Delhi High Court
Sapna Infracoloniser Pvt. Ltd vs ........... on 9 September, 2014
Author: Sanjeev Sachdeva
$~21
*IN THE HIGH COURT OF DELHI AT NEW DELHI
+ CO.PET. 177/2014
IN THE MATTER OF
SHUBH SPONGE IRON PRIVATE LIMITED AND ORS.
.....Petitioners
Through: Mr. Rajeev K. Goel Advocate for
the Petitioner.
Mr. Rajneesh Kumar Singh,
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)
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 for (a) Amalgamation of Shubh Sponge
Iron Pvt Ltd (hereinafter referred to as Transferor
Company No. 1), Apple Iron Enterprises Pvt Ltd
hereinafter referred to as Transferor Company No. 2),
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Manan Power Pvt Ltd (hereinafter referred to as
Transferor Company No. 3), Yuven Steels Pvt Ltd
(hereinafter referred to as Transferor Company No. 4),
Shreem Ispat Pvt Ltd (hereinafter referred to as
Transferor Company No. 5), Sanidhya Steels Pvt Ltd
(hereinafter referred to as Transferor Company No .6),
Madan Gopal Alloys Pvt Ltd (hereinafter referred to as
Transferor Company No. 7), Manohar Metalloys Pvt
Ltd (hereinafter referred to as Transferor Company No.
8)and Apple Buildtech Ltd (hereinafter referred to as
Transferor Company No. 9) (hereinafter collectively
referred to as Transferor Companies) with M G
Metalloy Pvt Ltd (hereinafter referred to as Transferee
Company) and (b) Re-arrangement/Reduction of post
merger Capital of the Transferee Company i.e., M G
Metalloy Pvt Ltd. (hereinafter all Companies
collectively referred to as Petitioner Companies). 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.
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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 Companies had earlier filed CA (M) 24
of 2014 seeking directions of this Court for
dispensation/convening of meetings. Vide order dated
11th February 2014, this Court allowed the Application
and requirement of convening separate meetings of
Shareholders and Un-secured Creditors of the
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Transferor Companies and the Transferee Company are
dispensed with. None of the Applicant Companies has
any Secured Creditors.
8. The Petitioner Companies had thereafter filed the
present Petition seeking sanction to the Scheme of
Arrangement. Vide Order dated 14 th March 2014,
notice of the Petition was directed to be issued to the
Registrar of Companies, Regional Director, Northern
Region, Ministry of Corporate Affairs and the Official
Liquidator attached with this Court. Citations were also
directed to be published in "Business Standard"
(English, Delhi Edition) and "Jan Satta" (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
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Liquidator has filed his Report dated 12.05.2014
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.
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
22nd July, 2014. Relying on the Scheme of
Arrangement, 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.
11. Further learned Regional Director in his affidavit has
observed that The Transferor Companies No. 1 to 7 and
the Transferee Company have foreign shareholding.
The Petitioner Companies may be asked to give an
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undertaking to comply with FEMA and RBI
Regulations for the same.
12. In response to the aforesaid observation, Mr. Ashish
Garg, Director of the Petitioner Transferee Company in
the Reply Affidavit dated 5 th September, 2014 has
stated that the Transferee Company has confirmed that
all the Transferor Companies and the Transferee
Company have complied with all the applicable
provisions of FEMA and RBI Regulations with regard
to foreign shareholding. The Company has further
confirmed and undertaken that the Petitioner
Transferee Company will comply with all the
applicable provisions of FEMA and RBI Regulations
with regard to issue of shares to foreign shareholders
pursuant to the Scheme of Arrangement.
13. Further learned Regional Director in his affidavit has
observed that ROC has reported that the proposed
Scheme of Amalgamation is for consolidation of funds
of the Transferor and Transferee Companies. However,
there is no mention 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, etc.
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14. In response to the aforesaid observation, the Petitioner
Transferee Company in its Reply Affidavit has stated
that all the Petitioner Transferor and Transferee
Companies are Core Investment Companies (CIC) as
defined in the Core Investment Companies (Reserve
Bank) Directions, 2011, issued by the Reserve Bank of
India, and as per the said Directions, Core Investment
Companies are not required registration from the RBI
as NBFC. Further, RBI NOC is also not required for
amalgamation of Core Investment Companies. The
Petitioner Transferee Company has undertaken and
confirmed that it will comply with all the compliances
of the Reserve Bank of India and will take other
necessary steps in this regard, if any. Further, the
Petitioner Companies and their Directors have also
undertaken that they will be bound for any action
which may be taken by the RBI in future for any act of
commission or omission by the Petitioner Companies
with regard to NBFC regulations.
15. It is directed that in case it is found that the Petitioner
Companies have violated any provision of the Reserve
Bank of India Act then the Directors of the Transferor
Companies and Transferee Company guilty of
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breaching the applicable provisions of the Reserve
Bank of India Act shall continue to be liable
irrespective of the sanction of the Scheme.
16. Further learned Regional Director in his affidavit
submits that the Income Tax Department has observed
that on examination of the Petition and as suggested by
the Central Government Standing Counsel, no direct
adverse impact on tax position could be noticed, so far
as the amalgamation of the Transferor Companies is
concerned. Further, it is submitted that there should not
be any writing off of any liability by the Transferor
Companies. Merger and de-merger have an impact on
income tax assessment particularly carry forward and
set off of business losses. Comments on applicability of
section 72A of the Act (which provides carry forward
of losses of the Transferor Companies and set off the
same in the Transferee Company) cannot be provided
until and unless the Petitioner provides the complete
detail of the assessment particulars of all the entities.
17. In response to the aforesaid observation, the Petitioner
Transferee Company in the Reply Affidavit has stated
that the Petitioners have confirmed that the Scheme of
Arrangement is not proposing to write off or reduce the
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value of any liability of the Transferor or the
Transferee Companies. Further, it has been submitted
that Para 2.c of the Scheme which provides that all
liabilities, provisions, duties and obligations including
income tax and other statutory liabilities, if any, of the
Transferor Companies, whether provided for or not in
the books of accounts of the Transferor Companies,
shall devolve and shall stand transferred to the
Transferee Company.
18. Further with regard to carry forward of losses and un-
absorbed depreciation of the Transferor Companies and
set off the same in the Transferee Company, it is
submitted that all the Petitioner Transferor and
Transferee Companies are profit making companies
and do not have any accumulated losses and un-
absorbed depreciation except the Transferor Company
No. 9 which has a small amount of loss of Rs. 9.68 lac
as on 31.3.2013. The aforesaid loss has been fully set
off against the income of the Transferor Company No.
9 during the Financial Year ended 31.3.2014 and as on
date there is no loss in the Company.
19. Mr. Rajeev Goel, learned Counsel for the Petitioners
submits that in terms of the provisions of section 72-A
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of the Income Tax Act, only industrial and other
eligible companies are allowed for the same. He
submits that in the present case, all the Transferor and
Transferee Companies are Core Investment Companies
and hence are not allowed to carry forward and set off
of losses on the amalgamation in terms of section 72 -A
of the Income Tax Act .
20. Further the Petitioners in their Affidavit submit that
the Scheme does not in any way reduce the income tax
liability of any of the Petitioner Company and interests
of the Income Tax Department are fully protected in
the Scheme and no prejudice will be caused to the
Income Tax authorities by approval of the Scheme.
Para 4 of the Scheme 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 the 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
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continued, prosecuted and enforced by or against the
Transferor Companies as if the Scheme had not been
made.
21. Mr. Rajeev Goel, learned Counsel for Petitioner
submits that the Income Tax Department has not asked
for any document/information from the Petitioner
Companies subsequent to submission of the Petition
and Scheme, etc., to them.
22. 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.
23. In view of the aforesaid clarifications and undertaking
given by the Petitioners, the concerns of the Regional
Director have been duly addressed.
24. No objection has been received to the Scheme from any
other party. Mr. Ashish Garg, 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.
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25. 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.
26. 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 Act, and in terms of the Scheme the
whole of the undertaking, the properties, 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. Upon the Scheme
coming into effect, the Transferor Companies shall
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stand dissolved without following the process of
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 department which may be
specifically required under any law.
28. 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.
29. The Petition is allowed in the above terms.
Order Dasti.
SANJEEV SACHDEVA, J
SEPTEMBER 09, 2014
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