World One Solutions Private ... vs .............
2014 Latest Caselaw 4267 Del

$~36
*IN THE HIGH COURT OF DELHI AT NEW DELHI
+    CO.PET. 334/2014

IN THE MATTER OF

WORLD ONE SOLUTIONS PRIVATE LIMITED AND
ORS.                            ..... Petitioners

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

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

                            Ms Megha, Advocate for the
                            Official Liquidator.

     CORAM:
     HON'BLE MR. JUSTICE SANJEEV SACHDEVA
                ORDER

     %          09.09.2014


SANJEEV SACHDEVA, J (ORAL)

CA No.1931/2014

This is an application by the Official Liquidator 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.

=============================================

CO.PET. 334/2014

1. This second motion joint Petition has been filed under section 391 to 394 of the Companies Act, 1956 ("Act") seeking sanction of a Composite Scheme of Arrangement ("Scheme") between World One Solutions Private Limited (hereinafter referred to as Petitioner-1/Demerged Company No. 1), Wynncom Digital Devices Private Limited (hereinafter referred to as Petitioner-2/ Demerged Company No. 2), Ncubate Logistic & Warehousing Private Limited (hereinafter referred to as Petitioner-3/Demerged Company No. 3), SAR Capital Private Limited (hereinafter referred to as Petitioner-4/Amalgamating Company No. 1), GEBS Distributions Private Limited (hereinafter referred to as Petitioner-5/Amalgamating Company No. 2) and Ncubate India Services Private Limited (hereinafter referred to as Petitioner-6/Resulting Company/ Amalgamated Company) (collectively referred to as Petitioner Companies) and their respective shareholders and Creditors. 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 Hon'ble High 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 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 Companies had earlier filed C.A (M) No. 51 of 2014 seeking directions of this Court for

=============================================

dispensation/convening of meetings. Vide Order dated 21.03.2014, this Court allowed the Application and dispensed with the requirement of convening meetings of Equity Shareholders of Petitioner Companies, Secured Creditors of Demerged Company No. 2, Demerged Company No. 3, Amalgamating Company No. 1 and Amalgamated Company/Resultant Company, Unsecured Creditors of Demerged Company 2, Amalgamating Company No. 2 and Amalgamated Company/Resultant Company and directed for convening the meeting of Unsecured Creditors of Demerged Company No. 1 and Demerged Company No. 3. Amalgamating Company No. 1 had no Unsecured Creditors. Further Demerged Company No. 1 and Amalgamating Company No. 2 had no Secured Creditors. From the report of the Chairperson at the above said meeting it is apparent that the scheme was approved unanimously by the Unsecured Creditors of Demerged Company No. 1 and Demerged Company No. 3 participating in the meeting.

8. The Petitioner Companies have thereafter filed the present Petition seeking sanction of the Scheme. Vide Order dated 22.05.2014, notice of the Petition was

=============================================

directed to be issued to the Official Liquidator, Registrar of Companies and The Central Government through Regional Director. Citations were also directed to be published in "Business Standard" (English) and "Jansatta" (Hindi). Affidavit of Service and Publication has been filed by the Demerged Petitioner Companies showing compliance regarding service of the Petition and also regarding publication of citations in the aforesaid newspapers. 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 Official Liquidator sought information from the Amalgamating Company No. 1 and Amalgamating Company No. 2. Based on the information received, the Official Liquidator has filed his report dated 25.08.2014 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 Amalgamating Company No. 1 and Amalgamating Company No. 2 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 notices issued, the Regional Director has filed its Affidavit dated 25.08.2014. Relying on Clause 10.1 of Part II and Clause 24.1 of Part III of the scheme he has stated in Para No. 3 that all the staff/employees of all the Demerged Companies engaged in "Demerged Undertakings" shall become the employees of the Resulting Company and staff/employees of both the Transferor Companies shall become the employees of the Transferee Company without any break or interruption in their services upon sanctioning of the Composite Scheme of Arrangement by the Hon'ble Court. Further, the learned Regional Director submits that despite notice, the Income Tax Authorities have not raised any objection with regard to the Scheme.

11. Further, the Regional Director, in its Affidavit has observed that the fairness report providing the exchange ratio should be certified by a Chartered Accountant.

=============================================

12. In reply to the above said observation, an Affidavit dated 26.08.2014 has been filed by Mr. Prashant Agarwal, Authorized Signatory of the Petitioner Companies, stating that the fairness report giving the exchange ratio for the Composite Scheme of Arrangement was given by valuers named "Corporate Professionals", a SEBI Recognized Merchant Banker. However, the Petitioners have filed a Chartered accountant certified fairness report along with the abovesaid rejoinder. Learned Counsel for the Petitioner further submits that the all the entities involved in the amalgamation are same group companies having common shareholding.

13. Learned counsel further relies on the Judgment dated 06.07.2009 in the case of M/s. Keane International (India) Private Limited, Co. Pet. No.160/2009 wherein it has been held as under:-

"25. The Regional Director while referring to Para 6.1 of Part-II of the Scheme has submitted that the ratio of exchange i.e. proposed allotment of shares has not been worked out by an independent valuer/Chartered Accountants and it is not clear as to how the exchange ratio of 1:76 or 1:38 has been fixed by the petitioners. It is further submitted that in the absence of the

=============================================

valuation report, he is not in a position to offer any comments on the fairness of the ratio of exchange determined by both the transferor and transferee companies. He has, therefore, prayed that the petitioner companies may be directed to obtain the valuation report from a recognized firm of Chartered Accountants. A similar objection has been raised by the Official Liquidator in Para 7 of his report dated 30 th June, 2009.

26. In response to the above objections, the petitioner companies in the affidavit dated 3rd July, 2009 of Sh. Harsh Vinayak, authorized signatory of the petitioner companies have submitted that all the three entities involved in the proposed amalgamation are a part of the same group with a common ultimate parent based in the United States of America and the ultimate parent after the successful approval of the Scheme by the High Court will remain the same and that there is no third party interest involved in the proposed Scheme, which is a part of the internal group restricting of the Keane Group. It is further submitted that shareholders, secured and unsecured creditors of all the three companies have given their written consents to the proposed Scheme and the share exchange ratio proposed therein. It is also submitted that to comply with the requirement of Section 2(1B) of the Income Tax Act, 1961, the shareholders of the transferor companies had to be issued shares of the transferee company. Hence, a share exchange ratio

=============================================

acceptable to the shareholders of the merging entities was agreed.

27. In support of his submission, learned Senior Counsel for the petitioner companies has placed reliance upon the judgment of the Bombay High Court in re: Advance Plastics (P) Ltd & Dynamic Plastics (P) Ltd. 138 Com Cas 1006 wherein it has been held as under:

"The shares are the properties of the shareholders and they are the ultimate and the best judge of the value they would put on their charges. There is no requirement in the Companies Act, 1956 that in such a case the ratio of exchange has to be determined on a valuation made by the chartered accountant and the auditor. In the present case, no shareholder has challenged the amalgamation. In the circumstances, valuation report is not necessary.

28. In view of the submissions made at the bar and the settled law on the subject, the objections raised by the Regional Director and the Official Liquidator does not survive."

14. In view of the above, the objection of the Regional Director does not survive.

=============================================

15. Further, the Regional Director, in his Affidavit has observed that the Petitioner Company may be asked to comply with the relevant provisions of the Companies Act, 2013 for satisfaction and creation of Charge in Transferor Demerged Company and resulting Company, respectively.

16. In reply to the above said observation, the Petitioners in its Reply Affidavit undertake that pursuant to the proposed Scheme, the charges shall be transferred from the Demerged Company No. 3 to the Amalgamated Company/Resulting Company according to the relevant provisions of Companies Act 2013.

17. Further, the Regional Director has observed that the Amalgamated Company/Resulting Company be directed to follow the provisions of Section 2(19AA) of the Income Tax Act 1961 for demerger of the demerged undertakings.

18. In reply to the above said observation, the Petitioners in their Reply Affidavit have undertaken to follow the provisions of section 2(19AA) of the Income Tax Act, 1961 for Demerger.

=============================================

19. Further, the Regional Director has observed that the Amalgamated Company/Resulting Company be directed to comply with the provisions of the Accounting Standard (AS) 14 issued by the Institute of Chartered Accountants of India for amalgamation.

20. In reply to the above said observation, the petitioner companies in its affidavit undertake to comply with the provisions of Accounting Standard 14 for amalgamation.

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

22. No objection has been received to the Scheme from any other party. Mr. Prashant Agarwal, Authorized Signatory of the Petitioner Companies has filed an Affidavit dated 25.08.2014, confirming that neither the Petitioner Companies nor its Counsel has received any objection pursuant to citations published in the newspapers.

23. In view of the approval accorded by the Shareholders and Creditors of the Petitioner Companies, representation/report filed by the Regional Director,

=============================================

Northern Region and Official Liquidator attached with this Court 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.

24. Certified copy of the order will be filed with the Registrar of Companies within 30 days from the date of receipt of the same. Upon the Scheme coming into effect, Amalgamating Company No. 1 and Amalgamating Company No. 2 shall stand dissolved without following the process of winding up.

25. 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.

26. Learned Counsel for the Petitioner 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.

27. The Petition is allowed in the above terms.

Order Dasti.

SANJEEV SACHDEVA, J SEPTEMBER 09, 2014

=============================================