Asf Insignia Sez Private Limited vs ...
2015 Latest Caselaw 9190 Del

                  IN THE HIGH COURT OF DELHI
                 COMPANY PETITION NO. 458/2015

                                    Reserved on 3rd November, 2015
                        Date of pronouncement: 10th December, 2015
In the matter of
The Companies Act, 1956 & the Companies Act, 2013 (to the extent
applicable):

And

Petition under Sections 391 to 394 of the
Companies Act, 1956

Scheme of Demerger and Arrangement between:

ASF Insignia SEZ Private Limited
                                          Petitioner/Demerged Company
      AND

Kings Canyon SEZ Private Limited
                                     Petitioner/Resulting Company No. 1

Grand Canyon SEZ Private Limited
                                     Petitioner/Resulting Company No. 2

                              Through Mr. Rajiv Nayar, Sr. Advocate
                              with Mr. Anirudh Dads, Mr. Manu
                              Krishnan and Mr. Kamaljeet Singh,
                              Advocates for the petitioners
                              Mr. Sanjay Bose, Dy. Registrar of
                              Companies for the Regional Director

SUDERSHAN KUMAR MISRA, J.

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

Companies Act, 1956 by the petitioner companies seeking sanction of

the Scheme of Demerger and Arrangement between ASF Insignia SEZ

Private Limited (hereinafter referred to as the demerged company) and

Kings Canyon SEZ Private Limited (hereinafter referred to as the

resulting company no. 1) and Grand Canyon SEZ Private Limited

(hereinafter referred to as the resulting company no. 2).

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 was originally incorporated under the

Companies Act, 1956 on 6th September, 2005 with the Registrar of

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

style of Canton Buildwell Private Limited. The company changed its

name to ASF Insignia SEZ Private Limited and obtained the fresh

certificate of incorporation on 9th February, 2012.

4. The resulting company no. 1 was originally incorporated under the

Companies Act, 1956 on 26th May, 2011 with the Registrar of

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

style of Idyllic Infrastructure Private Limited. The company changed its

name to Kings Canyon Insignia SEZ Private Limited and obtained the

fresh certificate of incorporation on 7th March, 2012. The company again

changed its name to Kings Canyon SEZ Private Limited and obtained the

fresh certificate of incorporation on 28th January, 2015.

5. The resulting company no. 2 was originally incorporated under the

Companies Act, 1956 on 25th May, 2011 with the Registrar of

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

style of Idyllic Buildcon Private Limited. The company changed its name

to Grand Canyon SEZ Private Limited and obtained the fresh certificate

of incorporation on 20th January, 2014.

6. The present authorized share capital of the demerged company is

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

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

Rs.1,06,42,590/- divided into 10,64,259 equity shares of Rs.10/- each.

7. The present authorized share capital of the resulting company no.1

is Rs.10,00,000/- divided into 1,00,000 equity shares of Rs.10/- each.

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

Rs.1,00,000/- divided into 10,000 equity shares of Rs.10/- each.

8. The present authorized share capital of the resulting company no.2

is Rs.10,00,000/- divided into 1,00,000 equity shares of Rs.10/- each.

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

Rs.1,00,000/- divided into 10,000 equity shares of Rs.10/- each.

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

demerged and resulting companies have been filed on record. The

audited balance sheets, as on 31st March, 2014, of the demerged and

resulting companies have also been filed.

10. A copy of the Scheme of Demerger and 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 by the Petitioners that the Scheme, inter alia, provides

that, upon coming into effect of this Scheme, the Demerged Undertaking

1 and the Demerged Undertaking 2 of the demerged company shall

stand merged with the resulting company no. 1 and resulting company

no. 2 respectively. It is claimed that the proposed demerger shall

facilitate and result in creation of greater management focus and easier

speedy decision process to achieve strategic advantage involving

focused strategy in development and/or operation of each such business;

optimal utilization of resources vesting in each of the demerged

undertakings; and keeping track of profitability of each demerged

undertaking distinctly.

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

provides that, upon coming into effect of this Scheme, the resulting

company no. 1 and 2 shall issue and allot equity shares to the

shareholders of the demerged company in the following ratio:-

"In consideration of and subsequent to vesting of demerged undertaking 1 to the resulting company no. 1, the resulting company no. 1 shall issue, in aggregate, 18,67,121 equity shares of Rs.10/- each to the equity shareholders of the demerged company in a manner that each such equity shareholder of demerged company shall be entitled to be issued 100 fully paid up equity shares of the resulting company no. 1 for every 57 fully paid up equity shares held by them in the demerged company."

"In consideration of and subsequent to vesting of demerged undertaking 2 to the resulting company no. 2, the resulting company no. 2 shall issue, in aggregate, 19,73,717 equity shares of Rs.10/- each to the equity shareholders of the demerged company in a manner that each such equity shareholder of demerged company shall be entitled to be issued 102 fully paid up equity shares of the resulting company no. 2 for every 55 fully paid up equity shares held by them in the demerged company."

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

Sections 235 and 250A of the Companies Act, 1956 and the applicable

provisions of the Companies Act, 2013 are pending against the petitioner

companies.

13. The Board of Directors of the demerged company and resulting

company no. 1 & 2 in their separate meetings held on 10th March, 2015

and 19th March, 2015 respectively have unanimously approved the

proposed Scheme of Demerger and 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.

14. The petitioner companies had earlier filed CA (M) No. 60/2015

seeking directions of this court to dispense with the requirement of

convening the meetings of their equity shareholders, secured and

unsecured creditors, which are statutorily required for sanction of the

Scheme of Demerger and Arrangement. Vide order dated 25th May, 2015

this court allowed the application and dispensed with the requirement of

convening and holding the meetings of the equity shareholders of the

demerged and resulting companies, there being no secured or unsecured

creditors of the resulting companies, and directed convening of separate

meetings of the secured and unsecured creditors of the demerged

company, to consider and, if thought fit, approve, with or without

modification, the proposed Scheme of Demerger and Arrangement.

15. The Chairpersons of the ordered meetings of the secured and

unsecured creditors of the demerged company have filed their reports

stating that the meetings were duly held on 30th June, 2015, as directed,

and that the Scheme of Demerger and Arrangement has been approved

unanimously by the secured and unsecured creditors of the demerged

company, present and voting, in their respective meetings.

16. The petitioner companies have thereafter filed the present petition

seeking sanction of the Scheme of Demerger and Arrangement. Vide

order dated 28th July, 2015, notice in the petition was directed to be

issued to the Regional Director, Northern Region. Citations were also

directed to be published in 'Indian Express' (English) and 'Jansatta'

(Hindi) editions. Affidavit of service has been filed by the petitioner

showing compliance regarding service on the Regional Director, Northern

Region and also regarding publication of citations in the aforesaid

newspapers on 15th September, 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 15th October, 2015. Relying on Clauses

3.1.2 (viii) of Part-III and 4.1.2 (viii) of the Scheme, he has stated that,

upon sanction of the Scheme of Demerger and Arrangement, all the

employees of the Demerged Undertaking I shall become the employees

of the Resulting Company I and all the employees of the Demerged

Undertaking II shall become the employees of the Resulting Company II

respectively, without any break or interruption in their services.

18. The Regional Director has not raised any objection to the proposed

Scheme, although in para 9 of his report he has submitted that the

demerged company is operating an IT SEZ and post the approval of the

Scheme, the resulting companies shall seek necessary approval of the

SEZ section, Department of Commerce, Ministry of Commerce and

Industry, Government of India and Board of Approval and the Scheme of

Arrangement becomes effective only after the said necessary approvals.

In response to the aforesaid observation, learned counsel for the

petitioner states that the aforesaid observations are in consonance with

prayer (f) of the petition as also with para 8.9(ii) of the Scheme

propounded, which states as follows:

"8.9 This scheme shall become effective on the last date of

following dates ("Effective Date"):

          (i)        xx       xx           xx

          (ii)       the date on which SEZ Section, Department of

                     Commerce, Ministry of Commerce and Industry,

                     Government of India and Board of Approval for

                     SEZs    approve   Resulting    Companies     as     co-

developers of the Project, as contemplated in this

Schema and the requirement agreements in terms

of Clauses 3.1.4(i) and 4.1.4(i) are executed; or

(iii) xx xx xx"

In view of the aforesaid, the observation of the Regional Director,

Northern Region stands satisfied.

19. No objection has been received to the Scheme of Demerger and

Arrangement from any other party. The petitioner companies in their

affidavits dated 13th October, 2015 of Mr. Anil Saraf, Mr. K.S.C. Shekhar

and Mr. Subhash Vaidyanathan, Directors 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 15th September, 2015.

20. Considering the approval accorded by the equity shareholders and

creditors of the petitioner companies to the proposed Scheme of

Demerger and Arrangement and the affidavit filed by the Regional

Director, Northern Region not raising any objection to the proposed

Scheme of Demerger and Arrangement, there appears to be no

impediment to the grant of sanction to the Scheme of Demerger and

Arrangement. Consequently, sanction is hereby granted to the Scheme

of Demerger and Arrangement under Sections 391 and 394 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 of the date on

which the SEZ Section, Department of Commerce, Ministry of Commerce

and Industry, Government of India and Board of Approval for SEZs

grants approval in terms of Clause 8.9(ii) of the Scheme. 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 April, 2014, the Demerged Undertaking I of the

demerged company shall stand merged in the resulting company no. 1

and Demerged Undertaking II of the demerged company shall stand

merged in the resulting company no. 2.

21. The representative of the Regional Director, Northern Region prays

that costs may also be imposed keeping in view the fact that the matter

has involved examination of extensive records and prioritized hearings.

He submits that at least costs of Rs.1,00,000/- should be paid by the

petitioners. Learned counsel for the petitioners states that the same is

acceptable to him. As already directed vide order dated 03.11.2015, the

petitioners shall deposit a sum of Rs.1,00,000/- by way of costs in the

Common Pool Fund of the Official Liquidator.

22. The petition is allowed in the above terms.

Dasti.

SUDERSHAN KUMAR MISRA, J.

December 10, 2015