,

there appears to be no impediment to the grant of sanction to the

Scheme of Amalgamation. Consequently, sanction is hereby granted

to the Scheme of 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

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 and 394 of the Companies Act, 1956, and in terms of

the Scheme, the whole or part of the undertaking, the property,

rights and powers of the Transferor Company No. 1 to 3 be

transferred to and vest in the Transferee Company without any

further act or deed. Similarly, in terms of the Scheme, all the

liabilities and duties of the Transferor Companies No. 1 to 3 be

transferred to the Transferee Company without any further act or

deed. 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.

15. Learned Counsel for the Petitioners states that the Petitioner

Companies would voluntarily deposit a sum of Rs. One lac in the

Common Pool fund of the Official Liquidator within three weeks

from today. The statement is accepted.

16. The Petition is allowed in the above terms.

Order Dasti

INDERMEET KAUR, J SEPTEMBER 28, 2012 A