Delhi High Court
World Wide Finevest And Leasing ... vs ............ on 21 May, 2014
$~63
* IN THE HIGH COURT OF DELHI AT NEW DELHI
+ CO.Appl.(M) 126/2013 in CO.PET. 655/2013
IN THE MATTER OF WORLD WIDE FINEVEST AND
LEASING LIMITED AND ORS.
......Petitioner
Through- Mr. P. Nagesh with
Mr. Ashutosh Gupta
Advocates for the Petitioner
Companies
Mr. Atma Sah, Assistant
Registrar of Companies for
the Regional Director
Mr. Rajiv Bahl, Advocate for
the official Liquidator.
CORAM:
HON'BLE MR. JUSTICE SANJEEV SACHDEVA
ORDER
% 21.05.2014
SANJEEV SACHDEVA, J (ORAL)
1. This Second motion joint petition has been filed under Sections 391
to 394 of the Companies Act, 1956 ( hereinafter referred to as „Act‟)
by M/s. AAR INFRA TECH LIMITED (Transferor Company No.
1), M/s. WESTERN SUPER HORTICULTURE MARKETS
LIMITED (Transferor Company No. 2), WESTERN OVERSEAS
PRIVATE LIMITED (Transferor Company No. 3), WESTERN
FINCAP LIMITED (Transferor Company No. 4), WORLD WIDE
FINVEST AND LEASING LIMITED (Transferor Company No.
5/Petitioner Company No. 1), ULTRA TECH PRODUCTS
PRIVATE LIMITED (Transferor Company No. 6/Petitioner
Company No.2), SHREE JI IMPEX PRIVATE LIMITED
(Transferor Company No. 7/Petitioner Company No. 3), WESTERN
EDUCATION PROMOTERS LIMITED (Transferor Company No.
8), NARAYAN BUILDERS PRIVATE LIMITED (Transferor
Company No. 9/Petitioner Company No.4), L.N. NYLON PRIVATE
LIMITED (Transferor Company No.10/Petitioner Company No. 5),
KARNAM TEXFAB PRIVATE LIMITED (Transferor Company
No. 11/Petitioner Company No.6), KARNAM TRADE VENTURES
PRIVATE LIMITED (Transferor Company No.12/Petitioner
Company No.7) and TANVI FINCAP PRIVATE LIMITED
(Transferee Company/Petitioner Company 8) are seeking sanction of
the Scheme of Amalgamation (hereinafter referred to as „Scheme‟).
A copy of the proposed Scheme is filed along with the present
application.
2. The Registered Offices of Transferor Companies No. 5, 6, 7, 9, 10,
11 & 12 and the Transferee Company are situated at New Delhi and
are within the jurisdiction of this Court.
3. The details of respective dates of incorporation of the Petitioner
Companies, their authorized, issued, subscribed and paid up capital
have been set out in the Petition.
4. The copies of Memorandum and Articles of Association of the
Petitioner Companies have been enclosed with the Petition.
5. The copies of resolutions passed by the Board of Directors of the
Petitioners Companies approving the Scheme have also been filed
along with the Petition.
6. Learned Counsel for the Petitioner Companies submits that no
proceedings under Sections 235 to 251 of the Companies Act 1956
are pending against the Petitioner Companies.
7. The petitioner companies had earlier filed C.A. (M) No. 126 of 2013
seeking directions of this Court for dispensation of the meetings.
Vide Order dated 24th September, 2013, this court allowed the
application and dispensed with the requirement of convening
meetings of Equity Shareholders of the Applicant Companies (herein
known as "Petitioner Companies"), Share Applicants of the
Transferor Companies 5, 6, 7 and the Transferee Company,
Unsecured Creditors of the Transferor Companies 5, 6, 9 and the
Transferee Company.
8. The Petitioner Companies have thereafter filed the present Petition
seeking sanction of the Scheme of Amalgamation. Vide order dated
13th December, 2013, notice in the Petition was directed to be issued
to the Regional Director, Northern Region, the Official Liquidator
and Citations were also directed to be published in "Business
Standard" (English, Delhi Edition) and "Business Standard" (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 12 th March, 2014, copies of the newspapers
cuttings, in original, containing the publications have been filed with
the affidavit of service.
9. 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
21st 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 companies do not appear to have been conducted in a
manner prejudicial to the interest of its members, creditors or to
public interest as per the second proviso of Section 394(1) of the
Companies Act, 1956.
10. In response to the notices issued in the Petition, the Regional
Director, Northern Region, Ministry of Corporate Affairs has filed
his affidavit / report dated 21.04.2014. Stating some observation,
specifically as follows:-
"........
i. That M/s Tanvi Fincap Pvt. Ltd. (Transferee
Company) is a Non-Banking Finance Companies
(NBFC) and registered with the Reserve Bank of
India. It is submitted that the Petitioner Transferee
Company may be asked to give an undertaking for all
compliances from Reserve Bank of India being
concerned Regulator, if deemed fit & proper by the
Hon‟ble Court.
ii. That on perusal of the Balance Sheet as at 31.03.2013
of the Petitioner Transferor Company No, 5, 6 & 7 are
having Share Application money pending for
allotment. This fact has also been mentioned in the
Company Application No. 126 of 2013 filed by the
Petitioner Companies before the Hon'ble Court,
wherein it has been stated that all the Petitioner
Companies have obtained No Objection for the same.
However, it may kindly be seen that these three
Transferor Companies have the following Share
Application Money pending for allotment with them
as under:-
M/s Worlwide Finvest & Leasing Rs. 19,25,000/-
M/s Shreeji Impex Private Limited Rs. 38,00,000/-
M/s Ultratech Products Private Limited Rs. 1,06,00,000/-
However, in the Balance Sheet as on 31.03.2013, it is seen that
Transferor Company No. 10 M/s Nylon Pvt. Ltd. has also
received Share Application Money amounting to Rs. 13,00,000
pending for allotment.
iii. That Registrar of Companies, Delhi has reported that
all the Transferor & Transferee Companies, are closely
held Companies. The entire funds collected by these
Companies in previous years by way of issue of Equity
Shares on premium to certain private limited
companies/or individuals have been parked as
investment and granting loans & advances. The shares
of these Companies have changed hand from time to
time. None of the Transferor & Transferee Companies
(except Transferor Company 6) are doing any
significant business activity and reported nominal
income except in the Financial Year ended 31.03.2013.
Therefore, it appears that the proposed Scheme of
Amalgamation is consolidation of such funds collected
and invested in past into Transferee Company,
however, there is no mention as to whether such
Companies are registered with RBI as NBFC, if so,
these Companies have obtained no objection from the
RBI with regard to the proposed Scheme of
Amalgamation. Further, these Companies have Share
Application Money pending for allotment and there is
no mention in the Petition that what would be effect of
such money after such Amalgamation."
11. In reply to the aforesaid observations of the RD, the petitioner
companies have filled rejoinder affidavit dated 02.05.14 wherein
it is stated as follows:
"........
i. With reference to (I.) above, it is submitted that the
Transferee Company Undertakes to comply with all
compliances in respect to Reserve Bank of India;
ii. With reference to (II.) above, it is submitted that it is
true that the Companies have the share application
money in the Financial Year 2012-13 and the
Companies have also obtained NOC form all the
share applicants which are also Annexed with the
Rejoinder to the Affidavit filed by the Regional
Director dated 2.05.2014. It is further stated that, the
share application money, outstanding in the
transferor companies, shall upon amalgamation, be
treated as share application money, itself, in the
Transferee Company. Furthermore, the Petitioner
Companies undertakes to comply with all the
provisions of the Companies Act, 2013.
It is submitted that, all the share applicants, have given their
consent for the scheme of amalgamation.
iii. With reference to (III.) above, it is submitted that
mergers in maxim are done with the objective of
consolidation and to drive synergy with the merged
strength of the Transferor and Transferee
Companies. Further in respect to the registration of
the petitioner companies with RBI, it is submitted
that that only the Transferee Company i.e. Tanvi
Fincap Private Limited, is registered with RBI as
NBFC. Further, in accordance with Company
Circular DNBS (PD) C.C. No. 63/02.02/2005-06
dated January 24th 2006, Non Deposit Accepting
NBFC are required to inform Reserve Bank of India
(RBI) about scheme of merger or amalgamation
along with Court‟s order approving the same within
a period of one month from the date of the final
order. Hence, in accordance with the above said
circular, there is no requirement of taking prior
approval for sanctioning Scheme of Arrangement
from RBI. Furthermore it is submitted that the
treatment of the Share Application Money, has
already been dealt and provided in reply to point
(ii)."
12. The concerns raised by the Regional Director is that the Transferor
Company and Transferee Company are closely held companies and
funds collected by the companies of the previous years by way of
equity shares on premium to certain private limited company and
invoice has been termed as investment and granting loans and
advance. The share of the companies has changed hands from time
to time and it appears that the purpose of the scheme of
amalgamation is consolidation of funds collected and invested in past
into two Transferee Company.
13. The Regional Director has further raised a concern that there is no
mention as to whether the company is registered with RBI and
NBFC and, if so, whether no objection has been obtained from RBI
for the scheme of amalgamation and further, there is no mention in
the petition as to what would be the effect of share application
money pending for allotment in these companies post amalgamation.
14. The Regional Director has raised a concern that the share application
money as mentioned in the Balance Sheet as on 31.03.2013 is
continuing to be shown in the Books of Accounts as share
application and shares qua the same has not been allotted.
15. Learned counsel for the petitioner submits that within 60 days of the
sanction of the scheme, the shares shall be allotted by the Transferee
Company and in case the shares are not so allotted, the amount shall
be treated as deposit and shall be refunded with interest in
accordance with the provisions of the Companies Act, 2013.
16. Learned counsel for the petitioner submits that an affidavit of
undertaking has been filed on behalf of the Transferee Company and
the Transferee Company undertakes to comply with all applicable
legislations including rules and regulations of the concerned
regulators including Reserve Bank of India and further, he
undertakes on behalf of the Transferor and Transferee Company that
the Transferor company shall be liable to comply with all the
provisions of the Act and the rules and regulations and the transferor
shall continue to be liable in case of breach of any provisions of the
Reserve Bank of India.
17. It is directed that in case it is found that the transferor company has
violated any provision of the Reserve Bank of India Act then the
Directors of the Transferor Company guilty of breaching the
provisions of the Reserve Bank of India Act shall continue to be
liable irrespective of the sanction of the Scheme.
18. Mr. Atma Sah, Asstt. Registrar of Companies submits that the
Income Tax Authorities have responded to the letter issued by the
Regional Director and have contended that a demand of Rs.18,932/-
for the Assessment Year 2010-11 is outstanding against the
Transferor Company No.5.
19. No issue with regard to the above issuance of shares on premium or
transfer of funds by way of investment or granting of loan or
advance is raised by the Income Tax Authorities. The Income Tax
Authorities has further not raised any issue with regard to the share
application money pending in the petitioner company. It is directed
that the Income Tax Authorities shall be permitted to proceed against
the Transferee Company in respect of any liability that may arise on
account of sanction of the Scheme. Mr. Atma Sah submits that the
Income Tax Authorities has further raised an issue that there should
not be any writing off, of any liability by the Transferee Company.
Learned counsel for the petitioner submits that no liability of the
Transferee Company can be and is sought to be written off.
20. Learned counsel for the petitioner undertakes on behalf of the
Transferee Company that as per the scheme, the liability of the
Transferee Company including liabilities for payment of outstanding
tax are to be borne by the Transferee Company and shall be borne by
the Transferee Company.
21. Learned counsel for the petitioner submits that the share application
money pending the allotment in the Transferor Company shall be
shown as share application money pending in the Transferee
Company. He further submits that „no objection‟ has been obtained
to the scheme of amalgamation from the individuals whose money
has been invested as share application money in the Transferor
Company.
22. Mr. Atma Sah, Assistant Registrar of Companies submits that in the
Transferor Company Nos.6 & 7, the sum total of the subscribed
capital and the share application money exceed the authorized capital
of the Transferor Company and is in violation of the provisions of
the Companies Act,2013.
23. Learned counsel for the petitioner submits that the deposit was
received prior to coming into force of Companies Act, 2013 and in
any case, in terms of undertaking given above, within 60 days, the
allotment shall be made by the Transferee Company else the amount
shall be treated as deposit refundable with interest. He further
submits that even if the amount is treated as share application money
in the Transferee Company as per the scheme, the sum total of the
subscribed capital and the share application money of the Transferee
Company would be far less than the authorized capital of the
Transferee Company. In view of the above, the concerns of the
Regional Director are addressed.
24. No objection has been received to the Scheme of Amalgamation from
any other party. Ms. Rama Gupta, Authorized Representative of
Transferor Company 5, Ms. Madhu Gupta Authorized Representative
of Transferor Company 6, Mr. Manoj Kumar Authorized
Representative of Transferor Company 7 and 9, Mr. Shobhit Jain
Authorized Representative of Transferor Company 10, Mr. Varun
Gupta Authorized Representative of Transferor Company 11 and 12
and Mr. Anil Kumar Authorized Representative of Transferee
Company has filed their affidavit dated 15th April, 2014 confirming
that neither the petitioner companies nor their Legal Counsel has
received any objection pursuant to the citations published in the
Newspapers.
25. In view of the approval accorded by the Shareholders, Share
Applicants and Creditors of the Petitioner Companies,
representations/ reports filed by the Regional Director, Northern
Region and the official liquidator, attached with this court to the
proposed Scheme, 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 Arrangement under Section 391-394
of the Companies Act, 1956. The petitioner companies will comply
with the statutory requirements in accordance with law.
26. A certified copy of the order be filed with the Registrar of Companies
within 30 days from receipt of the same. In terms of the provisions of
Section 391- 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 Petitioner/ Transferor Companies 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
Petitioner/ Transferor Companies be transferred to the Transferee
Company without any further act or deed. Upon the Scheme coming
into effect, the Petitioner/ Transferor Companies shall stand
dissolved without winding up.
27. 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.
28. Learned counsel for the petitioners states that the petitioner
Companies would voluntarily deposit a sum of Rs. 2,00,000/- in the
Common Pool Fund of the Official Liquidator within three weeks
from today. The statement is accepted.
29. The petition is allowed in the above terms.
Order Dasti.
SANJEEV SACHDEVA, J
MAY 21, 2014
