Value First Digital Media Private ... vs --
2013 Latest Caselaw 2943 Del

$~18
* IN THE HIGH COURT OF DELHI AT NEW DELHI

                                       Date of decision: 12th July, 2013

+      CO. PET. NO. 126 OF 2013

       Value First Digital Media Private Limited        .....Petitioner
                    Through: Mr. Mahesh Agarwal and Rajeev
                                Kumar, Advocates for the Petitioner

                                Mr. K.S. Pradhan, Dy. Registrar of
                                Companies for the Regional Director.

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

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


1.     This petition has been filed under Sections 391 to 394 of the

Companies Act, 1956 („Act‟) by the Petitioner seeking sanction of the

Scheme of Arrangement („Scheme‟) between Value First Digital

Media Private Limited (hereinafter referred to as „Petitioner Transferee

company‟) and Gingersoft Media Private Limited (hereinafter referred

to as „Demerged company‟) and their respective shareholders and

creditors.


2.     The registered office of the Petitioner-Transferee company is

situated at New Delhi, within the jurisdiction of this Court. The

CO. PET. 126-2013                                           Page 1 of 8
 registered office of the demerged company is situated at Hyderabad,

outside the jurisdiction of this court.


3.     The details of the date of incorporation of Petitioner-Transferee

company, its authorized, issued, subscribed and paid up capital have

been set out in the petition.


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

well as the latest audited annual accounts of the Petitioner-Transferee

company have also been placed on record.


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

(„BoDs‟) of the Petitioner-Transferee company and Demerged

company approving the Scheme has also been placed on record.


6.     Learned counsel for the Petitioner submits that no proceedings

under Sections 235 to 251 of the Act are pending against the

Petitioner-Transferee company.


7.     As regards the share exchange ratio for arrangement is

concerned, the Scheme in Clause 9 provides that:-




CO. PET. 126-2013                                           Page 2 of 8
        "As the entire issued share capital in mGinger is held by
       ValueFirst, mGinger is a wholly owned subsidiary of
       ValueFirst. Since ValueFirst is not permitted to issue
       shares to itself under the provisions of the Act, no new
       shares will be issued by ValueFirst in consideration of
       transfer of Demerged Business Undertaking in terms of
       Clause 4 of this Scheme".


8.     The Petitioner-Transferee company had earlier filed CA (M) No.

17 of 2013 in this Court seeking directions for dispensation of

requirement of convening the meetings of the equity shareholders,

preference shareholders and secured creditors and also for the

directions for convening the meeting of the unsecured creditors of the

Petitioner-Transferee company. By order dated 22nd January 2013, this

Court allowed the application and dispensed with the requirement of

convening the meetings of the equity shareholders, preference

shareholders and secured creditors of the Petitioner-Transferee

company. This Court further directed to convene the meeting of the

unsecured creditor of the Petitioner-Transferee company. Pursuant to

the direction of this Court, meeting of the unsecured creditors was

convened on 2nd March 2013. The chairperson appointed in the said

meeting submitted their report whereby it has been stated that the




CO. PET. 126-2013                                          Page 3 of 8
 proposed Scheme was approved by the unsecured creditors of the

Petitioner-Transferee company unanimously.


9.     The Petitioner-Transferee company had thereafter filed the

present petition seeking sanction of the Scheme. By order dated 19th

March 2013, notice of the petition was directed to be issued to the

Regional Director („RD‟). Citations were also directed to be published

in „The Indian Express‟ (English) and „Jansatta‟ (Hindi). An affidavit

of service and publication has been filed by the Petitioner showing

compliance regarding service of the petition and also regarding

publication of citations in the aforesaid newspapers on 26th May 2013.

Copies of the newspaper cuttings, in original, containing the

publications have also been filed along with the said affidavit.


10.    In response to the notices issued, the RD has filed his affidavit

dated 26th June 2013. Relying on Clause 7.1 of Part-II of the Scheme,

he has stated in para 3 of his affidavit that all the employees of the

Demerged company engaged in „Advertising & Sampling Business"

shall become the employees of the Transferee company without any

break or interruption in their services upon sanctioning of the Scheme.




CO. PET. 126-2013                                             Page 4 of 8
 11.    Further, the RD, in paras 5 and 5.1 of the said affidavit has

observed as follows:


       "5. That the Deponent further craves leave to submit
       that the Petitioner Transferee company by its letter dated
       10the June 2013 has stated that 55,100 shares are held by
       the foreign companies in the Petitioner Transferee
       company.

       5.1 It is submitted that the Petitioner Transferee
       company may be asked to give an undertaking for all
       compliances from Reserve Bank of India ('RBI') as
       required under FEMA for above transactions involving
       foreign entities, if deemed fit and proper by this Court."


12.    In reply to the abovesaid observation, a rejoinder affidavit dated

8th July 2013 has been filed by Mr. Vishwadeep Bajaj, Managing

Director of the Petitioner Transferee company, stating that the

Demerged company is a wholly owned subsidiary of the Petitioner

Transferee company, therefore no shares will be issued by the

Petitioner pursuant to the approval of the Scheme either to the Indian

shareholders or the foreign company. He further submits that the

Petitioner-Transferee   company     shall   make    all   the    necessary

compliances as may be applicable, as per the requirement of RBI under

FEMA.




CO. PET. 126-2013                                               Page 5 of 8
 13.    Further, the RD, in para 6 of the said affidavit has also observed

that the case should be decided subject to the outcome of the Hon‟ble

High Court of Andhra Pradesh.


14.    In reply to the abovesaid observation, the said rejoinder filed by

the Petitioner-Transferee company states that the High Court of

Andhra Pradesh has already approved the present Scheme by order

dated 23rd April 2013. Copy of the said order has been filed along with

the rejoinder affidavit.


15.    In view of the aforesaid submissions, the observations raised by

the RD no longer survive.


16.    No objection has been received to the Scheme from any other

party. Mr. Vishwadeep Bajaj, Managing Director of the Petitioner-

Transferee company, has filed an affidavit dated 9th July 2013,

confirming that neither the Petitioner company nor its counsel has

received any objection pursuant to citations published in the

newspapers.


17.    In view of the approval accorded by the shareholders and

creditors of the Petitioner-Transferee company, affidavit filed by the

CO. PET. 126-2013                                            Page 6 of 8
 RD to the proposed Scheme, 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-Transferee company will comply with the statutory

requirements in accordance with law.


18.    The Certified copy of the order will 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, the properties, assets rights and powers

of the Demerged Business undertakings of the Demerged company

shall be transferred to and vest in the Petitioner-Transferee company

without any further act or deed. Similarly, in terms of the Scheme, all

the liabilities and duties of the Demerged Business undertakings of the

Demerged company shall be transferred to the Petitioner-Transferee

company without any further act or deed.


19.    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




CO. PET. 126-2013                                               Page 7 of 8
 permission/compliance with any other department which may be

specifically required under any law.


20.    Learned counsel for the Petitioner states that the Petitioner-

Transferee company would voluntarily deposit a sum of Rs.50,000/- in

the Common Pool Fund of the Official Liquidator within three weeks

from today. The statement is taken on record.


21.    The petition is allowed in the above terms.


       Order be given dasti.


                                                     R. V. EASWAR, J.

JULY 12, 2013 hs