Modern Credit Private Limited. vs ...........
2014 Latest Caselaw 4184 Del

$~19
*IN THE HIGH COURT OF DELHI AT NEW DELHI

+     CO.PET. 367/2014

IN THE MATTER OF

MODERN CREDIT PRIVATE LIMITED.                   .... Petitioners

                   Through: Mr. Rajeev Kumar, Advocate for
                            the Petitioner.

                             Mr.    Atma    Sah,  Assistant
                             Registrar of Companies for the
                             Regional Director.
      CORAM:
      HON'BLE MR. JUSTICE SANJEEV SACHDEVA
                 ORDER

      %          05.09.2014

SANJEEV SACHDEVA, J (ORAL)

CA No.1985 /2014

This is an application by the Regional Director seeking condonation of delay in filing the report.

For the reasons stated in the application, the application is allowed and the delay in filing the report is condoned.

The report is directed to be taken on record.

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CO.PET. 367/2014

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 Arrangement („Scheme‟) between Modern Credit Private Limited (hereinafter referred to as Demerged Company) and Micra Soft Private Limited (hereinafter referred to as Resulting Company) (both collectively referred to as Petitioner Companies) and their respective shareholders. A copy of the Scheme has been enclosed with the Petition.

2. The registered offices of the Petitioner Companies are situated at New Delhi, within the jurisdiction of this Court.

3. The details of the respective dates of incorporation of the Petitioner Companies, their authorized, issued, subscribed and paid up capital have been given in the Petition.

4. The copies of the Memorandum and Articles of Association as well as the Annual Accounts of the Petitioner Companies for the year ended 31 st March 2013 have also been enclosed with the Petition. ==================================================

5. The copies of Resolutions passed by the Board of Director of the Petitioner Companies approving the Scheme of Amalgamation 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 is pending against the Petitioner Companies.

7. The Petitioner Company had earlier filed an application CA (M) No. 92 of 2014 for dispensation of meetings. Vide order dated 22.05.2014, this Court allowed the above said application and dispensed with the requirement of convening the meetings of Equity Shareholders and the Unsecured Creditors of the Petitioner Companies. The Petitioner Companies had no Secured Creditors.

8. The Petitioner Companies has thereafter filed the present Petition seeking sanction of the Scheme of Arrangement. Vide order dated 29.05.2014, notice of the Petition was directed to be issued to the Registrar of Companies and to the Central Government. Citations were also directed to be published in „Business

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Standard‟ (English) and „Jansatta‟ (Hindi). Affidavit of Service and Publication has been filed by the Petitioner Companies showing compliance regarding service of the Petition and also regarding publication of citations in the aforesaid newspapers on 03.07.2014. 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 notices issued, the Regional Director has filed his Affidavit dated 01.09.2014. Relying on Clause 7.1 of Part B of the Scheme of Arrangement he has stated in Para No. 3 that all the staff/employees of the Demerged Company/Transferor Company engaged in "Demerged Undertaking" shall become the employees of the Resulting Company/Transferee Company without any break or interruption in their services upon sanctioning of the Scheme by the Hon'ble Court.

10. Further Learned Regional Director states that despite notice, the Income Tax Authorities have not raised any objection with regard to the Scheme.

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11. Further, Learned Regional Director, in Para No. 5 of the said Affidavit has observed as follows:

"5. That the Deponent further craves leave to submit that para 4.7 of Part-B of the Scheme provides that demerger shall be in accordance with Section 2 (19AA) of the Income Tax Act, 1961. The Section 2 (19AA) stipulated several conditions to comply with and hence, it is submitted that all the Petitioner Companies shall submit the undertaking to comply with those conditions".

12. In reply to the abovesaid observation, a rejoinder affidavit dated 03.09.2014 has been filed by Mr. Pratap Singh Bisht, Authorized Signatory of Petitioner Companies stating that the Petitioner Companies undertake to comply with the conditions mentioned in Section 2 (19AA) of the Income Tax Act.

13. Further the Learned Regional Director has raised concern that M/s Modern Credit Private Limited (Demerged Company) is Non Banking Finance Companies and registered with Reserve Bank of India. As per the circular dated 26.05.2014 issued by Reserve Bank of India, prior approval of Reserve Bank of India is required in case of any merger/amalgamation of an ==================================================

NBFC with another entity. Regional Director submits that in the instant case it appears that the Petitioner Demerged Company has not obtained the prior approval of Reserve Bank of India.

14. In reply to the abovesaid observation, the petitioner companies has filed rejoinder dated 03.09.2014, wherein it has been stated that the Petitioners had filed the 1st Motion Application CA (M) No. 92 of 2014 on 22.05.2014 i.e. prior to the Reserve Bank of India circular dated 26.05.2014. Therefore, prior approval of Reserve Bank of India is not required in the present case. He relies upon paragraph 2(iv)(b) of the Circular dated 01.07.2014 issued by the Reserve Bank of India. Learned counsel for the Petitioner Companies further submits that this is a case of demerger and the Circular of the Reserve Bank of India dated 26.05.2014 is applicable only in cases of merger/amalgamation.

15. It is directed that the Petitioner Companies shall comply with post merger compliances with respect to the Reserve Bank of India.

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16. In view of the aforesaid clarification and undertaking given by the Petitioners, the concern of the Regional Director has been duly addressed.

17. No objection has been received to the Scheme from any other party. Mr. Pratap Singh Bisht, Authorized Signatory of the Petitioner Companies, has filed an Affidavit dated 01.09.2014, confirming that neither the Petitioner Companies nor their Counsel has received any objection pursuant to citations published in the newspapers.

18. In view of the approval accorded by the Shareholders and Creditors of the Petitioner Companies, representation/report filed by the Regional Director, Northern Region 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 Companies Act, 1956. The Petitioner Companies will comply with the statutory requirements in accordance with law.

19. Certified copy of the order will be filed with the Registrar of Companies within 30 days from the date of

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receipt of the same. In terms of the provisions of Sections 391 and 394 of the Act, and in terms of the Scheme the whole of the undertaking, the properties, rights and powers of the "Demerged Undertaking" of the Demerged Company be transferred to and vest in the Resulting Company without any further act or deed. Similarly, in terms of the Scheme, all the liabilities and duties of the "Demerged Undertaking" of the Demerged Company without any further act or deed.

20. 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.

21. The Petition is allowed in the above terms.

Order Dasti.

SANJEEV SACHDEVA, J SEPTEMBER 05, 2014

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