Psb Realtors Private Limited vs ...
2015 Latest Caselaw 2585 Del

                    IN THE HIGH COURT OF DELHI
                  COMPANY PETITION NO. 364/2014
                                           Reserved on 2nd March, 2015
                               Date of pronouncement:26th March, 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
Section 100 of the Companies Act, 1956

Scheme of Arrangement between:

PSB Realtors Private Limited
                                           Petitioner/Transferor Company
      WITH
Land Rush Estate India Private Limited
                                           Petitioner/Transferee Company
      AND
Goodland India Infracon Private Limited
                                            Petitioner/Resulting Company

                                Through Mr. Ashish Middha, 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 Section 100 of the Companies Act, 1956 by the petitioner companies

seeking sanction of the Scheme of Arrangement between PSB Realtors

Private Limited (hereinafter referred to as the transferor company) with

Land Rush Estate India Private Limited (hereinafter referred to as the

transferee company) and Goodland India Infracon Private Limited

(hereinafter referred to as the resulting company).

2. The registered offices of the transferor company, the transferee

company and the resulting company are situated at New Delhi, within the

jurisdiction of this court.

3. The transferor company was incorporated under the Companies

Act, 1956 on 28th November, 2007 with the Registrar of Companies, NCT

of Delhi & Haryana at New Delhi.

4. The transferee company was incorporated under the Companies

Act, 1956 on 28th February, 2007 with the Registrar of Companies, NCT

of Delhi & Haryana at New Delhi.

5. The resulting company was incorporated under the Companies

Act, 1956 on 24th March, 2014 with the Registrar of Companies, NCT of

Delhi & Haryana at New Delhi.

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

Rs.2,10,00,000/- divided into 21,00,000 equity shares of Rs.10/- each.

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

Rs.2,04,60,000/- divided into 20,46,000 equity shares of Rs.10/- each

fully paid-up.

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

Rs.60,00,000/- divided into 6,00,000 equity shares of Rs.10/- each. The

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

Rs.59,80,680/- divided into 5,98,068 equity shares of Rs.10/- each fully

paid-up.

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

Rs.1,00,000/- divided into 10,000 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 fully paid-

up.

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

transferor, transferee and resulting companies have been filed on record

with the joint application, being CA(M) 88/2014, earlier filed by the

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

transferor and transferee companies, along with the report of the

auditors, had also been filed. It is submitted by the petitioners that since

the resulting company has been recently incorporated, no accounts of the

resulting company have been prepared and audited for any of the

financial year.

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: (a) amalgamation of the transferor

company with the transferee; (b) demerger of Plot measuring 4691 sq.

yards in Khasra No. 1889 in Village Kantha, Distt. Baghpat, Delhi

Saharanpur High at Village Kantha, Khekra Distt. Baghpat, U.P. i.e. the

demerged undertaking of the transferee company into the resulting

company; and (c) reduction of share capital of the transferee company,

post merger and demerger. It is further submitted by the petitioners that

the transferor, transferee and resulting companies are in the business of

real estate and allied activities and are under the same management and

control. It is claimed that the proposed amalgamation will result in

reduction in overheads and other expenses, reduction in administrative

and procedural work, eliminate duplication of work, better and more

productive utilization of various resources and will enable the

undertakings concerned to effect internal economies and optimize

productivity. It is further claimed that the Scheme will contribute in

furthering and fulfilling the objects of the companies concerned and

enabling the optimum growth and development of their combined

business and separate entity.

11. The petitioners have also moved an application being CA

2127/2014 seeking amendment of the Scheme limited to Clause 3.3.1 of

the Scheme, regarding issue and allotment of equity shares to the

shareholders of the transferee/demerged company. After issuance of

notice to this application, Regional Director as well as the Official

Liquidator had filed their respective replies. They did not raise any

objection to the proposed amendment. It was also noticed that along with

the proposed amendment, as claimed, the applicant had filed fresh

consents of the shareholders and unsecured creditors. It is also stated

that there are no secured creditors of the applicant company. Under the

circumstances, the application was allowed and the amended Scheme

was taken on record.

12. 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:

"01 equity share of Rs.10/- each of the transferee company, credited as fully paid up, for every 17.41 equity shares of Rs.10/- each held by the shareholders in the transferor company."

It is further provided that upon demerger of the demerged business

of the transferee company into the resulting company, the resulting

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

transferee/demerged company equivalent to the amount of

Rs.1,14,415.69/- which shall be rounded off to Rs.1,14,420/- being

difference in the value of assets and liabilities of demerged business

which are proposed to be transferred at book value. The shares shall be

allotted on pro-rata basis to the shareholders of the transferee company.

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

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

petitioner companies.

14. The Board of Directors of the transferor company, the transferee

company and the resulting company in their separate meetings held on

28th April, 2014 have unanimously approved the proposed Scheme of

Arrangement. Copies of the Resolutions passed at the meetings of the

Board of Directors of the transferor company, the transferee company

and the resulting company had been placed on record in CA(M) 88/2014.

15. The petitioner companies had earlier filed CA (M) No. 88/2014

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 Arrangement. Vide order dated 19th May, 2014, this court

allowed the application and dispensed with the requirement of convening

and holding the meetings of the equity shareholders and unsecured

creditors of the petitioner companies, there being no secured creditor of

the petitioner companies, to consider and, if thought fit, approve, with or

without modification, the proposed Scheme of Arrangement.

16. The petitioner companies have thereafter filed the present petition

seeking sanction of the Scheme of Arrangement. Vide order dated 29th

May, 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 'Business Standard' (English) and

'Veer Arjun' (Hindi) editions. The petitioners have filed the affidavit

showing publication of citations in the aforesaid newspapers on 26th

June, 2014. Copies of the newspaper clippings containing the

publications have been filed along with the said affidavit.

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

information from the petitioner companies. Based on the information

received, the Official Liquidator has filed a report dated 30th August, 2014

wherein he has stated that he has not received any complaint against the

proposed Scheme of Arrangement from any person/party interested in

the Scheme in any manner and that the affairs of the 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.

18. 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 2nd September, 2014. Relying on Clause

6.2.1 of Part-6 of the Scheme, he has stated that, upon sanction of the

Scheme of Arrangement, all the employees of the demerged company

engaged in demerged undertaking shall become the employees of the

resulting company and all the employees of the transferor company shall

become the employees of the transferee company without any break or

interruption in their services.

19. The Regional Director in Para 5 of his report has, however,

submitted that para 3.2 of Part-3 of the Scheme provides that demerger

shall be in accordance with Section 2(19AA) of the Income Tax Act,

1961, which stipulates several conditions to comply. He, therefore, prays

that petitioner/demerged company may be directed to submit an

undertaking to comply with those conditions. In para 6 of his report, he

submitted that a perusal of the shareholding pattern of the transferor

company shows that its 69.50% shares are held by the Non Resident

Indian. He, therefore, prays that the transferor company may be directed

to give an undertaking for all compliances from Reserve Bank of India as

required under FEMA for above transactions involving foreign

banks/entities. In reply to the first observation, the petitioner companies

in their reply have submitted that the compliance of Section 2(19AA) of

the Income Tax Act, 1961 is necessary to enable the petitioners to avail

the benefit of Income Tax Act. So far as the second observation of the

Regional Director is concerned, the petitioners have submitted that as

per RBI's circular for allotting shares to the NRI shareholders, in case of

amalgamation, RBI's permission is not required. However, the petitioners

have undertaken to comply with the requirements of Section 2(19AA) of

the Income Tax Act, 1961 and also to comply with the provisions of

FEMA in allotting shares to the Non Resident Indian, if required. In view

of the undertakings given by the petitioners, the observations raised by

the Regional Director do not subsist.

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

from any other party. The petitioner companies, in the affidavit dated 11th

September, 2014 of Mr. Gurcharan Singh Lau, Director of the resulting

company, have submitted that neither the company nor their counsel

have received any objection pursuant to the citations published in the

newspapers on 26th June, 2014.

21. Considering the approval accorded by the equity shareholders and

unsecured creditors of the petitioner companies to the proposed Scheme

of Arrangement; the affidavit filed by the Official Liquidator not raising any

objection to the proposed Scheme of Arrangement, and there being no

surviving objection to the same by the Regional Director, Northern

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

Amended Scheme of Arrangement. Consequently, sanction is hereby

granted to the Amended Scheme of 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. 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, (i) the transferor

company shall stand dissolved without undergoing the process of winding

up; and (ii) the demerged undertaking of the transferee company shall

stand merged with the resulting company.

22. The petition is allowed in the above terms.

Dasti.

SUDERSHAN KUMAR MISRA, J.

March 26, 2015