Delhi High Court
Sanchi Infratech Pvt Ltd vs ................. on 31 October, 2014
$~14
*IN THE HIGH COURT OF DELHI AT NEW DELHI
+ CO.PET. 500/2013
IN THE MATTER OF
SANCHI INFRATECH PVT LTD .....Petitioners
Through: Mr. Rajeev K Goel, Advocate for
the Petitioners.
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
% 31.10.2014
SANJEEV SACHDEVA, J (ORAL)
1. This second motion joint petition has been filed under
sections 391 to 394 of the Companies Act, 1956
("Act") seeking sanction of the Scheme of
Amalgamation ("Scheme") of. Sanchi Infratech Pvt Ltd
(hereinafter referred to as Transferor Company No. 1),
Teasel Impex Pvt Ltd hereinafter referred to as
Transferor Company No. 2), Amy Traders Pvt Ltd
(hereinafter referred to as Transferor Company No. 3),
Adrent Associates Pvt Ltd (hereinafter referred to as
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Transferor Company No. 4), Karnak Infotech Pvt Ltd
(hereinafter referred to as Transferor Company No. 5),
Karnak Traders Pvt Ltd (hereinafter referred to as
Transferor Company No. 6), Orchid Associates Pvt Ltd
(hereinafter referred to as Transferor Company No. 7),
Sakura Info Solution Pvt Ltd. (hereinafter referred to as
Transferor Company No. 8), Proactive
Telecommunications Pvt Ltd (hereinafter referred to as
Transferor Company No. 9), and Ujval Networks Pvt
Ltd (hereinafter referred to as Transferor Company No.
10) with Rhone Associates Pvt Ltd (hereinafter referred
to as Transferee Company) (hereinafter collectively
referred to as Petitioner Companies). A copy of the
Scheme has been enclosed with the Petition.
2. The registered office of the Petitioner Companies is
situated at New Delhi, within the jurisdiction of this
Court.
3. Details with regard to the date of incorporation of the
Petitioner Companies, their authorized, issued,
subscribed and paid up capital have been given in the
Petition.
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4. Copies of the Memorandum and Articles of
Association as well as the latest audited Accounts as at
31st March 2013 of the Petitioner 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 Companies submits
that no proceedings under Sections 235 to 251 of the
Companies Act, 1956 is pending against the Petitioner
Companies.
7. Petitioner Companies had earlier filed C.A (M) 110 of
2013 seeking directions of this Court for
dispensation/convening of meetings. Vide order dated
6th September, 2013, this Court allowed the Application
and requirement of convening all the meetings of
Shareholders and Un-secured Creditors of the
Transferor Companies and of the Transferee Company
were dispensed with. Since there were no Secured
Creditors in the Applicant Companies and Transferee
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Company, requirement for convening meeting of the
same were dispensed with.
8. The Petitioner Companies had thereafter filed the
present Petition seeking sanction to the Scheme of
Amalgamation. Vide order dated 20 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
attached with this Court. Citations were also directed to
be published in „Business Standard‟ (English, Delhi
Edition) and „Dainik Bhaskar‟ (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 Companies.
Based on the information received, the Official
Liquidator has filed his Report dated 13th May 2014,
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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.
10. In response to the notice issued in the Petition, Learned
Regional Director, Northern Region, Ministry of
Corporate Affairs has filed his Affidavit/Report dated
20th January, 2014. Relying on the Scheme of
Amalgamation, he has stated that, upon sanction of the
Scheme, all the employees of the Transferor Company
shall become the employees of the Transferee
Company without any break or interruption in their
services. Further Learned Regional Director submits
that despite of notice, Income Tax Authorities has not
raised any observation with regard to the Scheme.
11. Further learned Regional Director in its Affidavit dated
20th January 2014 has raised an observation that
Accounting Treatment for Amalgamation as given in
under Para 11 (e) of the Scheme provides that any
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surplus arising out of Amalgamation shall be credited
to Security Premium Account. The Petitioner
Transferee Company may be asked to file undertaking
by way of an affidavit that it will comply with the
provisions of section 2(43) of the Companies Act, 2013
and Accounting Standard 14 and no part of surplus
arising out of Amalgamation shall be credited to
Securities Premium Account.
12. In response to the aforesaid observations, the Petitioner
Transferee Company in the Reply Affidavit dated 28 th
July, 2014, has submitted that Accounting Standard 14
(AS-14) as notified by the Central Government is a
mandatory Accounting Standard which provides the
manner in which an Amalgamation has to be recorded
in the books of the Transferee Company. Section 2(43)
of the Companies Act, 2013, gives the definition of
„Free Reserves‟. The Transferee Company has
confirmed and undertaken that it will comply with the
provisions of section 2(43) of the Companies Act, 2013
and Accounting Standard 14 while giving effect to the
amalgamation in its books of accounts. With regard to
the treatment of surplus arising out of amalgamation, it
was submitted that Para 16 of AS-14 provides for
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treatment of Reserves on Amalgamation under pooling
of interest method. Para 16 and 35 provides that the
difference between new shares issued by Transferee
Company on Amalgamation and the issued capital of
Transferor Companies will be adjusted in Reserves.
That means where more capital is issued on
amalgamation (leading to deficit), the difference will
be deducted from the Reserves. On the other hand
where less capital is issued on amalgamation (leading
to surplus), such surplus has to be added to some
Reserve of the Transferee Company. Since General
Reserves may be distributed among members by way
of dividend, credit to General Reserves may not be
proper. Securities Premium Reserve is the only reserve
which is not available for distribution as dividend. The
Transferee Company thought it appropriate to provide
in the Scheme that any surplus on Amalgamation
would be credited to Securities Premium Account. It
was further submitted that there is no contradiction in
Para 11(e) of the Scheme of Amalgamation and
provisions of AS-14.
13. Further Regional Director in its Affidavit has raised an
observation that the Petitioner Companies have allotted
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shares at a high premium. The Scheme will create
substantial Securities Premium Account which will be
an amount free for distribution as bonus shares under
section 78 of the Companies Act, 1956. On cancellation
of crossholding of shares, Securities Premium Account
relating to the cancelled shares may also be cancelled.
By applying AS-14, differences should be treated as
Capital Reserve.
14. In response to the aforesaid observations, the Petitioner
Transferee Company has submitted that as regards to
the allotment of shares at a high premium, it was
submitted that allotment of shares is an agreement
between the issuer company and the proposed allotees.
The Companies Act, 1956, does not prohibit a company
to issue shares at a premium. Under the provisions of
the Companies Act, 1956, any company, old or new,
can issue shares at any premium. Even a new company
can make an IPO at any premium it feels appropriate.
On the contrary, under the new Companies Act, 2013
and the SEBI Regulations, a company is not allowed to
issue shares below the price calculated as per the
prescribed method, under certain circumstances. The
Petitioner Companies, while allotting the shares at
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premium, followed the necessary procedure and
complied with all the applicable provisions of the
Companies Act, 1956. Further learned counsel for
Petitioners submits that The Transferee Company has
confirmed that in terms of the Generally Accepted
Accounting Principles, Securities Premium Account
relating to shares to be cancelled by way of
crossholding of shares in the Transferee Company,
would also be cancelled. The Transferee Company has
already made its submissions with regards to treatment
of difference on account of such cancellation.
15. Further Regional Director in its Affidavit dated 20 th
January 2014 has raised an observation that as per the
audited Balance Sheet as on 31.3.2013, the Petitioner
Transferor Companies No. 1, 9 and 10 were having a
large „cash in hand‟. These Companies may be asked to
deposit the same in their Bank Accounts.
16. In response to the aforesaid observations, the Petitioner
Transferee Company in the Reply Affidavit has
submitted that the Transferee Company has clarified
and confirmed that substantial part of „cash in hand‟ in
the Transferor Companies No. 1, 9 and 10, as pointed
out by the learned Regional Director , has already been
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utilized in the business of these Companies. None of
these Companies has abnormal „cash in hand‟ in their
books. A certificate from the Chartered Accountants to
this effect was enclosed with said reply affidavit.
17. Further, learned Counsel for the Petitioner Companies
submits that the Petitioner Companies undertakes to
comply with the provisions of section 2(43) of the
Companies Act, 2013 and Accounting Standard 14.
18. In view of the aforesaid clarifications and undertaking
given by the Petitioners, that the concerns raised by the
learned Regional Director have been duly addressed.
19. It is however clarified that any income tax liability
which is payable by the Transferor Companies shall be
paid by the Transferee Company as all liabilities of the
Transferor Companies stand transferred to the
Transferee Company. Therefore, any liability that falls
on the Transferor Companies on account of any earlier
transaction shall have to be borne by the Transferee
Company. It is also clarified that the Income Tax
authorities shall be entitled to proceed against the
transferee company in respect of any liability that may
arise on account of sanction of the Scheme and that the
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Income Tax Authorities shall have the right to raise
demands which are valid and as per law and the
Transferee Company shall be entitled to benefits,
refunds and credits in accordance with applicable law.
It is directed that the Income Tax Authorities shall be
permitted to proceed against the Petitioner Companies
in respect of any liability that may arise irrespective of
sanction of the Scheme.
20. No objection has been received to the Scheme of
Amalgamation from any other party. Mr. Vikas
Aggarwal, Director of the Transferee Company has
filed an affidavit confirming that neither the Petitioner
Companies nor their Counsel has received any
objection pursuant to citations published in the
newspapers.
21. 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
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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.
22. 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.
23. 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.
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24. Learned Counsel for the Petitioners states that the
Petitioner Companies (collectively) would voluntarily
deposit a sum of Rs. 1,00,000/- in the Common Pool
fund of the Official Liquidator within three weeks from
today. The statement is accepted.
25. The Petition is allowed in the above terms.
Order Dasti.
SANJEEV SACHDEVA, J
OCTOBER 31, 2014
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