Delhi High Court
Teerth Traders Pvt. Ltd vs ............ on 28 November, 2014
$~36
*IN THE HIGH COURT OF DELHI AT NEW DELHI
+ CO.PET. 509/2014
IN THE MATTER OF
TEERTH TRADERS PVT. LTD .....Petitioner
Through: Mr. Ashok Kumar Jain,
Advocate for the Petitioner.
Mr. Atma Sah, Assistant
Registrar of Companies for the
Regional Director.
Mr. Rajiv Behl, Advocate for the
Official Liquidator.
CORAM:
HON'BLE MR. JUSTICE SANJEEV SACHDEVA
ORDER
% 28.11.2014
SANJEEV SACHDEVA, J (ORAL)
1. This second motion petition has been filed under
sections 391 to 394 of the Companies Act, 1956
("Act") seeking sanction of the Scheme of
Amalgamation ("Scheme") of Girish Commercials Pvt.
Ltd (hereinafter referred to as Transferor Company No.
1), Perfect Vinimay Pvt. Ltd (hereinafter referred to as
Transferor Company No 2), Adhirath Commercials Pvt.
Ltd (hereinafter referred to as Transferor Company No.
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3). Teerth Traders Pvt. Ltd. (hereinafter referred to as
Transferor Company No. 4) (hereinafter Transferor
Company No. 4 is referred to as Petitioner Company)
with Chandni Commercials Pvt. Ltd. (hereinafter
referred to as Transferee Company). A copy of the
Scheme has been enclosed with the Petition.
2. The registered office of the Transferor Company No. 4
is situated at New Delhi, within the jurisdiction of this
Court. The registered office of the Transferor
Companies No. 1 - 3 and Transferee Company is
situated at Kolkata, outside the jurisdiction of this
Court.
3. Details with regard to the date of incorporation of the
Petitioner Company, 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
31st March 2013 of the Petitioner Company have also
been enclosed with the Petition.
5. Copies of the Resolutions passed by the Board of
Directors of the Petitioner Company approving the
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Scheme of Amalgamation have also been placed on
record.
6. Learned Counsel for the Petitioner Company submits
that no proceedings under Sections 235 to 251 of the
Companies Act, 1956 is pending against the Transferor
and Transferee Companies.
7. Petitioner Company had earlier filed C.A (M) 119 of
2013 seeking directions of this Court for
dispensation/convening of meetings. Vide order dated
13th September, 2013, this Court allowed the
Application and requirement of convening all the
meetings of Shareholders and Un-secured Creditors of
the Transferor Company were dispensed with. Since
there were no Secured Creditors in the Transferor
Company No. 4, requirement for convening meeting of
the same were dispensed with.
8. The Petitioner Company had thereafter filed the present
Petition seeking sanction to the Scheme of
Amalgamation. Vide order dated 24 th September, 2013,
notice of the Petition was directed to be issued to the
Regional Director, Northern Region, Ministry of
Corporate Affairs, Noida and the Official Liquidator
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attached with this Court. Citations were also directed to
be published in 'The Statesman' (English, Delhi
Edition) and `Veer 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.
Copies of the newspaper cuttings, in original,
containing the publications have also been filed along
with the Affidavit of Service.
9. In response to the notice issued, the Official Liquidator
sought information from the Petitioner Company.
Based on the information received, the Official
Liquidator has filed his Report dated 7 th May 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 2 nd proviso of section 394(1) of the
Act. Further, the Official Liquidator has observed that
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the Scheme is not in accordance with Exchange Ratio
derived in the Share Valuation Report.
10. In response to the aforesaid observations the Petitioner
Company in reply affidavit dated 17.05.2014 has been
submitted that the standard practice of the valuation
report is that the exchange ratio is required to be
mentioned but the issuance and cancellation of shares
are based on facts in each case. Further, learned
Counsel for Petitioners submits that in the present case,
the shares of the Transferor Company and the
Transferee Company are inter se crisscross holding and
there is no scope for exchange of any shares since as
per the scheme the shares of the Transferor Companies
are to be cancelled and in that case there will be no
question of any exchange. Further, learned Counsel for
Petitioners submits that in the valuation report filed in
the present case, the valuer did not consider the inter se
crisscross holding of the shares by the company and
when all the above companies get merged with
Chandini Commercials Pvt. Ltd. (Transferee Company)
automatically the holdings of the Transferor Companies
would get cancelled and no shares would be issued to
the Transferor Companies. Further, it has been
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submitted that Clause (II) of the Scheme stipulates
that:-
".....
II. ISSUE OF SHARES
As the entire shares in the Transferor
Companies are either held inter se or by the
Transferee Company, upon coming into
effect of this Scheme, all such shares in each
of the Transferor Companies shall stand
cancelled and consequently the Transferee
Company shall not be obligated to issue and
sell any shares under the Scheme of any of
the existing shareholders of the Transferor
Companies."
11. In response to the notice issued in the Petition, Learned
Regional Director, Northern Region, Ministry of
Corporate Affairs has filed his Affidavit/Report dated
14th February, 2014. Relying on the Scheme of
Amalgamation, he has stated that, upon sanction of the
Scheme, all the employees of the Transferor
Companies shall become the employees of the
Transferee Company without any break or interruption
in their services.
12. Further, the learned Regional Director in his Affidavit
dated 14th February 2014 has raised an observation that
the Transferee Company is the member of the
Transferor Companies and it cannot allot shares to its
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own. Therefore, Petitioner Company asked to clarify
the matter and Scheme is not in accordance with the
Valuation Report.
13. In response to the aforesaid observations, the Petitioner
Company in the Reply Affidavit dated 16.05.2014,
submits that the shares of the Transferor Company and
the Transferee Company are inter sc crisscross holding
and there is no scope for exchange of any shares since
as per the scheme the shares of the Transferor
Companies are to be cancelled and in that case there
will be no question of any exchange. Further, learned
Counsel for Petitioner Company submits that in the
present facts circumstances when all the above
companies get merged with Chandini Commercials Pvt.
Ltd. (Transferee Company) automatically the holdings
of the Transferor Companies would get cancelled and
no shares would be issued to the Transferor Companies
and there will be no requirement of any fresh shares.
14. Further, learned Regional Director in his Affidavit has
raised another observation that the Petitioner Company
has set off the losses against Securities Premium
Account, thereby violated the provisions of section 78
read with Sections 100 to 104 of the Companies Act,
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1956, since such utilization of Securities Premium
Account requires approval of the Hon'ble High Court
under Section 78 read with Section 100 to 104 of the
Companies Act, 1956.
15. In response to the aforesaid observations, the Petitioner
Company has submitted that the revenue loss has not
been adjusted against the Securities Premium Account
and both the share premium amount as well as the
deficit in profit and loss account has been distinctly &
separately depicted in the Balance Sheet and as such it
is submitted that there is no breach or violation of
Section 78 or Sections 100 to 104 of the Companies
Act and accordingly, then is no necessity for seeking
any approval under Section 78 read with Section 100 to
104 of the Companies Act as being observed. Further,
learned Counsel for the Petitioner submits that the
reserve and surpluses have not been adjusted but have
been treated in terms of the revised Schedule-VI as
prescribed by the Ministry of Corporate Affairs.
16. It is clarified that in case it is found that Transferor
Companies has violated any provision of the
Companies Act then the Directors of the Transferor and
Transferee Companies guilty of breaching the
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provisions the Companies Act shall continue to be
liable irrespective of the sanction of the Scheme.
17. By Order dated 26.09.2014, notice was issued to the
Income Tax through Standing Counsel, Income Tax,
Delhi High Court. Further on instructions, it is
submitted by the Income Tax Authorities that in case
any proceedings are initiated against the Transferor
Companies or Transferee Company under Section
153(C)/148 of the Income Tax Act or any other
provision of the Income Tax Act in respect of any
Assessment Year prior to the date of the Scheme being
implemented, the interest of Income Tax Department
may be protected. It has been further submitted that the
Income Tax Authorities has no objection to the
sanction of the Scheme subject to the right of the
Income Tax Authorities to continue assessment and
proceedings, if any, against the Transferee Company.
18. In response to the aforesaid observation, the leaned
Counsel for Petitioner Company submits that the
Clause 13 of the Scheme already provides that all
liabilities, provisions, duties and obligations including
Income Tax and other statutory liabilities, if any, of
every kind, nature and description of the Transferor
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Companies, whether provided for or not in the books of
accounts of the Transferor Companies, shall devolve
and shall stand transferred or be deemed to be
transferred without any further act or deed, to the
Transferee Company and shall be the liabilities,
provisions, duties and obligations of the Transferee
Company. Leaned Counsel for the Petitioner Company
further submits that the Scheme also provides that 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.
19. It is directed that the sanction of the scheme shall not
come in the way of any proceedings initiated against
the Transferor Companies or Transferee Company
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under Section 153(C)/148 of the Income Tax Act or
any other provision of the Income Tax Act in respect of
any Assessment Year prior to the date of the Scheme
being implemented. The rights of the Income Tax
Department are protected. Income Tax Authorities shall
have the right to continue the assessment and the
proceedings, if any, against the Transferee Company.
The sanction of the Scheme would not affect the
powers of the Income Tax Department for recovery,
including imposition of penalties, etc. as permissible
under law, irrespective of the sanction of the Scheme.
20. In view of the aforesaid clarifications given by the
Petitioners, that the concerns raised by the learned
Regional Director and Income Tax Authorities have
been duly addressed.
21. Learned Counsel for Petitioner submits that no
objection has been received by him or his client in
relation to the Scheme of Amalgamation from any
other party pursuant to citations published in the
newspapers.
22. In view of the approval accorded by the Shareholders
and Creditors of the Petitioner Company;
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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 Company will
comply with the statutory requirements in accordance
with law. However, it will be subject to the orders
passed by High Court of Judicature at Calcutta.
23. 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
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
Transferor Companies be transferred to the Transferee
Company without any further act or deed.
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24. 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 department which may be
specifically required under any law.
25. Learned Counsel for the Petitioner states that the
Petitioner 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 accepted.
26. The Petition is allowed in the above terms.
Order Dasti.
SANJEEV SACHDEVA, J
NOVEMBER 28, 2014
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