Avantha Business Solutions ... vs ..
2015 Latest Caselaw 9591 Del

                  IN THE HIGH COURT OF DELHI
             COMPANY APPLICATION (MAIN) NO. 188/2015
                                    Reserved on 15th 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 of the
Companies Act, 1956 read with Rule 9 of the
Companies (Court) Rules, 1959

Scheme of Arrangement between:

Avantha Business Solutions Limited
                                         Applicant/Transferor Company
       AND

Avantha Holdings Limited
                                         Applicant/Transferee Company

                              Through Mr. Anirudh Das and
                              Mr.Kamal, Advocate for the applicants

SUDERSHAN KUMAR MISRA, J.

1. This joint application has been filed under Section 391 of the

Companies Act, 1956 read with Rule 9 of the Companies (Court) Rules,

1959 by the applicant companies seeking directions of this court to

dispense with the requirement of convening the meetings of the equity

shareholders and secured creditors of the transferor company and equity

shareholders and preference shareholders of the transferee company

and for convening of separate meetings of the unsecured creditors of the

transferor company and secured and unsecured creditors of the

transferee company to consider and approve, with or without

modification, the proposed Scheme of Arrangement between Avantha

Business Solutions Limited (hereinafter referred to as the transferor

company) and Avantha Holdings Limited (hereinafter referred to as the

transferee company).

2. The registered offices of the transferor and transferee companies

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

3. The transferor company was originally incorporated under the

Companies Act, 1956 on 9th May, 2005 with the Registrar of Companies,

NCT of Delhi & Haryana at New Delhi under the name and style of

Salient Business Solutions Limited. The company changed its name to

Avantha Business Solutions Limited and obtained the fresh certificate of

incorporation on 15th October, 2014.

4. The transferee company was originally incorporated under the

Companies Act, 1956 on 29th May, 1998 with the Registrar of

Companies, Maharashtra at Mumbai under the name and style of Bilt

Investments Limited. The company changed its name to Bilt Trading &

Infrastructure Limited and obtained the fresh certificate of incorporation

on 19th July, 2001. The company again changed its name to NewQuest

Corporation Limited and obtained the fresh certificate of incorporation on

18th July, 2002. The company again changed its name to NewQuest

Corporation Private Limited and obtained the fresh certificate of

incorporation on 2nd September, 2002. The company again changed its

name to NewQuest Corporation Limited and obtained the fresh certificate

of incorporation on 4th March, 2005. The company finally changed its

name to Avantha Holdings Limtied and obtained the fresh certificate of

incorporation on 28th July, 2009. Thereafter, 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 on 2nd February, 2010.

5. The present authorized share capital of the transferor company is

Rs.1,40,00,00,000/- divided into 14,00,00,000 equity shares of Rs.10/-

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

is Rs.1,38,60,00,000/- divided into 13,86,00,000 equity shares of Rs.10/-

each.

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

Rs.3,75,87,00,000/- divided into 55,85,000 equity shares of Rs.100/-

each aggregating to Rs.55,85,00,000/-; 2,98,02,000 preference shares of

Rs.100/- each aggregating to Rs.2,98,02,00,000/-; and 22,00,000

unclassified shares of Rs.100/- each aggregating to Rs.22,00,00,000/-.

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

Rs.45,03,90,900/- divided into 4,53,909 equity shares of Rs.100/- each

aggregating to Rs.4,53,90,900/-; 50,000 8% cumulative fully redeemable

optionally convertible preference shares of Rs.100/- each aggregating to

Rs.50,00,000/-; and 40,00,000 8.5% redeemable cumulative non-

convertible preference shares of Rs.100/- each aggregating to

Rs.40,00,00,000/-.

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

transferor and transferee companies have been filed on record. The

audited balance sheets, as on 31st March, 2015, of the transferor and

transferee companies, along with the report of the auditors, have also

been filed.

8. 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 claimed

by the applicants that the proposed scheme will result in consolidation of

the businesses presently being carried on by the applicant companies,

which shall be beneficial to the interest of the shareholders, creditors and

employees of both the companies and to the interests of public at large,

as such amalgamation would create greater synergies between the

businesses of both the companies would enable them to have a larger

asset base, wider market coverage and access to better financial

resources. It is further claimed that the proposed scheme will also result

in economization and reduction of administrative and managerial costs.

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

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

company shall issue and allot equity shares to the shareholders of the

transferor company in the following ratio:

"11 equity shares of Rs.1,00,000/- each of the transferee company for every 5,00,00,000/- equity shares of Rs.10/- each held by such shareholder in the transferor company."

It has been further provided that no shares shall be issued to the

transferee company in lieu of shares held by it in the transferor company

and all equity shares held by the transferee company in the transferor

company shall stand cancelled.

10. It has been submitted by the applicants that no proceedings under

Sections 235 to 250A of the Companies Act, 1956 or the applicable

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

companies.

11. The Board of Directors of the transferor and transferee companies

in their separate meetings held on 21st November, 2015 have

unanimously approved the proposed Scheme of Arrangement. Copies of

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

transferor and transferee companies have been placed on record.

12. The transferor company has 09 equity shareholders. 08 out of 09

equity shareholders, being 88.88% in number and 98.37% in value, 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 meeting of the equity shareholders of the

transferor company to consider and, if thought fit, approve, with or

without modification, the proposed Scheme of Arrangement is dispensed

with. There is no secured creditor of the transferor company, as on 31st

October, 2015.

13. The transferee company has 08 equity shareholders and 02

preference shareholders. All the equity shareholders and both the

preference shareholders 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 preference shareholders of the

transferee company to consider and, if thought fit, approve, with or

without modification, the proposed Scheme of Arrangement is dispensed

with.

14. The transferor company has 23 unsecured creditors and a

direction is sought to convene and hold their meetings to seek their

approval to the proposed Scheme of Arrangement. Considering the facts

and circumstances aforesaid, the meeting of the unsecured creditors of

the transferor company shall be held on 21st February, 2016 at 10:30

a.m. at PHD Chambers of Commerce and Industry, PHD House, 4/2, Siri

Institutional Area, August Kranti Marg, New Delhi - 110016. Mr. Rishi

Manchanda, Advocate, (Mobile No. 9911681178) is appointed as the

Chairperson and Mr. Dheeraj Trikha, Advocate, (Mobile No.

9873377707) is appointed as the Alternate Chairperson to conduct the

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

the transferor company shall be 5 in number and more than 25% in value

of the total unsecured debt.

15. The transferee company has 9 secured creditors and a direction is

sought to convene and hold their meetings to seek their approval to the

proposed Scheme of Arrangement. Considering the facts and

circumstances aforesaid, the meeting of the secured creditors of the

transferee company shall be held on 21st February, 2016 at 12:00 noon

at PHD Chambers of Commerce and Industry, PHD House, 4/2, Siri

Institutional Area, August Kranti Marg, New Delhi - 110016. Mr. Saurabh

Kansal, Advocate, (Mobile No. 9958378565) is appointed as the

Chairperson and Mr. Pramod Tyagi, Advocate, (Mobile No. 9999710366)

is appointed as the Alternate Chairperson to conduct the said meeting.

The Quorum of the meeting of the secured creditors of the transferee

company shall be 3 in number and more than 25% in value of the total

secured debt.

16. The transferee company has 139 unsecured creditors and a

direction is sought to convene and hold their meetings to seek their

approval to the proposed Scheme of Arrangement. Considering the facts

and circumstances aforesaid, the meeting of the unsecured creditors of

the transferee company shall be held on 21st February, 2016 at 02:00

p.m. at PHD Chambers of Commerce and Industry, PHD House, 4/2, Siri

Institutional Area, August Kranti Marg, New Delhi - 110016. Mr. Nishant

Anand, Advocate, (Mobile No. 9717061109) is appointed as the

Chairperson and Mr. Jitender Bhardwaj, Advocate, (Mobile No.

9811672065) is appointed as the Alternate Chairperson to conduct the

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

the transferee company shall be 30 in number and more than 25% in

value of the total unsecured debt.

17. In case the quorum as noted above for the above meetings is not

present at the meetings, then the meetings 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 meetings is

filed with the registered office of the applicant companies at least 48

hours before the meetings. The Chairpersons and Alternate

Chairpersons shall ensure that the proxy registers are properly

maintained.

18. The Chairpersons and Alternate Chairpersons shall ensure that

notices for convening the aforesaid meetings of the unsecured creditors

of the transferor company and secured and unsecured creditors of the

transferee 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 transferor company and

secured and unsecured creditors of the transferee company by ordinary

post at their registered or last known addresses at least 21 days before

the date appointed for the meetings, in their presence or in the presence

of their authorized representatives. Notice of the meetings shall also be

published in the Delhi editions of the newspapers "Statesman" (English)

and "Jansatta" (Hindi) in terms of the Companies (Court) Rules, 1959 at

least 21 days before the date appointed for the meetings.

19. The Chairpersons and Alternate Chairpersons will be at liberty to

issue suitable directions to the management of the applicant companies

so that the aforesaid meetings of the unsecured creditors of the

transferor company and secured and unsecured creditors of the

transferee company are conducted in a just, free and fair manner.

20. The fee of the Chairpersons and the Alternate Chairpersons for the

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

incidental expenses. The Chairpersons will file their reports within two

weeks from the date of holding of the aforesaid meetings.

21. The application stands allowed in the aforesaid terms.

Co.Appl. No. 3772/2015

This application under Section 101(3) of the Companies Act, 1956

is filed by the transferee company seeking dispensation from following

the procedure prescribed under Section 101(2) of the Act.

It is contented that as an integral part of the Scheme of

Arrangement and consequent upon the Scheme becoming effective:

(i) 167 shares of the transferee company held by PNR Investment

Advisors Private Limited shall be cancelled and an amount of

Rs.1,10,26,759.50/- shall be transferred to the Investor Education and

Protection Fund established by the Central Government, in terms of

Clause 4.6 of the Scheme; and

(ii) 742 equity shares of Rs.100/- each prior to the consolidation of

shares at Clause 4.1 of the Scheme shall be cancelled by refunding an

amount of Rs.4,89,93,147/- to the existing equity shareholders, in terms

of Clause 4.6 of the Scheme.

Learned counsel for the applicants submits that the provisions of

Section 101(2) of the Act will be duly complied with since:

(a) The aforesaid proposed reduction in terms of the Scheme has

been duly approved by the shareholders of the transferee company at

the Extra-Ordinary General Meeting held on 23rd November, 2015, which

is placed on record.

(b) The refund of amount totaling Rs.6,00,19,906.50, in terms of

Clause 4.6 of the Scheme, does not involve diminution of liability in

respect of unpaid share capital. The amount of Rs.1,10,26,759.50/- shall

be transferred to the Investor and Education Fund of India and an

amount of Rs.4,89,93,147/- only shall be refunded in view of the

fractional entitlement. Further, the aforesaid payouts also does not

affects the rights of the creditors; and

(c) The secured and unsecured creditors of the applicant companies,

there being no secured creditor of the transferor company, will also

consider the said reduction at the time of their meetings which will be

convened pursuant to the directions of this Court.

Applicants, therefore, have prayed for dispensation of the

requirement of following the procedure under Section 101(2) of the Act

by the applicant companies.

During the course of arguments on 15.12.2015, it was stated by

the learned counsel for the applicants that they shall file affidavits within

a week clarifying the aspect with respect to all the shareholders whose

holding is subject to either diminution or extinction as a result of

proposed reduction in capital. The affidavits are not yet filed.

Further, it was stated by the learned counsel for the applicants on

15.12.2015 that the amount proposed to be refunded to the existing

shareholders will be placed in a separate interest bearing account

subject to further orders. Applicants to also place on record, by way of

affidavit, the steps taken in this behalf.

Re-notify Co. Appl. No. 3772/2015 on 15th January, 2016.

Dasti

SUDERSHAN KUMAR MISRA, J.

December 23, 2015