Delhi High Court
Kernel Systems Private Limited vs ... on 5 May, 2015
IN THE HIGH COURT OF DELHI
COMPANY PETITION NO. 798/2014
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(1) to 394 read
with Section 100 of the Companies Act, 1956
Scheme of Amalgamation of:
Kernel Systems Private Limited
Petitioner/Transferor Company
WITH
Arcop Associates Private Limited
Petitioner/Transferee Company
Through Mr. Ashish Middha, Advocate
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(1) to 394 read
with Section 100 of the Companies Act, 1956 by the petitioner companies
seeking sanction of the Scheme of Amalgamation of Kernel Systems
Private Limited (hereinafter referred to as the transferor company) with
Arcop Associates 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 17th February, 1993 with the Registrar of Companies, NCT
of Delhi & Haryana at New Delhi
4. The transferee company was incorporated under the Companies
Act, 1956 on 26th June, 1985 with the Registrar of Companies, NCT of
Delhi & Haryana at New Delhi.
5. The present authorized share capital of the transferor company is
Rs.25,00,000/- divided into 2,50,000 equity shares of Rs.10/- each. The
issued, subscribed and paid-up share capital of the company is
Rs.19,25,000/- divided into 1,92,500 equity shares of Rs.10/- each.
6. The present authorized share capital of the transferee company is
Rs.1,00,00,000/- divided into 1,00,000 equity shares of Rs.100/- each.
The issued, subscribed and paid-up share capital of the company is
Rs.75,00,000/- divided into 75,000 equity shares of Rs.100/- 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) 148/2014, earlier filed by the petitioners.
The audited balance sheets, as on 31st March, 2013, 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 Scheme 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 affect internal
economies and optimize productivity. It is further claimed that the
proposed Scheme will enable the undertakings and business of the said
companies to obtain greater facilities possessed and enjoyed by one
large company compared to a small company for raising capital, securing
and conducting trade and business on favourable terms and other related
benefits.
9. 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. Hence, no shares are to be allotted to the
shareholders of the transferor company, upon coming into effect of this
Scheme.
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 28th February, 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. 148/2014
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, secured
and unsecured creditors of the transferor and transferee 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 22nd
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. The petitioners have filed an affidavit showing
compliance regarding publication of citations in the aforesaid newspapers
on 12th 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 3rd 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.
15. 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 3rd 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 14.4
of Part-III of the Scheme, it has been stated that the amalgamation shall
be 'amalgamation in the nature of merger' as defined in Accounting
Standard-14 as prescribed under the Companies (Accounting Standards)
Rules, 2006 and shall be accounted for under the 'pooling of interests'
method in accordance with the said accounting standard.
16. Although no objection has been raised by the Regional Director,
Northern Region, but in para 12 of his report, he has submitted that the
Scheme has provided the appointed date as 01.04.2013, whereas the
petitioners have filed the balance sheet for the year 2014 and as such in
order to avoid the revision of balance sheet, the petitioner companies
may be asked to shift the appointed date as at 01.04.2014. In response
to the aforesaid, learned counsel for the petitioners submitted that they
are not inclined to change the appointed date and that the appropriate
revised balance sheets with effect from the appointed date of 01.04.2013
shall be appropriately drawn up and filed. So far as the question with
regard to fixing of appointed date of the Scheme is concerned, it has
been held in numerous judgments passed by this Court and other High
Courts that it is in the prerogative of the petitioners to fix any date as the
appointed date of the Scheme and the Courts need not require alteration
of the said date unless it is deemed necessary to do so, inter alia, for the
reasons that either the petitioners have used the appointed date as a
colourable device to evade taxes or it is in the interest of all stakeholders
of the companies concerned to change the appointed date. In the present
case, the only reason given by the Regional Director for change in the
appointed date is that the petitioners have filed their balance sheets as at
31st March, 2014 and thus the appointed date may also be fixed as at
01.04.2014. However, no malafide is alleged in fixing the appointed date
as at 01.04.2013. Learned counsel for the petitioners have submitted that
the balance sheets of the petitioner companies shall be drawn up and
filed with effect from the appointed date i.e. 01.04.2013. In view of the
aforesaid, the observation raised by the Regional Director is suitably
addressed.
17. No objection has been received to the Scheme of Amalgamation
from any other party. The petitioner companies, in the affidavits dated 2nd
March, 2015 of Mr. Raja Raja Menon, Director of the transferee
company, have submitted that neither the petitioner companies nor their
counsel have received any objection pursuant to the citations published
in the newspapers on 12th January, 2015.
18. 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, 2013, the transferor
company shall stand dissolved without undergoing the process of winding
up.
19. 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 a number of records and prioritized hearings. He submits
that at least costs of Rs.1,00,000/- each should be paid by the
petitioners. Learned counsel for the petitioners states that the same is
acceptable to him. 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 two weeks from today.
20. The petition is allowed in the above terms.
Dasti.
SUDERSHAN KUMAR MISRA, J.
May 05, 2015
