Mars Industries Private Limited vs ...
2015 Latest Caselaw 3594 Del

                    IN THE HIGH COURT OF DELHI
                  COMPANY PETITION NO. 786/2014

                                            Reserved on 26th March, 2015
                                   Date of pronouncement: 5th May, 2015
In the matter of
The Companies Act, 1956 & the Companies Act, 2013 (to the extent
applicable):

And

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

Scheme of Amalgamation of:

Mars Industries Private Limited
                                           Petitioner/Transferor Company
      WITH

Dorset India Private Limited
                                           Petitioner/Transferee Company

                                  Through Mr. Mahesh Aggarwal and
                                  Mr.Rajeev Kumar, Advocates for the
                                  petitioners
                                  Ms.     Aparna     Mudiam, Assistant
                                  Registrar of Companies for the
                                  Regional Director
                                  Mr. Rajiv Bahl, Advocate for the
                                  Official Liquidator

SUDERSHAN KUMAR MISRA, J.

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

Companies Act, 1956 by the petitioner companies seeking sanction of

the Scheme of Amalgamation of Mars Industries Private Limited

(hereinafter referred to as the transferor company) with Dorset India

Private 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 incorporated under the Companies

Act, 1956 on 8th May, 1995 with the Registrar of Companies, NCT of

Delhi & Haryana at New Delhi

4. The transferee company was incorporated under the Companies

Act, 1956 on 18th April, 2011 with the Registrar of Companies, NCT of

Delhi & Haryana at New Delhi.

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

Rs.3,00,00,000/- divided into 30,00,000 equity shares of Rs.10/- each.

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

Rs.2,58,42,000/- divided into 25,84,200 equity shares of Rs.10/- each.

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

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

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

transferor and transferee companies have been filed on record with the

joint application, being CA(M) 159/2014, 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.

8. 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 claimed that

by the proposed amalgamation the synergies that exist between the two

entities in terms of similar products, processes and resources can be put

to the best advantage of all stakeholders. It is further claimed that the

proposed amalgamation will provide economies of scale, sourcing

benefits, vendor rationalization, more focused operational efforts,

rationalization, standardization, and simplification of business processes

and productivity in improvements.

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:

"08 equity shares of Rs.10/- each at a premium of Rs.9,370/- per share, as fully paid up of the transferee company for every 100 equity shares of Rs.10/- each fully paid up held by the shareholders in the transferor company."

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

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

transferor and transferee companies.

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

in their separate meetings held on 6th October, 2014 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.

12. The petitioner companies had earlier filed CA (M) No. 159/2014

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 Amalgamation. Vide order dated 27th November, 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 transferor and transferee companies, there

being no secured creditors of the petitioner companies, to consider and, if

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

of Amalgamation.

13. The petitioner companies have thereafter filed the present petition

seeking sanction of the Scheme of Amalgamation. Vide order dated 16th

December, 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

(Hindi) editions. Affidavit of service has been filed by the petitioner

showing compliance regarding service on the Official Liquidator and the

Regional Director, Northern Region and also regarding publication of

citations in the aforesaid newspapers on 16th January, 2015. Copies of

the newspaper clippings containing the publications have been filed

along with the said affidavit.

14. 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 10th March, 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 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 13 of his

report, the Official Liquidator has submitted that the shares in

consideration of amalgamation are issued at a premium of Rs.9,370/-.

However, as per the valuation report prepared by SMC Capitals Limited,

the valuer has not recommended any premium on issue of shares to the

shareholders of the transferor company in lieu of shares held in the

transferor company. Further, in para 14 of his report, the Official

Liquidator has submitted that as per the information provided by the

transferor company in its reply dated 04.02.2015, there are disputed tax

liabilities of Sales Tax for the year 2009-10, 2010-11 and 2006-07 and of

Excise for the year 2011-12, wherein appeal is pending. Further,

payment of TDS is also in default till 31st December, 2014. The Official

Liquidator, therefore, prays that the petitioner companies may be asked

to clarify the same.

15. In reply to the first observation made by the Official Liquidator, the

petitioner companies in their reply dated 11th March, 2015 have

submitted that the valuation report prepared by SMC Capitals Limited has

recommended the share swap ratio of 8:100 based on the value per

share of the transferor company and the transferee company i.e.

Rs.748.20 per share and Rs.9,380/- per share for the transferor company

and the transferee company respectively, thus, reflecting the fair price

per share of the transferee company i.e. Rs.9,380/- per share (including a

premium of Rs.9,370/- per share over the face value of Rs.10/- per

share).

16. In reply to the second observation made by the Official Liquidator

in para 14 of his report, the petitioners, while referring to Para 9 of the

Scheme, have undertaken that post the Scheme becoming effective, all

the pending proceedings of the transferor company shall not abate or be

discontinued and instead the same shall continue in the name of the

transferee company. The aforesaid undertaking is accepted and the

petitioner shall remain bound by the same. In view of the aforesaid, the

observations made by the Official Liquidator stand satisfied.

17. 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 10th March, 2015. Relying on Clause 10

of Part-III 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 7 of Part-III of the Scheme, it has been stated that the assets and

liabilities of the transferor company shall be accounted for and dealt with

in the books of accounts of the transferee company in accordance with

the 'Purchase Method' of Accounting Standard-14 governed by the

Companies (Accounting Standards) Rules, 2006. He further submitted

that in Clause 14 of Part-III of the Scheme, it has been stated that upon

this scheme becoming effective, the transferor company shall stand

dissolved without the process of winding up.

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

from any other party. The petitioner companies, in the affidavits dated

11th March, 2015 of Mr. Rajesh Bansal and Mr. Saurabh Bansal,

authorized signatory of the transferor and transferee companies

respectively, have submitted that neither the petitioner companies nor

their counsel have received any objection pursuant to the citations

published in the newspapers on 16th January, 2015.

19. Considering the approval accorded by the equity shareholders and

creditors of the petitioner companies to the proposed Scheme of

Amalgamation and the affidavits filed by the Regional Director, Northern

Region, and the Official Liquidator not raising any objection to the

proposed Scheme of Amalgamation, 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

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 Amalgamation, i.e. 1st April, 2014, the transferor

company shall stand dissolved without undergoing the process of winding

up.

20. Learned counsel for the Official Liquidator prays that costs may

also be imposed keeping in view the fact that the matter has involved

examination of records from the office of the Regional Director and the

office of the Registrar of Companies and for filing the reports. He submits

that costs of at least Rs.1,00,000/- per company may be imposed.

Learned counsel for the petitioners states that he has no objection to the

request made by learned counsel for the Official Liquidator. Looking to

the circumstances, the petitioners shall deposit a sum of Rs.1.0 lakh

each by way of costs in the Common Pool Fund of the Official Liquidator,

within one week from today.

21. The petition is allowed in the above terms.

Dasti.

SUDERSHAN KUMAR MISRA, J.

May 05, 2015