Emeter India Pvt. Ltd. vs .....
2013 Latest Caselaw 2716 Del

$~8
* IN THE HIGH COURT OF DELHI AT NEW DELHI

                                         Date of decision: 2nd July, 2013
+      CO.PET. 609/2012

       EMETER INDIA PVT. LTD.                      .....Petitioner
                Through: Mr. Sharad Vaid and Ms. Shilpi Jain,
                          Advocates for Petitioner
                          Mr. K.S. Pradhan, Dy. Registrar of
                          Companies for the Regional Director
                          Mr. Rajiv Bahl, Advocate for the
                          Official Liquidator

CORAM: HON'BLE MR. JUSTICE R.V.EASWAR

R. V. EASWAR, J.: (ORAL)


1.

This second motion petition has been filed under Sections 391 to

394 of the Companies Act, 1956 („Act‟) by Emeter India Private Limited

(hereafter referred to as „Petitioner Transferor Company‟) seeking

sanction of the Scheme of Amalgamation („Scheme‟) of the Petitioner

Transferor Company with Siemens Technology and Services Private

Limited (hereafter referred to as „Transferee Company‟).

2. The registered office of the Petitioner Transferor Company is

situated within the National Capital Territory of Delhi, within the

jurisdiction of this Court. The registered office of the Transferee

Company is situated at Mumbai in the state of Maharashtra, outside the

jurisdiction of this Court.

3. The details of the dates of incorporation of the Petitioner

Transferor Company and the Transferee Company, their respective

authorized, issued, subscribed and paid up capital have been given in the

Petition.

4. The copies of the Memorandum and Articles of Association as

well as the latest audited annual accounts for the year ended 31 st March,

2012 and unaudited financial statements made upto and as on 31st August

2012 of the Petitioner Transferor Company and the latest audited annual

accounts for the year ended 30th September 2011 and unaudited financial

statements made upto and as on 31st August 2012 of the Transferee

Company have also been enclosed with the CA (M) 179 of 2012.

5. The copies of the resolution passed by the Boards of Directors

(„BoDs‟) of the Petitioner Transferor Company and the Transferee

Company approving the Scheme have also been enclosed with the CA

(M) 179 of 2012.

6. It has been submitted by the Learned counsel for the Petitioner

Transferor Company that no proceedings under Sections 235 to 251 of

the Act are pending against the Petitioner Transferor Company or the

Transferee Company.

7. A copy of the Scheme has been placed on record and the salient

features of the Scheme have been detailed in the petition. The Scheme

provides that upon sanction of the Scheme by the Court, it will take

effect from the Appointed Date which is 1st April 2013. It has been

submitted in the petition that the Petitioner Transferor Company is a

wholly-owned subsidiary of the Transferee Company and upon the

Scheme coming into effect, all shares held by the Transferee Company in

the share capital of the Petitioner Transferor Company shall stand

cancelled and in lieu thereof, no new shares shall be allotted nor any

payment be made by the Transferee Company to any person whatsoever.

8. The Petitioner Transferor Company had earlier filed CA (M) No.

179 of 2012 in this Court seeking directions for dispensation from

convening and holding the meetings of the shareholders and creditors.

By the order dated 5th December 2012, this Court allowed the application

and dispensed with the requirement of convening and holding the

meetings of the shareholders and the creditors of the Petitioner

Transferor Company.

9. The Petitioner Transferor company had thereafter filed CA No.

2332 of 2012 in CA (M) 179 of 2012 stating, inter alia, that (i) Petitioner

Transferor Company is the wholly owned subsidiary of the Transferee

Company and no new shares shall be issued by the Transferee Company,

thus, the Scheme does not entail any reorganization of the capital of the

Transferee Company and (ii) Petitioner Transferor Company is a profit

making company having a positive net worth and as such, the rights and

interest of any of the shareholders or creditors of the Transferee

Company will not be affected by the Scheme and accordingly sought

directions for dispensation from approaching the Transferee Company‟s

jurisdictional High Court at Bombay for seeking sanction of the Scheme,

which was disposed of by order dated 16th January 2013. By this order,

following the orders in Auto Tools India Pvt. Ltd [Co. Appl. (M) No.41

of 2010], Sharat Hardware Industries Pvt. Ltd. (1978) 48 Com. Cas.

23(Delhi), Mahaamba Investments Ltd. Vs. IDI Limited (2001) 105

Com. Cas. 16 (Bom.), Andhra Bank Housing Finance Ltd. (2004) 118

Com. Cas. 295 (AP) and the order dated 23rd April 2012 passed by this

Court in Co. Appl. (M) 63 of 2012 (Prosell Field Marketing Pvt. Ltd),

the Court allowed the Application and dispensed with the requirement of

Transferee Company having to approach the Bombay High Court for

sanction of the Scheme.

10. The Petitioner Transferor Company has filed the present petition

seeking sanction of the Scheme. By order dated 21st December 2012,

notice of the petition was directed to be issued to the Regional Director,

Northern Region („RD‟) and also the Official Liquidator („OL‟) attached

to this Court. Citations were also directed to be published in the

„Statesman‟ (English edition) and in „Jansatta‟ (Hindi edition). An

affidavit of service and publication has been filed by the Petitioner

showing compliance regarding service of the petition on the RD and the

OL, and also regarding publication of citations in the aforesaid

newspapers on 1st February 2013. Copies of the newspaper cuttings, in

original, containing the publications have been filed along with the

affidavit of service.

11. In response to the notice issued in the petition, the RD has filed his

affidavit/ Report dated 4th March 2013. In his affidavit, the RD, inter

alia, has stated that the shares of the Transferee Company are held by a

foreign company viz. M/s Siemens Pte Ltd., Singapore. Further, the

Transferor Company was also a subsidiary of a foreign company, M/s

eMeter Corporation, USA and later on became a subsidiary of the

Transferee Company and, therefore, the RD has submitted that the

Petitioner Transferor Company may be asked to give an undertaking for

all compliances with the Reserve Bank of India („RBI‟) as required under

Foreign Exchange Management Act, 2000 („FEMA‟) for the above

transactions involving foreign banks/entities, if deemed fit and proper by

the Court.

12. In view of the above submissions made by the RD in his aforesaid

affidavit, the Petitioner Transferor Company has filed an affidavit dated

15th March 2013 and confirmed, acknowledged and assured this Court

and has also undertaken that all compliances in relation to the above

transactions involving foreign companies/banks/entities, as required

under FEMA have been and shall be duly made and that there is no

contravention of FEMA regulations in this regard.

13. Pursuant to the notices issued in the petition, the OL sought

information from the Petitioner Transferor Company. Based on the

information received, the OL has filed his report dated 18th March 2013

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 Petitioner Transferor Company does

not appear to have been conducted in a manner prejudicial to the interest

of its members or to public interest, subject to his submissions given in

para 9 and 10 of his report.

14. An affidavit dated 3rd May 2013, giving point wise reply to the

aforesaid report of the OL, has been filed by the Petitioner Transferor

Company with this Court in which it has been submitted: -

(i) with regard to paragraph 9 of the aforesaid report of the OL,

that: -

 Petitioner Transferor Company had paid off all the

unsecured creditors under the head „trade payables‟

appearing in its trial balance as on 31st October 2012 and

had also provided a certificate dated 7th November 2012 of

an independent Chartered Accountant, M/s R.S. Kelkar &

Co, confirming and certifying that all amounts due to

unsecured creditors of the Petitioner Transferor Company as

on 6th November 2012 had been paid off in full.

 paragraph 5.2 of the Scheme read with sub-clause (g)

of paragraph 2.1.11 of the Scheme provides for transfer and

vesting of all the debts, liabilities, duties and obligations of

the Petitioner Transferor Company to the Transferee

Company pursuant to the orders of the High Court

sanctioning the Scheme, made under Section 394 of the Act,

without any further act or deed, thus providing for

assumption of all liabilities of the Petitioner Transferor

Company as on the Appointed Date i.e., 1st April 2013 by

the Transferee Company.

 As per the financial statements of the Petitioner

Transferor Company as on 31st August 2012, its assets were

far in excess over its total liabilities (of `200.78 lacs), by a

significant amount as its net worth stood at `509.26 lacs and

also, as per financial statements of the Transferee Company

as on 31st August 2012 as against total liability of

`21,049.41 lacs, its net worth stood at `35,060.41 lacs and

as such, its total assets were far in excess of its total liability

as on that date.

In view of the above it is submitted by the Petitioner

Transferor Company that the interest of all the unsecured creditors

of the Petitioner Transferor Company could in no way be

prejudiced in case the Scheme is sanctioned by the Court under

Sections 391 to 394 of the Act and more so, because the financial

position of the Transferee Company is even better than that of the

Petitioner Transferor Company and therefore, after sanction of the

Scheme by this Court and the Scheme becoming effective, the

unsecured creditors of the Petitioner Transferor Company would

be entitled to a far better asset cover in respect of their debts due

from Petitioner Transferor Company prior to such amalgamation.

(ii) with regard to paragraph 10 of the aforesaid report of the

OL, the Petitioner Transferor Company has submitted that there

was an inadvertent and unintentional typographical error in

recording the figure of `6,58,00,000/- as `65,80,000/-, the amount

of consideration at which all its shares had been transferred by

Siemens AG, Germany to the Transferee Company, in resolution

No 4 passed by the BoDs of the Petitioner Transferor Company at

its meeting held on 14th December 2012, which mistake has been

taken note of and rectified by the BoDs of the Petitioner

Transferor Company at their meeting held on 5th April 2013.

(iii) As for the observation of the OL in paragraph 10 of his

aforesaid report to the effect that Auditor of the Transferee

Company had, in his report in the Balance Sheet as on 30 th

September 2011, qualified the report and stated that material

discrepancies were noticed on physical verification of fixed assets,

it is submitted by the Petitioner Transferor Company in its

aforesaid reply to the OL‟s report that the discrepancies on

physical verification of fixed assets as noticed by the auditor of the

Transferee Company, had been appropriately given effect to by the

Transferee Company in its books of accounts and in fact, the

Auditor of the Transferee Company had himself, in the very

subsequent line in the same paragraph (i)(b) of the Annexure to his

report dated 12th December 2011, very clearly stated that "these

have been properly dealt with in the books of accounts", which

sentence has not been reproduced by the OL in his aforesaid report

and as such the Transferee Company has taken proper care of the

discrepancy found on physical verification by dealing with

property in its books of accounts.

(iv) In para 12 of the OL report, the OL has stated that it had not

received any complaint against the proposed Scheme from any

person / party interested in the Scheme in any manner until the

date of filing of his report.

15. No objections have been received to the Scheme from any other

party. Mr Manish Mohan, the authorised signatory of the Petitioner

Transferor Company as also its Counsel have filed separate affidavits,

both dated 15th March 2013, and it has been submitted by and on behalf

of the Petitioner Transferor Company at the hearing before this Court

that neither the Petitioner Transferor Company nor their Counsel has

received any objection pursuant to citations published in the newspapers.

16. In view of the approval accorded by the shareholders of the

Petitioner Transferor Company as well as the Transferee Company by

giving their consent to the Scheme in writing and the Court waiving the

convening and holding of the meetings of the shareholders and the

creditors of the Petitioner Transferor Company by order dated 5th

December, 2012; representation/reports filed by the RD and the OL to

the proposed Scheme and the reply Affidavit in response to the reports

of the RD and the OL filed by the Petitioner Transferor Company 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 Transferor Company will comply

with the statutory requirements in accordance with law.

17. The certified copy of the order shall be filed with the Registrar of

Companies within 30 days from the date of receipt of the same. In terms

of Sections 391 and 394 of the Act and in terms of the Scheme, the

whole of the undertaking, business, properties, assets, rights and powers

of the Petitioner Transferor Company be transferred to and vest in the

Transferee Company as a going concern without any further act or deed.

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

obligations of the Petitioner Transferor Company be transferred to and

vest in the Transferee Company without any further act or deed. Upon

the Scheme coming into effect, the Petitioner Transferor Company shall

stand dissolved without winding up.

18. It is, however, clarified that this order shall 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.

19. The Petitioner Transferor Company states that it would voluntarily

deposit a sum of `50,000/- (Rupees Fifty Thousand) in the Common

Pool Fund of the OL within three weeks from today. The statement is

taken on record.

The Petition is allowed in the above terms.

Order Dasti.

EASWAR R. V., J.

JULY 2, 2013