Shiva Agro Private Limited vs ...
2015 Latest Caselaw 3603 Del

                    IN THE HIGH COURT OF DELHI
                  COMPANY PETITION NO. 790/2014

                                          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:

Shiva Agro Private Limited
                                          Petitioner/Transferor Company
      WITH

GSC Glass 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 Shiva Agro Private

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

Glass 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 13th August, 1986 with the Registrar of Companies, NCT of

Delhi & Haryana at New Delhi

4. The transferee company was originally incorporated under the

Companies Act, 1956 on 2nd March, 1989 with the Registrar of

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

style of G.S.C. Toughened Glass Private Limited. The company changed

its name to GSC Glass Private Limited and obtained the fresh certificate

of incorporation on 8th September, 2009. The company again changed its

name to GSC Glass Limited and obtained the fresh certificate of

incorporation on 16th March, 2010.

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

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

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

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

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

Rs.7,00,00,000/- divided into 7,00,000 equity shares of Rs.100/- each.

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

Rs.6,07,95,000/- divided into 6,07,950 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) 144/2014, 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, have

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

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, 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.100/- each of the transferee company, credited as fully paid up, for every 53.44 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 10th June, 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. 144/2014

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. The Court, however, directed the

petitioners to issue specific notice to the Corporation Bank, secured

creditor of the transferee company at the time of moving second motion

petition, calling for their objection, if any, to the Scheme.

13. The petitioner companies have thereafter filed the present petition

seeking sanction of the Scheme of Amalgamation. Vide order dated 17th

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. Thereafter, the petitioner moved an application being CA

667/2015 seeking to place on record the amended gist of the Scheme;

amended second motion petition with affidavits; valuation report dated 6th

June, 2014; audited balance sheets of the petitioner companies as on

31st March, 2014 and the amended Scheme of Amalgamation. The said

application was allowed vide order dated 26th March, 2015 and the

documents filed along with the application were taken on record. The

petitioners have filed an affidavit showing compliance regarding

publication of citations in the aforesaid newspapers on 31st December,

2014. Copies of the newspaper clippings containing the publications have

been filed along with the said affidavit. The petitioners have also claimed

that notice has been duly served on the Corporation Bank, secured

creditor of the transferee company.

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

14.1.7 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. He further

submitted that in Clause 23.1 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.

16. Although both the Official Liquidator and the Regional Director,

Northern Region, have not raised any objection to the proposed Scheme

of Amalgamation but certain observations with regard to the share

exchange ratio and appointed date of the Scheme as mentioned in the

Scheme and in the second motion petition and also about the valuation

report have been pointed out by them. Their first observation is that

Board of Directors of the petitioner companies in their separate meetings

held on 10th June, 2014 have approved the draft Scheme of

Amalgamation and the share exchange ratio, derived through the

valuation report prepared by C. S. Bhatnagar & Co., Chartered

Accountants, but the valuation report was prepared by the aforesaid

Chartered Accountants on 8th July, 2014 i.e. after the date of the Board

Meetings. The second observation is that there is a difference between

the share exchange ratio as suggested by the said Chartered

Accountants and as mentioned in Para 14 of the Scheme. The last

observation is that the appointed date of Scheme, as mentioned in the

petition and the gist of the Scheme is 1st April, 2013 whereas as per the

Scheme of the Amalgamation, the appointed date is 1st April, 2014. It

may be noted that these observations were made by the Official

Liquidator and the Regional Director prior to filing and allowing of CA

667/2015 vide order dated 26th March, 2015. The annexures filed along

with the application, viz. CA 667/2015 further answer the observations

made by the Official Liquidator and the Regional Director, Northern

Region.

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

from any other party. The petitioner companies, in the affidavits dated 3rd

March, 2015 of Mr. Sharanjit Singh, 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 31st December, 2014.

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 amended Scheme of Amalgamation.

Consequently, sanction is hereby granted to the amended 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.

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