M/S. Systemes Moteurs India ... vs ...
2015 Latest Caselaw 2245 Del

                    IN THE HIGH COURT OF DELHI
                  COMPANY PETITION NO. 633/2014

                                        Reserved on 10th March, 2015
                             Date of pronouncement: 17th March, 2015
In the matter of
The Companies Act, 1956 & the Companies Act, 2013 (to the extent
applicable):

And

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

Scheme of Amalgamation of:

M/s. Systemes Moteurs India Private Limited
                                         Petitioner/Transferor Company
      WITH

M/s. Sogefi MNR Filtration India Private Limited
                                      Non-Petitioner/Transferee Company

                               Through Mr. Samar Bansal and
                               Mr.Vinayak Mehrotra, Advocates for
                               the petitioner
                               Mr. Kirtiman Singh and Ms. Prerna
                               Shah, Advocates for the Regional
                               Director
                               Mr. Rajiv Bahl, Advocate for the
                               Official Liquidator

SUDERSHAN KUMAR MISRA, J.

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

Companies Act, 1956 by the petitioner/transferor company seeking

sanction of the Scheme of Amalgamation of M/s. Systemes Moteurs India

Private Limited (hereinafter referred to as the petitioner/transferor

company) with M/s. Sogefi MNR Filtration India Private Limited

(hereinafter referred to as the transferee company).

2. The registered office of the petitioner/transferor company is

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

registered office of the transferee company is situated at Bangalore,

Karnataka, outside the jurisdiction of this court. Learned counsel for the

petitioner submitted that the Scheme of Amalgamation in respect of the

transferee company had already been sanctioned by the Karnataka High

Court vides order dated 2nd February, 2015 passed in CP No. 210/2014

filed by the transferee company. A copy of the same is placed on record.

3. The petitioner/transferor company was originally incorporated

under the Companies Act, 1956 on 18th March, 2009 with the Registrar of

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

style of Mark IV Air Intake India Private Limited. The company changed

its name to Systemes Moteurs India Private Limited and obtained a fresh

certificate of incorporation on 25th August, 2012.

4. The authorized share capital of the petitioner/transferor company,

as on 22nd May, 2014, was Rs.19,25,00,000/- divided into 1,92,50,000

equity shares of Rs.10/- each. The issued, subscribed and paid-up share

capital of the company was Rs.12,76,36,860/- divided into 1,27,63,686

equity shares of Rs.10/- each.

5. A copy of the Memorandum and Articles of Association of the

petitioner/transferor company has been filed on record with the

application, being CA(M) 135/2014, earlier filed by the petitioner. The

audited balance sheet, as on 31st March, 2013, of the petitioner/transferor

company, along with the report of the auditors, had also been filed.

6. A copy of the Scheme of Amalgamation 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 petitioner that the amalgamated entity will have the ability to leverage

its large asset base, diverse products and services and vast pool of

intellectual capital, to enhance shareholders and stakeholders value. It is

claimed that amalgamation will enable optimization of operational and

other costs associated with the functioning of the companies which are

engaged in similar and related businesses, focused operational efforts,

rationalization, standardization, and simplification of business processes,

productivity improvements, improved procurement and elimination of

duplication and rationalization of all administrative costs.

7. 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

petitioner/transferor company in the following ratio:

"1 (one) equity of Rs.10/- each of the transferee company for every 24.0205 fully paid up equity shares of Rs.10/- each held by the shareholders in the transferor company."

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

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

petitioner/transferor company.

9. The Board of Directors of the petitioner/transferor company in their

meetings held on 28th May, 2014 and 21st January, 2015 have

unanimously approved the proposed Scheme of Amalgamation. Copies

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

petitioner/transferor company have been placed on record.

10. The petitioner/transferor company had earlier filed CA (M) No.

135/2014 seeking directions of this court to dispense with the

requirement of convening the meetings of its shareholders, secured and

unsecured creditors, which are statutorily required for sanction of the

Scheme of Amalgamation. Vide order dated 1st October, 2014, this court

allowed the application and dispensed with the requirement of convening

and holding the meeting of the equity shareholders, secured and

unsecured creditors of the petitioner/transferor company to consider and,

if thought fit, approve, with or without modification, the proposed Scheme

of Amalgamation. The Court, however, directed the petitioner to issue

specific individual notice to ING Vysya Bank Limited, Deutsche Bank AG

Bangalore and the corporate unsecured creditors of the petitioner/

transferor company, namely, Lanxess India Private Limited, Ring Plus

Aqua Limited, Sebros Industries Private Limited and MEUNIDEC at the

time of moving second motion petition calling for their objection, if any, to

the Scheme.

11. The petitioner/transferor company has thereafter filed the present

petition seeking sanction of the Scheme of Amalgamation. Vide order

dated 15th October, 2014, 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 'Statesman' (English) and

'Veer Arjun' (Hindi) editions. Affidavit of service has been filed by the

petitioner showing compliance regarding service on the Regional

Director, Northern Region and the Official Liquidator, and also regarding

publication of citations in the aforesaid newspapers on 8th November,

2014 and 7th November, 2014 respectively. Copies of the newspaper

clippings containing the publications have been filed along with the

affidavit of service. The petitioner company has also filed an affidavit

dated 5th November, 2014 of Sh. Ajay Kumar Maan, authorized signatory

of the petitioner company submitting that pursuant to directions passed

by this court vide order dated 1st October, 2014, notice was issued to the

unsecured creditors, whose board resolutions have not been annexed

with their consents filed at the time of moving first motion application, by

registered post.

12. Pursuant to the notices issued, the Official Liquidator sought

information from the petitioner/transferor company. Based on the

information received, the Official Liquidator has filed his report dated 23rd

January, 2015 wherein he has stated that he has not received any

complaint against the proposed Scheme of Amalgamation from any

person/party interested in the Scheme in any manner and that the affairs

of the petitioner/transferor company do not appear to have been

conducted in a manner prejudicial to the interest of its members, creditors

or public interest, as per second proviso of Section 394(1) of the

Companies Act, 1956. However, in Para 9 of the report, it is submitted by

the Official Liquidator that in spite of increase in the authorized share

capital of the transferee company, pursuant to the Scheme, it will remain

insufficient to issue shares to the shareholders of the transferor company.

13. 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 28th January, 2015. Relying on Clause

8.1 of Part-C of the Scheme, he has stated that, upon sanction of the

Scheme of Amalgamation, all the employees of the transferor company

shall become the employees of the transferee company without any

break or interruption in their services. He has further submitted that in

Clause 12.1(b) of Part-C of the Scheme, it has been stated that the

transferee company shall account for the arrangement in the books of

accounts according to Accounting Standard-14 issued by the Institute of

Chartered Accountants of India. He further submitted that in terms of

Clause 10.5 of Part-C of the Scheme, it has been stated that as on

effective date, the transferor company shall stand dissolved without the

process of winding up.

14. The Regional Director, in para 11 of his report, has further

submitted that the authorized share capital of the transferee company is

not sufficient for allotment of shares to the shareholders of the transferor

company, hence the transferee company may be advised to comply with

the requirements of the Companies Act, 2013. Further, in para 12 of his

report, he has submitted that the balance sheet of the petitioner/

transferor company as at 31.03.2014 reveals that as on 31.03.2014, it

has outstanding short term unsecured borrowings of Rs.19.05 crores

from banks on account of cash credit. He, therefore, prays that the

petitioner company may be asked as to how it has obtained such huge

borrowings from the banks without creating any charge thereon in terms

of the provisions of Section 125 of the Companies Act, 1956.

15. In response to the objections raised by the Official Liquidator and

the Regional Director, Northern Region with regard to insufficiency of

authorized share capital of the transferee company, the

petitioner/transferor company has filed the affidavit dated 6th February,

2015 of Mr. Ajay Kumar Maan, Chief Finance Officer and Authorized

Signatory of the petitioner/transferor company stating that, upon sanction

of the Scheme, the transferee company shall issue and allot 01 equity

share of Rs.10/- each to the shareholders of the petitioner/transferor

company holding 24.0205 equity shares of Rs.10/- each and the fraction,

if any, shall be rounded off to the next number. Therefore, in terms of the

said share exchange ratio, the transferee company shall issue and allot

equity shares amounting to Rs.53,13,660/- to the shareholders of the

transferor company. He, therefore, submits that the increase of

Rs.55,00,000/- in the authorized share capital of the transferee company,

as approved in Clause 10.1 of the Scheme of Amalgamation, is sufficient

to allot shares to the shareholders of the petitioner/transferor company. In

view of the above, the objections raised by the Official Liquidator and the

Regional Director, Northern Region do not survive.

16. So far as the objection of the Regional Director with regard to short

term unsecured borrowings of Rs.19.05 crores of the petitioner/transferor

company is concerned, the petitioner company in the affidavit dated 6th

February, 2015 of Mr. Ajay Kumar Maan, Chief Finance Officer and

Authorized Signatory of the petitioner/transferor company has submitted

that the unsecured loans with the Deutsche Bank and ING Vysya Bank

have been arranged by the group company i.e. Sogefi SpA with their

global relation and engagement with the bank. Security has been

provided by the Ultimate Holding Company and its subsidiary companies

through BNP Paribas Bank and ING Bank NV respectively. It is further

submitted that this loan is therefore secured with respect to the company,

Sogefi SpA but is unsecured with respect to the transferor company.

Copies of the loan agreements entered into by the transferor company

with the banks are placed on record. Further, the petitioner company has

undertaken to comply with all requirements as may be needed under the

Foreign Exchange Management Act, 1999 and any other rules and

regulations issued by the Reserve Bank of India.

17. The matter was listed for consideration on 19th February, 2015

when the Regional Director, Northern Region sought and was granted

time to file further affidavit in support of the objections raised by him.

Pursuant to said order, the Regional Director has filed his additional

affidavit dated 4th March, 2015 stating that all the objections/observations

that had been raised by him earlier now stand adequately addressed and

that he has no further objection in the matter. In view of the above,

nothing survives so far as the objection of the Regional Director, Northern

Region is concerned.

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

from any other party. The petitioner company, in the affidavit dated 24th

January, 2015 of Sh. Samar Bansal, Advocate of the petitioner company,

has submitted that no objection has been received from any creditor or

other party pursuant to the citations published in the newspapers on 7th &

8th November, 2014. No objections are also stated to have been received

from the unsecured creditors to whom individual notices have sent in

terms of order dated 1st October, 2014.

19. Considering the approval accorded by the equity shareholders,

secured and unsecured creditors of the petitioner/transferor company, to

the proposed Scheme of Amalgamation and there being no surviving

objection to the same by the Regional Director, Northern Region, and the

Official Liquidator; and also in view of the order dated 2nd February, 2015

passed by the Karnataka High Court in CP 210/2014 granting sanction to

the proposed Scheme of Amalgamation in respect of the transferee

company, 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 company 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 Amalgamation,

that is 1st April, 2015, the transferor company shall stand dissolved

without undergoing the process of winding up.

20. Learned counsel for the petitioner/transferor company submits that

the petitioner/transferor company would voluntarily deposit a sum of

Rs.1,00,000/- in the Common Pool Fund of the Official Liquidator within

two weeks from today. The statement is accepted.

21. The petition is allowed in the above terms.

Dasti.

SUDERSHAN KUMAR MISRA, J.

March 17, 2015