Delhi High Court
C & S Electric Mv Pvt Limited vs ........... on 10 September, 2014
$~28
*IN THE HIGH COURT OF DELHI AT NEW DELHI
+ CO.PET. 379/2014
IN THE MATTER OF
C & S ELECTRIC MV PVT LIMITED ..... Petitioners
Through: Mr. Arun Kathpalia and Mr.
Dhrupad Das, Advocates for the
Petitioners.
Mr P.K Malik, Deputy Registrar
of Companies for the Regional
Director.
Mr. Rajiv Behl, Advocate for the
Official Liquidator.
CORAM:
HON'BLE MR. JUSTICE SANJEEV SACHDEVA
ORDER
% 10.09.2014
SANJEEV SACHDEVA, J (ORAL)
CA No.1944/2014
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.
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CO.PET. 379/2014
1. This second motion petition has been filed under
Section 391 to 394 of the Companies Act, 1956 („Act‟)
seeking sanction of the Scheme of Amalgamation
("Scheme") of C&S Electric MV Private Limited
(hereinafter referred to as Transferor Company)
between C&S Electric Limited (hereinafter referred to
as C&S/ Non-Petitioner Company/ Transferee
Company) (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
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 for the year ended 31 st March
2013 have also been enclosed with the Petition.
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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 and Non-Petitioner Company had earlier
filed an Application CA (M) No. 58 of 2014 seeking
directions of this Court for dispensation of requirement
of convening meetings of Equity Shareholders and
Unsecured Creditors of the Transferor Company and
the Equity Shareholders, Secured and Unsecured
Creditors of the Transferee Company. There are no
Secured Creditors in the Transferor Company. Further,
the Application filed provided for seeking the
directions of this Court for dispensation with the
requirement of filing any further Company Scheme
Petition (Second Motion) by the Transferee Company.
Vide order dated 02.04.2014, this Court allowed the
abovesaid application and dispensed with the
requirement of convening meetings of Equity
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Shareholders of the Transferor Company and the
meeting of the Equity Shareholders, Secured and
Unsecured Creditors of the Transferee Company. Also,
this Hon‟ble Court dispensed with the requirement for
filing a petition for sanction of the scheme (Second
Motion) by the Transferee Company. Further, this
Hon‟ble Court directed that meeting of the Unsecured
Creditors of the Transferor Company shall be held on
15th May, 2014 at 11:00 AM at Auditorium attached to
the office of the Okhla Industrial Estate Association,
Exhibition Complex, Okhla Industrial Estate, New
Delhi - 110020, respective reports from chairman were
filed.
8. The Petitioner Company has thereafter filed the present
Petition seeking sanction of the Scheme. Vide order
dated 29.05.2014, notice of the Petition was directed to
be issued to the Official Liquidator (OL), Registrar of
Companies (ROC) and the Central Government
through Regional Director, Northern Region, Ministry
of Corporate Affairs (RD). Citations were also directed
to be published in "Statesman" (English Edition) and
"Veer Arjun" (Hindi Edition). Affidavit of Service and
Publication has been filed by the Petitioner Company
=============================================
showing compliance regarding service of the Petition
and also regarding publication of citations in the
aforesaid newspapers on 11.08.2014. 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 Official
Liquidator sought information from the Petitioner
Companies. Based on the information received, the
Official Liquidator has filed his report dated
26.08.2014 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 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 notices issued, the Regional Director
has filed his Affidavit dated 25.08.2014. Relying on
Clause 10 of Part-III of the Scheme of Amalgamation
he has stated in Para No. 3 that all the staff/employees
of the Transferor Company shall become the employees
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of the Amalgamated Company without any break or
interruption in their services upon sanctioning of the
Scheme of Amalgamation 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 learned Regional Director, in its affidavit has
observed that on perusal of the shareholding pattern of
the Transferee Company it has been observed that
9.52% shares are held by M/s GE Equity International,
Mauritius, a foreign company. It is submitted that the
Transferee Company may be asked to give an
undertaking for all compliances from Reserve Bank of
India as required under FEMA for above transactions
involving foreign banks/ entities, if deemed fit and
proper by the Hon‟ble Court.
12. In response to the aforesaid observation, the leaned
counsel for Petitioner Companies submits that the
Transferor Company is a wholly owned subsidiary of
the Transferee Company and pursuant to the proposed
Scheme of Amalgamation being effective, no shares
will be required to be issued by the Transferee
Company. Hence there will be no issue of shares to any
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person resident outside India and accordingly, the
above mentioned requirement is not applicable to the
Petitioner Company.
13. The learned Counsel for the Petitioners submits that in
case any shares are to be issued under the Scheme and
there is any requirement of compliances to be carried
out in respect of the regulations of the Reserve Bank of
India under FEMA, the Petitioner Companies
undertake to comply with them.
14. Further the Regional Director, in its affidavit has
observed that Para 15.1 of Part-IV of the Scheme
provides as under:-
"With effect from the Appointed Date and upon
becoming effective, the Main Object Clause of the
Memorandum of Association of the Transferee
Company shall be altered and amended to include
the main objects of the Transferor Company,
without any further act or deed ....................."
15. The Regional Director has submitted that the
Transferee Company may be asked to comply with the
provisions of section 17 of the Companies Act, 1956 or
corresponding to section of the Companies Act, 2013 in
respect of alteration in the Memorandum and Articles
of Association as proposed.
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16. In response to the aforesaid observation, the leaned
counsel for Petitioner Companies submits that
amendment in the Memorandum & Articles of
Association of the Transferee Company is part of the
Scheme of Amalgamation. Further, as also stated in
para No.15.3 of the Scheme of Amalgamation, the
Transferee Company shall file with the Registrar of
Companies, Delhi & Haryana at New Delhi all
requisite forms and complete the compliance and
procedural requirements under the Companies Act, if
any.
17. This Court by order dated 23.05.2014 in CO.PET
134/2014 titled M/s Capital 18 Fincap Pvt. Ltd and
order dated 07.08.23014 in CO.PET 246/2014 titled
Kalyani Alstom Power Limited & Ors held that a
scheme of arrangement in terms of section 391-394 of
the Companies Act, 1956 is a complete code in itself,
requiring sanction by the jurisdictional High Court,
which is a single window clearance and as such, does
not require any other procedure to be followed
separately. Upon sanction of the scheme, the order of
the court shall be filed with the Registrar of Companies
and the same shall constitute compliance of the
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provisions of the Act for change of the Memorandum
of Association.
18. The learned Regional Director has raised an
observation that the Applicants/ Transferor Company
have stated in the application that the applicants/
Transferor Company are wholly owned subsidiaries of
the Transferee Company. The Transferee has not filed a
separate application under section 391-394 of the
Companies Act, 1956.
19. In response to the said observation learned Counsel for
the Petitioner Companies submits that the entire issued,
subscribed and paid up equity share capital of
Transferor Company is held by Transferee Company
directly and the Transferor Company is wholly owned
subsidiary of the Transferee Company. Therefore, the
Transferee Company is not required to file a separate or
joint application before this Hon‟ble Court for sanction
of the Scheme of Amalgamation. This issue has been
considered and approved by this Court in the case of
M/s. CL Media Private Limited (Company Petition No.
74 of 2014), Auto Tools India Pvt. Ltd. [Co. Appl. (M)
No. 41 of 2010], Sharat Hardware Industries Pvt. Ltd.
[1978 (48) Com Cas 23 Delhi], Mahaamba Investments
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Ltd. vs. IDI Limited [2001 (105) Com Cas 16 Bombay
and Andhra Bank Housing Finance Ltd. [2004 (118)
Com Cas 295 Andhra Pradesh].
20. Further, learned Counsel for the Petitioner submits that
at the time of allowing the first motion Order dated
02.04.2014, this Court has already held that there is no
arrangement which is proposed between the
Shareholders and Creditors of the Transferor and
Transferee Company. Since Transferor Company is the
wholly owned subsidiary of the Transferee Company,
no separate petition is required to be filed by the
Transferee Company.
21. In view of the aforesaid clarification and undertaking
given by the Petitioner and the law laid down by this
Court, the concern of the Regional Director has been
duly addressed.
22. No objection has been received to the Scheme from any
other party, the Counsel for the Petitioner Companies
has stated that neither he nor the client has received any
objection pursuant to the citations published in the
newspapers.
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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. 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
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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 Petitioners states that the
Petitioner Companies would (collectively) 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 10, 2014
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