Overnite Real Estate Private ... vs ......
2014 Latest Caselaw 2124 Del

$~36
*      IN THE HIGH COURT OF DELHI AT NEW DELHI

+      CO.PET. 80/2014

       OVERNITE REAL ESTATE PRIVATE LIMITED & ANR.
                                                 ..... Petitioner


                           Through Through Mr. Deepak Diwan, and
                           Raghu Vamsy Dasika Advocates for the
                           Petitioners

                           Mr. Atma Sah, Asstt. Registrar of Companies
                           for the Regional Director

                           Mr. Rajiv Bahal, Advocate for the Official
                           Liquidator


       CORAM:
       HON'BLE MR. JUSTICE SANJEEV SACHDEVA
                    ORDER

       %            29.04.2014

       SANJEEV SACHDEVA, J. (oral)

1. This joint second motion Petition has been filed under sections 391 & 394 of the Companies Act, 1956 by the Petitioner/Transferor Company and Petitioner/Transferee Company seeking sanction of the Scheme of Amalgamation of Overnite Real Estate Pvt. Ltd.- Petitioner/transferor Company with BMC Properties Pvt. Ltd.- petitioner/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 Petitioner 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 Annual Accounts for the year ended 31st March, 2013 of the Petitioners 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. Learned counsel for the petitioner submits that no proceedings under Sections 235 to 251 of the Companies Act, 1956 are pending against the Petitioner Companies.

7. As per Clause 7.1 of the Scheme, The present shareholding pattern of the transferor Company is as follows: Rajan Gupta -9363, Meera Gupta- 737. On the merger of the transferor Company into the Transferee Company the above shareholders ceasing to be shareholders in the Transferor Company shall become entitled to the same number of shares in the Transferee Company as they were holding in the transferor Company. The holding of shares by the Transferor Company which is a 100% holding company of the Transferee Company will stand cancelled since the Transferor Company shall stand dissolved.

8. The Petitioner Companies had earlier filed CA (M) No. 8 of 2014 seeking directions of this Court for dispensation/convening of meetings. Vide order dated 17th January, 2014, this Court allowed the Application and dispensed meetings of Secured, Unsecured Creditors and Equity Shareholders of Transferor Company and Transferee Company.

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 31rd January, 2014, 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 'Business Standard' (English, Delhi Edition) and 'Jansatta' (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 newspapers on 10th February 2014. 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 24th April, 2014 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 Company 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 B.N. Harish, Learned Regional Director, Northern Region, Ministry of Corporate Affairs has filed his Affidavit/Report dated 28thMarch, 2014. Relying on Clause 12 of the Scheme of Amalgamation, he has stated that, upon sanction of the Scheme of Amalgamation, all the employees of the Transferor Company shall ultimately 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. It is further submitted in the report that none of the Transferor Company and Transferee Company are doing any significant business activity. It appears that the proposed scheme of amalgamation is consolidation of such funds and invested part into Transfree Company. Further that instead of coming into the scheme of Amalgamation, it is better option for the Company to go in typo liquidation to wind up their operation and company.

12. In Para 5 of the Report it is submitted that in the scheme of amalgamation the Appointed Date was fixed as 22.10.2013, and the reason behind the fixed Appointed Date was to be clarified from the Petitioners.

13. The learned Counsel from the Petitioners has relied upon the judgment in the case of Miheer H. Mafatal v Mafatal Industries Limited [1996] 87 Com cases at 818: AIR [1997] SC 506 to contend that where parameters as laid down in the said judgment about the requirements of a scheme for getting sanction for the court are found to have been met, the court will have no further jurisdiction to sit in appeal over the commercial wisdom of the majority of the persons who with their open eyes have given their approval of the scheme, even if in the view of the court there would be a better scheme for the company and its members or creditors for whom the scheme is framed. The Court cannot refuse to sanction such a scheme on that ground as it would otherwise amount to the Court exercising appellate jurisdiction over the scheme, rather than its supervisory jurisdiction.

14. In view of the law as laid down by the Supreme Court in Mafatlal Industries Ltd. (supra), I find no merit in the contentions of the Regional Director that it is a better option for the company to go into liquidation to wind up its operation and company. With regard to the objection raised by the Regional Director about the selection of cut off date as 22.10.2013, learned counsel for petitioner has contended that similar petition has been filed in respect of two companies, which are identically situated and whose promoters and directors are same and in one of the companies a secured creditor being a foreign company had given its No Objection Certificate on 25.10.2013 and since there had to be a cut off date so the date 22.10.2013 was selected. In my view the explanation provided is reasonable and is accepted. Hence the objection raised by the Regional Director is rejected.

15. The Registrar of Company, NCT Delhi & Haryana (ROC) has submitted that a letter was written to the Chief Commissioner of Income Tax to examine the scheme of amalgamation. The Chief Commissioner of Income tax has sent a letter to the Regional Director raising two issues (1) that the Income Tax Department should be permitted to proceed against the transferee company in the event of any liability arising out of the transaction in question and (2) that there should be no writing off any liability by the demerged company. Learned counsel for the petitioner submits that the scheme itself provides that the transferee company shall be liable for any liability including any tax liability arising out of merger and further that no liability is being written off by the transferor company. Needless to state that in case of a merger, the transferee company is in any case liable for any tax liability that may arise out of the transaction. Further the statement of the counsel is taken on record that the scheme provides for taking over of all liabilities including income tax liabilities by the transferee company and that no liability is being written off by the transferor company.

16. No objection has been received to the Scheme of Amalgamation from any other party. Mrs. Meera Gupta, Director of Transferor Company, and Mr. Rajan Gupta, Director of Transferee Company, both have filed an affidavit dated 28th March, 2014, confirming the publication of notices as directed and also confirming that neither the Petitioner Companies nor their Legal 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 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.

18. 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 Petitioner Transferor Company be amalgamated with the Petitioner Transferee Company without any further act or deed. Similarly, in terms of the Scheme, all the liabilities and duties of the Petitioner Transferor Company be transferred to the Petitioner 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. The income tax department is permitted to proceed against the resultant company in the event of any liability arising out of amalgamation being sanctioned herein.

19. Learned Counsel for the Petitioners states that the Petitioner Company would voluntarily deposit a sum of Rs. 35,000/- in the Common Pool fund of the Official Liquidator within three weeks from today. The statement is accepted.

20. The Petition is allowed in the above terms.

Order Dasti.

SANJEEV SACHDEVA, J APRIL 29, 2014 n