Delhi High Court
Kaizen Lifestyle Products Pvt Ltd ... vs .............. on 30 September, 2014
$~25
*IN THE HIGH COURT OF DELHI AT NEW DELHI
+ CO.PET. 310/2014
IN THE MATTER OF
KAIZEN LIFESTYLE PRODUCTS PVT LTD AND ORS
.....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
% 30.09.2014
SANJEEV SACHDEVA, J (ORAL)
CA No. 1859/2014 (application seeking condonation of
delay on behalf of the Official Liquidator)
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.310/2014 and C.A No. 1137/2014
1. This second motion joint petition has been filed under
sections 391 to 394 read with sections 100 to 104 of
the Companies Act, 1956 ("Act") seeking sanction of
the Scheme of Amalgamation ("Scheme") of (a) Kaizen
Lifestyle Products Pvt Ltd (hereinafter referred to as
Transferor Company No. 1), Uninet Infra Technologies
Pvt Ltd (hereinafter referred to as Transferor Company
No. 2) and Uninet Strategic Management Ltd
(hereinafter referred to as Transferor Company No. 3)
with Victor Financial Consultants Pvt Ltd (hereinafter
referred to as Transferee Company) (hereinafter all
Companies collectively referred to as Petitioner
Companies) and (b) Reduction of post merger share
capital of the Transferee Company. 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.
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. The Petitioner Companies had earlier filed C.A (M) 65
of 2014 seeking directions of this Court for
dispensation/convening of meetings. Vide Order dated
21st April 2014, this Court allowed the Application and
requirement of convening meetings of Equity
Shareholders, Preference Shareholders and Un-secured
Creditors of the Transferor Companies No. 1 to 3 and
==================================================
the Transferee Company is 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 13 th May 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) and "Dainik Bhaskar" (Hindi). 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 16th August 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
2nd September 2014. Relying on the Scheme of
Amalgamation, 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. Further Learned Regional Director
submits that despite of notice, Income Tax Authorities
has not raised any observation with regard to the
Scheme.
11. Mr. Rajeev Goel, learned Counsel for the Petitioner
Companies, has pointed out that the Transferor
Companies is holding some shares of the Transferee
==================================================
Company which would be cancelled on implementation
of the Scheme of Arrangement as a crossholding.
Further, to clean the Balance Sheet and to show more
appropriate financial position, the Transferee Company
after giving effect to the amalgamation; will write off
entire accumulated losses of Transferor and Transferee
Companies being the aggregate amount of Rs.
3,40,66,689 as on 31 st January, 2014 against the
aggregate amount of Capital Reserve and Securities
Premium, in that order, (inclusive of the Transferor
Companies). He, however, clarifies that such reduction
would not involve either the diminution of any liability
in respect of un-paid share capital or the payment to
any shareholder of any paid-up share capital, and
accordingly, the provisions of section 101(2) of the Act
will not be applicable. The provisions of Rule 85 of the
Companies (Court) Rule, 1959, which provides that
where a proposed compromise or arrangement involves
a reduction of capital of the company, the procedure
prescribed by the Act and the Companies (Court) Rules
relating to the reduction of capital, and the
requirements of the Act and the Rules in relation
thereto, shall be complied with, before the compromise
or arrangement so far as it relates to reduction of
==================================================
capital, is sanctioned. Mr. Goel submitted that Rule 85
only provides for compliance with relevant provisions
with regard to the reduction of capital. Rule 85 does
not provide for filing of separate petition under sections
100 to 104 of Act. He also submits where reduction of
capital is an integral part of the Scheme of
Amalgamation/Arrangement, no separate petition is
required to be filed under sections 100 to 104 of Act
for such capital reduction.
12. Mr. Rajeev Goel, learned Counsel for Petitioner
submits that the substantial compliance with the
provisions of sections 100 to 104 of the Companies
Act, 1956, and the applicable rules of the Companies
(Court) Rule, 1959, have already been made in regard
to the proposed reduction of share capital on account of
cancellation of cross holding of share in the following
manner:
"......
a. Members of all the Transferor and
Transferee Companies have considered and
unanimously approved the proposed Scheme
of Arrangement and the proposed reduction
of capital by passing a Special Resolution in
respective Extra ordinary General Meetings.
==================================================
b. All the un-secured creditors of the
Transferor Companies and the Transferee
Company have already given their written
consents/NOC to the proposed Scheme of
Amalgamation. The Transferor Companies
and the Transferee Company does not have
any Secured Creditor."
13. A joint Application being C.A No. 1137 of 2014 is
moved by the Petitioner Transferor Companies and the
Transferee Company seeking exemption from filing a
separate Petition under sections 100 to 104 of the
Companies Act, 1956 for the aforesaid reduction of
capital.
14. In view of the fact that the substantial compliance with
the provisions of sections 100 to 104 of the Companies
Act, 1956, and the applicable rules of the Companies
(Court) Rule, 1959, have already been made with
regard to the proposed reduction of share capital of the
Transferor Companies and the Transferee Company,
requirement of filing a separate petition under sections
100 to 104 of the Act, is dispensed with and the present
Application (C.A No. 1137 of 2014) to this effect is
allowed.
15. No objection has been received to the Scheme from any
other party. Mr. Vishal Malik, Director of the
==================================================
Transferee Company, has filed an Affidavit confirming
that neither the Petitioner Companies nor the Counsel
has received any objection pursuant to citations
published in the newspapers.
16. 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
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.
17. 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.
18. 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.
19. Learned Counsel for the Petitioners states that the
Petitioner Companies (collectively) would voluntarily
deposit a sum of Rs. 75,000/- in the Common Pool fund
of the Official Liquidator within three weeks from
today. The statement is accepted.
20. The Petition is allowed in the above terms.
Order Dasti.
SANJEEV SACHDEVA, J
SEPTEMBER 30, 2014
st
==================================================
