Century Seeds Private Limited vs ...
2015 Latest Caselaw 3586 Del

                  IN THE HIGH COURT OF DELHI
              COMPANY APPLICATION (MAIN) NO. 36/2015
                                            Reserved on 10th April, 2015
                                  Date of pronouncement: 5th May, 2015
In the matter of
The Companies Act, 1956 & the Companies Act, 2013 (to the extent
applicable):
And
Application under Section 391 to 394 of the
Companies Act, 1956 read with Rules 6 & 9 of
the Companies (Court) Rules, 1959
Scheme of Amalgamation of:
Century Seeds Private Limited
                                           Applicant/Transferor Company
       WITH

HM.Clause India Private Limited
                                      Non-Applicant/Transferee Company

                                Through Mr Niraj Kumar and Mr. A.S.
                                Gyani, Advocates for the applicant
SUDERSHAN KUMAR MISRA, J.

1. This application has been filed under Section 391 to 394 of the

Companies Act, 1956 read with Rules 6 and 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, secured and unsecured creditors to consider and

approve, with or without modification, the proposed Scheme of

Amalgamation of Century Seeds Private Limited (hereinafter referred to

as the applicant/transferor company) with HM.Clause India Private

Limited (hereinafter referred to as the transferee company) and to

dispense with the requirement of the transferee company to approach the

High Court of Andhra Pradesh, its jurisdictional High Court, for seeking

sanction of Scheme of Amalgamation.

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

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

registered office of the transferee company is situated at Telangana,

outside the jurisdiction of this Court.

3. The applicant/transferor company was incorporated under the

Companies Act, 1956 on 16th April, 1982 with the Registrar of

Companies, NCT of Delhi & Haryana at New Delhi.

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

company is Rs.50,00,000/- divided into 50,000 equity shares of Rs.100/-

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

is Rs.21,10,000/- divided into 21,100 equity shares of Rs.100/- each.

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

applicant/transferor company and the transferee company have been

filed on record. The audited balance sheets, as on 31st March, 2014 and

30th June, 2014, of applicant/transferor company and the transferee

company respectively, along with the report of the auditors, have 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 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 result in reduction in overheads, administrative, managerial and other

expenditure, and bring about operational rationalization, and

organizational efficiency and synergy. It is further claimed that the

proposed amalgamation will result in significant reduction in the

multiplicity of legal and regulatory compliances required at present to be

carried out by the transferee company and the transferor company and

eliminate multiple book record-keeping.

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

provides that the transferor company is a wholly owned subsidiary of the

transferee company, and the entire equity share capital of the transferor

company is held by the transferee company. Therefore, neither any

consideration shall be paid or shares shall be issued/allotted by the

transferee company to the shareholders of the transferor company and

the shares so held by the transferee company shall stand cancelled and

extinguished pursuant to implementation of the Scheme.

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

Sections 235 to 251 of the Companies Act, 1956 and under any

applicable provisions of the Companies Act, 2013 are pending against

the applicant/transferor company.

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

in their separate meetings held on 20th 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

transferor and transferee companies have been placed on record.

10. The applicant/transferor company has 02 equity shareholders and

44 unsecured creditors. Both the equity shareholders and all the

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

the proposed Scheme of Amalgamation. 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 unsecured creditors of the applicant/transferor

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

modification, the proposed Scheme of Amalgamation is dispensed with.

There is no secured creditor of the applicant/transferor company, as on

30th January, 2015.

11. The applicant also seeks dispensation of requirement of the

transferee company to approach the High Court of Andhra Pradesh 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 applicant/transferor company is a 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 of the

transferee company will not be affected in any manner whatsoever by the

Scheme. It is further submitted that both the companies are profit making

companies and have sufficient reserves and surplus and high positive net

worth and the aggregate of assets of both the companies are more than

sufficient to meet their respective and combined aggregate liabilities

towards their respective creditors. Therefore, the rights of the creditors of

the transferee company will not be adversely affected. The applicant has

also placed on record the certificate from GVR & Co., Chartered

Accountants, showing the positive net worth of the transferor and

transferee companies.

12. In support of his submissions, learned counsel placed reliance on

the judgments of various High Courts in the matters of Auto Tools India

Pvt. Ltd. [CA(M) 41/2012], Sharat Hardware Industries Pvt. Ltd.

(1978), 48 Com.Cas 23 (Delhi), Mahaamba Investments Ltd. V. IDI

Limited (2001) 105 Com Cas. 16 (Bom.), and Andhra Bank Housing

Finance Ltd. (2004) 118 Com.Cas. 295(AP), wherein the courts, under

similar circumstances, had dispensed with the requirement of the

transferee company to approach the court of competent jurisdiction for

sanction of the Scheme.

13. 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 of Amalgamation, the requirement

of the transferee company having to approach the High Court of Andhra

Pradesh under Section 391(2) of the Companies Act, 1956 for sanction

of the Scheme of Amalgamation is dispensed with.

14. The application stands allowed in the aforesaid terms.

Dasti

SUDERSHAN KUMAR MISRA, J.

May 05, 2015