Lloyds Line Pipes Limited vs ...
2015 Latest Caselaw 9586 Del

                  IN THE HIGH COURT OF DELHI
             COMPANY APPLICATION (MAIN) NO. 189/2015

                                     Reserved on 18th December, 2015
                         Date of pronouncement: 23rd December, 2015
In the matter of
The Companies Act, 1956 & the Companies Act, 2013 (to the extent
applicable):

And

Application under Sections 391, 392 & 394 of
the Companies Act, 1956 read with Rules 6 &
9 of the Companies (Court) Rules, 1959

Scheme of Arrangement between:

Lloyds Line Pipes Limited
                                           Applicant/Transferor Company
       AND

APL Apollo Tubes Limited
                                     Non-Applicant/Transferee Company

                               Through    Mr.     Ashutosh         Gupta,
                               Advocate for the applicants

SUDERSHAN KUMAR MISRA, J.

1. This application has been filed under Sections 391, 392 & 394 of

the Companies Act, 1956 read with Rules 6 & 9 of the Companies

(Court) Rules, 1959 by the applicant/transferor company seeking

directions of this court to dispense with the requirement of convening the

meetings of its equity shareholders and secured creditors and for

convening a meeting of its unsecured creditors to consider and approve,

with or without modification, the proposed Scheme of Arrangement

between Lloyds Line Pipes Limited (hereinafter referred to as the

transferor company) and APL Apollo Tubes Limited (hereinafter referred

to as the transferee company.

2. The registered offices of the applicant/transferor company and the

transferee company are situated at New Delhi, within the jurisdiction of

this Court.

3. The applicant/transferor company was originally incorporated

under the Companies Act, 1956 on 4th September, 2008 with the

Registrar of Companies, Maharashtra at Mumbai. The company shifted

its registered office from the State of Maharashtra to Delhi and obtained

a certificate in this regard from the Registrar of Companies, NCT of Delhi

& Haryana at New Delhi 26th August, 2011.

4. The present authorized share capital of the applicant/transferor

company is Rs.20,00,00,000/- divided into 2,00,00,000 equity shares of

Rs.10/- each. The issued, subscribed and paid-up share capital of the

company is Rs.20,00,00,000/- divided into 2,00,00,000 equity shares of

Rs.10/- each.

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

transferor and transferee companies have been filed on record. The

audited balance sheet, as on 31st March, 2015, along with the report of

the auditors, of the applicant/transferor company has also been filed.

6. 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 application and the accompanying affidavit. It is submitted

by the applicant that the transferor company is a wholly owned subsidiary

of the transferee company. It is claimed that the proposed amalgamation

will contribute in furthering and fulfilling the objectives and business

strategies of both the companies thereby accelerating growth, expansion

and development of their business. It is further claimed that the proposed

amalgamation will lead to optimum and efficient utilization of capital,

resources, assets and facilities; enhancement of competitive strengths

including financial resources; and will result in reduction of overheads,

administrative, managerial and other expenditure and bring about

operational rationalization, efficiency and optimum utilization of various

resources.

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

provides that the entire share capital of the transferor company is held by

the transferee company. Therefore, the transferee company shall not be

required to issue any shares or pay any consideration to the transferor

company or to their shareholders.

8. It has been submitted by the applicant that no proceedings under

Sections 235 to 251 of the Companies Act, 1956 and corresponding

provisions of the Companies Act, 2013 are pending against the applicant/

transferor company.

9. The Board of Directors of the applicant/transferor company and the

transferee company in their separate meetings held on 13th June, 2015

have unanimously approved the proposed Scheme of Arrangement.

Copies of the Resolutions passed at the meetings of the Board of

Directors of the applicant/transferor company and the transferee

company have been placed on record.

10. The applicant/transferor company has 07 equity shareholders and

02 secured creditors. All the equity shareholders and both the secured

creditors have given their consents/no objections in writing to the

proposed Scheme of Arrangement. Their consents/no objections have

been placed on record. They have been examined and found in order. In

view thereof, the requirement of convening the meetings of the equity

shareholders and secured creditors of the applicant/transferor company

to consider and, if thought fit, approve, with or without modification, the

proposed Scheme of Arrangement is dispensed with.

11. The applicant/transferor company has 126 unsecured creditors and

a direction is sought to convene and hold their meeting to seek their

approval to the proposed Scheme of Arrangement. Considering the facts

and circumstances aforesaid, the meeting of the unsecured creditors of

the applicant/transferor company shall be held on 13th February, 2016 at

01:00 p.m. at J.P. Hotels and Resorts, 6-B, I.P. Extension, Patparganj,

Delhi. Mr. Shobhit Kumar Mahant, Advocate, (Mobile No. 9810357786) is

appointed as the Chairperson and Mr. Mudit Gupta, Advocate, (Mobile

No. 9910687976) is appointed as the Alternate Chairperson to conduct

the said meeting. The Quorum of the meeting of the unsecured creditors

of the applicant/ transferor company shall be 25 in number and more than

25% in value of the total unsecured debt.

12. In case the quorum as noted above for the above meeting is not

present at the meeting, then the meeting shall be adjourned by half an

hour, and thereafter the persons present and voting shall be deemed to

constitute the quorum. For the purpose of computing the quorum the

valid proxies shall also be considered, if the proxy in the prescribed form

duly signed by the person entitled to attend and vote at the meeting is

filed with the registered office of the applicant/transferor company at least

48 hours before the meeting. The Chairperson and Alternate Chairperson

shall ensure that the proxy register is properly maintained.

13. The Chairperson and Alternate Chairperson shall ensure that

notices for convening the aforesaid meeting of the unsecured creditors of

the applicant/transferor company, along with copies of the Scheme of

Arrangement and the statement under Section 393 of the Companies

Act, 1956, shall be sent to the unsecured creditors of the applicant/

transferor company by ordinary post at their registered or last known

addresses at least 21 days before the date appointed for the meeting, in

their presence or in the presence of their authorized representatives.

Notice of the meeting shall also be published in the Delhi editions of the

newspapers "Business Standard" (English) and (Hindi) in terms of the

Companies (Court) Rules, 1959 at least 21 days before the date

appointed for the meeting.

14. The Chairperson and Alternate Chairperson will be at liberty to

issue suitable directions to the management of the applicant company so

that the aforesaid meeting of the unsecured creditors of the applicant/

transferor company is conducted in a just, free and fair manner.

15. The fee of the Chairperson and the Alternate Chairperson for the

aforesaid meeting shall be Rs.50,000/- each in addition to meeting their

incidental expenses. The Chairperson will file his report within two weeks

from the date of holding of the aforesaid meeting.

16. The applicant also seeks dispensation of requirement of the

transferee company to approach this Court for sanction of Scheme of

Amalgamation under Sections 391-394 of the Companies Act, 1956 on

the ground that the Scheme does not entail or involve any arrangement

between the transferee company and its shareholders since the

transferor company is wholly owned subsidiary of the transferee

company; no new shares will be issued by the transferee company in lieu

of the shares of the transferor company; and there will be no change in

the control and management of the transferee company, therefore, the

rights of the shareholders and creditors of the transferee company will

not be affected in any manner whatsoever by the Scheme. Learned

counsel also placed reliance on the judgments of this Court, in many

cases such as Sharat Hardware Industries Pvt. Ltd. (1978), 48 Com.

Cas 23 (Delhi); eMeter India Pvt. Ltd. (CA(M) 179/2012); Century

Seeds Private Ltd. (CA(M) 36/2015); Jaisingh Wires Private Limited

(CA(M) 138/2015); Sudeep Import Export Private Limited (CA(M)

149/2015); and Bharti Infotel Private Limited (CA(M) 152/2015),

wherein it has been held that there is no requirement to file a separate or

joint application on behalf of the transferee company for sanction of the

Scheme.

17. I have carefully considered the aforesaid case laws cited at the

Bar, wherein the transferee company, being the holding company, has

been granted exemption from taking out separate proceedings under

Section 391(2) of the Companies Act, 1956. In view of this settled legal

position and considering the Scheme, the requirement of the transferee

company having to approach this Court under Section 391(2) of the

Companies Act, 1956 for sanction of the Scheme of Amalgamation is

dispensed with.

18. The application stands allowed in the aforesaid terms.

Dasti

SUDERSHAN KUMAR MISRA, J.

December 23, 2015