Avalokiteshvar Valinv Limited vs ...
2015 Latest Caselaw 3003 Del

                    IN THE HIGH COURT OF DELHI
                   COMPANY PETITION NO. 13/2015
                                          Reserved on 23rd March, 2015
                                Date of pronouncement: 16th April, 2015
In the matter of
The Companies Act, 1956 & the Companies Act, 2013 (to the extent
applicable):

And

Petition under Sections 391 to 394 read with
Sections 100 to 103 of the Companies Act,
1956 & Section 52 of the Companies Act, 2013
Scheme of Arrangement between:
Avalokiteshvar Valinv LImited
                                    Petitioner/Demerged Company No. 1

Renaissance Asset Management Company Private Limited
                               Petitioner/Demerged Company No. 2
     AND
Renaissance Advanced Consultancy Limited
                                       Petitioner/Resulting Company
                                Through Mr. Sharad Vaid, Advocate for
                                the petitioners
                                Ms.    Aparna     Mudiam,   Assistant
                                Registrar of Companies for the
                                Regional Director
SUDERSHAN KUMAR MISRA, J.

1. This joint petition has been filed under Sections 391 to 394 read

with Sections 100 to 103 of the Companies Act, 1956 and Section 52 of

the Companies Act, 2013 by the petitioner companies seeking sanction

of the Scheme of Arrangement between Avalokiteshvar Valinv LImited

(hereinafter referred to as the Demerged company no. 1); Renaissance

Asset Management Company Private Limited (hereinafter referred to as

the Demerged company no. 2) and Renaissance Advanced Consultancy

Limited (hereinafter referred to as the Resulting company).

2. The registered offices of the Demerged and Resulting companies

are situated at New Delhi, within the jurisdiction of this court.

3. The Demerged company no. 1 was originally incorporated under

the Companies Act, 1956 on 25th April, 1974 with the Registrar of

Companies, Orissa under the name and style of Utkal Investments

Limited. The company shifted its registered office from the State of

Orissa to State of West Bengal and obtained a certificate in this regard

from the Registrar of Companies, West Bengal on 7th July, 2000.

Thereafter, the company again shifted its registered office from the State

of West Bengal to NCT of Delhi and obtained a certificate in this regard

from the Registrar of Companies, NCT of Delhi & Haryana at New Delhi

on 18th June, 2003. Subsequently, the company changed its name to

Avalokiteshvar Valinv Limited and obtained the fresh certificate of

incorporation on 5th March, 2012.

4. The Demerged company no. 2 was originally incorporated under

the Companies Act, 1956 on 28th September, 2000 with the Registrar of

Companies, NCT of Delhi & Haryana at New Delhi under the name and

style of Renaissance Estates Limited. Thereafter, the company changed

its name to Renaissance Asset Management Company Limited and

obtained the fresh certificate of incorporation on 2nd August, 2001. The

company again changed is name to Renaissance Asset Management

Company Private Limited and obtained the fresh certificate of

incorporation on 4th October, 2001.

5. The Resulting Company was incorporated under the Companies

Act, 2013 on 1st September, 2014 with the Registrar of Companies, NCT

of Delhi & Haryana at New Delhi.

6. The present authorized share capital of the Demerged company

no.1 is Rs.25,00,00,000/- divided into 1,08,50,000 equity shares of

Rs.10/- each aggregating to Rs.10,85,00,000/- and 1,41,50,000

preference shares of Rs.10/- each aggregating to Rs.14,15,00,000/-. The

issued, subscribed and paid-up share capital of the company is

Rs.4,98,83,500/- divided into 49,88,350 equity shares of Rs.10/- each

fully paid-up.

7. The present authorized share capital of the Demerged company

no.2 is Rs.30,00,00,000/- divided into 1,50,00,000 equity shares of

Rs.10/- each aggregating to Rs.15,00,00,000/- and 1,10,00,000 12%

preference shares of Rs.10/- each aggregating to Rs.11,00,00,000/- and

40,00,000 8% preference shares of Rs.10/- each aggregating to

Rs.4,00,00,000/-. The issued, subscribed and paid-up share capital of the

company is Rs.5,15,00,000/- divided into 51,50,000 equity shares of

Rs.10/- each.

8. The present authorized share capital of the Resulting company is

Rs.5,00,000/- divided into 50,000 equity shares of Rs.10/- each. The

issued, subscribed and paid-up share capital of the company is

Rs.5,00,000/- divided into 50,000 equity shares of Rs.10/- each fully paid-

up.

9. Copies of the Memorandum and Articles of Association of the

Demerged and Resulting companies have been filed on record with the

joint application, being CA(M) 151/2014, earlier filed by the petitioners.

The audited balance sheets, as on 31st March, 2014, of the Demerged

and Resulting companies, along with the report of the auditors, as well as

the audited balance sheets of the demerged companies including audited

balance sheets of their consultancy division, as on 30th September, 2014,

have also been filed. Amended Memorandum of Association of the

resulting company has also been filed and the same was taken on record

vide order dated 23.03.2015.

10. A copy of the Scheme of Arrangement has been placed on record

and the salient features of the Scheme have been incorporated and

detailed in the petition and the accompanying affidavit. It is submitted that

the Scheme, inter alia, provides for demerger of Consulting Services

Division of the Demerged Company No.1 and Demerged Company No. 2

into the Resulting Company and reduction of share capital and reserves

and surplus of the demerged companies no. 1 & 2. It is claimed that the

proposed demerger would lead to concentrated and focused business

approach and attention to the two businesses being carried on by the

demerged companies by segregating them and consolidating their

consulting services business into the resulting company so that full

anticipated growth potential of the two businesses could be better

exploited by the respective companies for the benefit of all stakeholders.

It is further claimed that proposed arrangement would have

rationalization of use of available resources and management efforts for

achieving higher efficiencies, thereby reducing administrative and

operational overheads and other costs and expenses.

11. So far as the share exchange ratio is concerned, the Scheme

provides that, upon coming into effect of this Scheme and upon transfer

and vesting of Consulting Services Division of the Demerged Companies

into the Resulting Company, the Resulting Company shall issue and allot

equity shares to the shareholders of the Demerged companies in the

following ratio:

"100 new ordinary shares shall be issue and allotted, at par, by the resulting company for every 246 fully paid-up equity shares of Rs.10/- each held in Demerged company no. 1."

"100 new ordinary shares shall be issue and allotted, at par, by the resulting company for every 894 fully paid-up equity shares of Rs.10/- each held in Demerged company no. 2."

12. It has been submitted by the petitioners that no proceedings under

Sections 235 to 251 of the Companies Act, 1956 are pending against the

Demerged and Resulting companies.

13. The Board of Directors of the Demerged and Resulting companies

in their separate meetings held on 11th October, 2014 have unanimously

approved the proposed Scheme of Arrangement. Copies of the

Resolutions passed at the meetings of the Board of Directors of the

Demerged and Resulting companies have been placed on record. The

members of the Demerged Company No. 1 and Demerged Company

No.2 in their separate Extra-Ordinary General Meetings held on 13th

December, 2014 and 12th December, 2014 respectively have also

approved the proposed reduction of share capital and reserves and

surplus of the demerged companies. Copies of the resolutions passed in

the Extra-Ordinary General Meetings of the Members of the demerged

companies have also been placed on record.

14. The petitioner companies had earlier filed CA (M) No. 151/2014

seeking directions of this court to dispense with the requirement of

convening the meetings of their secured and unsecured creditors and the

equity shareholders of demerged company no. 2 and the resulting

company and for convening the meeting of the equity shareholders of

demerged company no. 1, which are statutorily required for sanction of

the Scheme of Arrangement. Vide order dated 3rd November, 2014, this

court allowed the application and dispensed with the requirement of

convening and holding the meetings of the equity shareholders of

demerged company no. 2 and resulting company, there being no secured

and unsecured creditors of the petitioner companies, and directed

convening of a meeting of the equity shareholders of the demerged

company no. 1, to consider and, if thought fit, approve, with or without

modification, the proposed Scheme of Arrangement.

15. The Chairperson of the ordered meeting of the equity shareholders

of the demerged company no. 1 has filed his report stating that the

meeting was duly held on 13th December, 2014, as directed, and that the

Scheme of Arrangement has been approved unanimously by the equity

shareholders of the demerged company no. 1, present and voting, in the

meeting.

16. The petitioner companies have thereafter filed the present petition

seeking sanction of the Scheme of Arrangement. Vide order dated 13th

January, 2015, notice in the petition was directed to be issued to the

Regional Director, Northern Region, and the Official Liquidator. Citations

were also directed to be published in 'The Financial Express' (English)

and 'Jansatta' (Hindi) editions. It was also directed that no separate

application/petition need to be filed by the petitioners under Sections 101

to 104 of the Companies Act, 1956 in relation to reduction of issued,

subscribed & paid-up share capital, securities premium account and

general reserves & surplus of the demerged company nos. 1 & 2.

Thereafter, vide order dated 23rd March, 2015 passed in CA 755/2015, in

view of the fact that the present petition merely concerns the Scheme of

Demerger and not amalgamation, it was directed that notice is not

required to be served on the Official Liquidator. Affidavit of service has

been filed by the petitioners showing compliance regarding service on the

Regional Director, Northern Region and also regarding publication of

citations in the aforesaid newspapers on 26th February, 2015. Copies of

the newspaper clippings containing the publications have been filed

along with the said affidavit.

17. In response to the notices issued in the petition, Mr. A. K.

Chaturvedi, Regional Director, Northern Region, Ministry of Corporate

Affairs has filed his report dated 19th March, 2015. Relying on Clauses

3.2.6(a) of Part-III and 4.2.6(a) of Part-IV of the Scheme, he has stated

that, upon sanction of the Scheme of Arrangement, all the employees of

the Demerged companies in connection with the work of their Consulting

Services Division shall become the employees of the Resulting Company

without any break or interruption in their services.

18. No objection has been received to the Scheme of Arrangement

from any other party. The petitioner companies, in the affidavit dated 18th

March, 2015 of Mr. Arun Sharma, Authorized Signatory of the petitioner

companies, have submitted that neither the petitioner companies nor

their counsel have received any objection pursuant to the citations

published in the newspapers on 26th February, 2015.

19. Considering the approval accorded by the shareholders and

creditors of the petitioner companies to the proposed Scheme of

Arrangement and the affidavit filed by the Regional Director, Northern

Region, not raising any objection to the proposed Scheme of

Arrangement, there appears to be no impediment to the grant of sanction

to the Scheme of Arrangement. Consequently, sanction is hereby

granted to the Scheme of Arrangement under Sections 391 and 394 read

with Sections 100 to 103 of the Companies Act, 1956. The petitioner

companies will comply with the statutory requirements in accordance with

law. Certified copy of this order be filed with the Registrar of Companies

within 30 days. It is also clarified that this order will not be construed as

an order granting exemption from payment of stamp duty as payable in

accordance with law. Upon the sanction becoming effective from the

appointed date of Arrangement, i.e. 1st October, 2014, the 'Consulting

Services Division' of the Demerged Company nos. 1 and 2 shall stand

merged with the Resulting Company.

20. The petition is allowed in the above terms.

Dasti.

SUDERSHAN KUMAR MISRA, J.

April 16, 2015