Delhi High Court
Evolv Services Limited vs ... on 8 May, 2015
IN THE HIGH COURT OF DELHI
COMPANY PETITION NO. 82/2015
Reserved on 15th April, 2015
Date of pronouncement: 8th 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
Composite Scheme of Arrangement between:
NIIT Limited
Petitioner/Amalgamated Company
Evolv Services Limited
Petitioner/Amalgamating Company No. 1
Scantech Evaluation Services Limited
Petitioner/Amalgamating Company No. 2
NIIT Online Learning Limited
Petitioner/Amalgamating Company No. 3
AND
Hole-in-the-Wall Education Limited
Petitioner/Transferee Company
Through Mr. Rajiv Nayar, Sr. Advocate
with Mr. Anirudh Das & Mr. Kamaljeet
Singh, 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 Composite Scheme of Arrangement between NIIT Limited
(hereinafter referred to as the amalgamated company); Evolv Services
Limited (hereinafter referred to as the amalgamating company no. 1);
Scantech Evaluation Services Limited (hereinafter referred to as the
amalgamating company no. 2); NIIT Online Learning Limited (hereinafter
referred to as the amalgamating company no. 3); and Hole-in-the-Wall
Education Limited (hereinafter referred to as the transferee company).
2. The registered offices of the amalgamated, amalgamating and
transferee companies are situated at New Delhi, within the jurisdiction of
this court.
3. The amalgamated company was originally incorporated under the
Companies Act, 1956 on 2nd December, 1981 with the Registrar of
Companies, Punjab, H.P. and Chandigarh under the name and style of
Pace Education Private Limited. Thereafter, the word 'Private' was
deleted from the name of the company w.e.f. 27th October, 1988. The
company changed its name to NIIT Limited and obtained the fresh
certificate of incorporation on 16th November, 1990 from the Registrar of
Companies, NCT of Delhi & Haryana at New Delhi.
4. The amalgamating company no. 1 was originally incorporated
under the Companies Act, 1956 on 12th April, 1996 with the Registrar of
Companies, NCT of Delhi & Haryana at New Delhi under the name and
style of Chezcouture India Private Limited. Thereafter, the company
changed its name to e Placement Services Private Limited. The company
again changed its name to Evolv Management Services Private Limited
and obtained the fresh certificate of incorporation on 14th November,
2003. The company again changed its name to Evolv Management
Services Limited and obtained the fresh certificate of incorporation on 3rd
April, 2008. The company finally changed its name to Evolv Services
Limited and obtained the fresh certificate of incorporation on 2nd May,
2008.
5. The amalgamating company no. 2 was originally incorporated
under the Companies Act, 1956 on 17th July, 2002 with the Registrar of
Companies, NCT of Delhi & Haryana at New Delhi under the name and
style of Scantech Evaluation Services Private Limited. The company
changed its name to Scantech Evaluation Services Limited and obtained
the fresh certificate of incorporation on 26th February, 2004.
6. The amalgamating company no. 3 was incorporated under the
Companies Act, 1956 on 26th May, 2000 with the Registrar of
Companies, NCT of Delhi & Haryana at New Delhi.
7. The transferee was originally incorporated under the Companies
Act, 1956 on 16th July, 2001 with the Registrar of Companies, NCT of
Delhi & Haryana at New Delhi under the name and style of Minimally
Invasive Education Company Limited. The company changed its name to
Hole-in-the-Wall Education Limited and obtained the fresh certificate of
incorporation on 7th February, 2003.
8. The present authorized share capital of the amalgamated company
is Rs.75,00,00,000/- divided into 25,00,00,000 equity shares of Rs.2/-
each aggregating to Rs.50,00,00,000/-; 25,00,000 redeemable
preference shares of Rs.100/- each aggregating to Rs.25,00,00,000/-.
The issued capital of the company is Rs.33,03,53,194/- divided into
16,51,76,597 equity shares of Rs.2/- each. The subscribed and paid up
capital of the company is Rs.33,03,47,194/- divided into 16,51,70,597
equity shares of Rs.2/- each aggregating to Rs.33,03,41,194/- and 6000
forfeited equity shares (amount originally paid up) aggregating to
Rs.6000/-.
9. The present authorized share capital of the amalgamating
company no. 1 is Rs.1,60,00,000/- divided into 16,00,000 equity shares
of Rs.10/- each. The issued, subscribed and paid-up share capital of the
company is Rs.1,47,50,960/- divided into 14,75,096 equity shares of
Rs.10/- each.
10. The present authorized share capital of the amalgamating
company no. 2 is Rs.12,00,00,000/- divided into 1,20,00,000 equity
shares of Rs.10/- each. The issued, subscribed and paid-up share capital
of the company is Rs.9,91,00,000/- divided into 99,10,000 equity shares
of Rs.10/- each.
11. The present authorized share capital of the amalgamating
company no. 3 is Rs.50,00,00,000/- divided into 15,00,00,000 equity
shares of Rs.1/- each aggregating to Rs.15,00,00,000/- and 35,00,00,000
8.5% cumulative redeemable preference shares of Rs.1/- each
aggregating to Rs.35,00,00,000/-. The issued, subscribed and paid-up
share capital of the company is Rs.43,87,998/- divided into 43,87,998
equity shares of Rs.1/- each.
12. The present authorized share capital of the transferee company is
Rs.30,00,00,000/- divided into 2,00,00,000 equity shares of Rs.10/- each
aggregating to Rs.20,00,00,000/- and 1,00,00,000 redeemable
preference shares of Rs.10/- each aggregating to Rs.10,00,00,000/-. The
issued, subscribed and paid-up share capital of the company is
Rs.6,60,00,070/- divided into 10,00,007 equity shares of Rs.10/- each
aggregating to Rs.1,00,00,070/-; 34,00,000 13.75% non-convertible
cumulative redeemable preference shares of Rs.10/- each aggregating to
Rs.3,40,00,000/-; and 22,00,000 13.25% non-convertible cumulative
redeemable preference shares of Rs.10/- each aggregating to
Rs.2,20,00,000/-.
13. Copies of the Memorandum and Articles of Association of the
amalgamated, amalgamating and transferee companies have been filed
on record. The audited balance sheets, as on 31st March, 2014, of the
amalgamated, amalgamating and transferee companies, along with the
report of the auditors, have also been filed.
14. A copy of the Composite 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
by the petitioners that amalgamating companies no. 1, 2 & 3 are wholly
owned subsidiaries of amalgamated company. It is further submitted that
the Scheme, inter alia, provides for amalgamation of amalgamating
companies no. 1, 2 & 3 into the amalgamated company and demerger of
the School Business Undertaking of the amalgamated company into the
transferee company. It is claimed that the proposed amalgamation will
remove inefficiencies and combine similar business interest into one
corporate entity, resulting in operational synergies, simplification,
streamlining and optimization of the group structure and efficient
administration. It is further claimed that the proposed demerger will
facilitate creation of a separate, focused entity to take advantage of the
future emerging opportunities in the school segment, which shall
efficiently and effectively cater to the independent growth plan for the
School Business Undertaking Scheme and its future value recognition,
expansion and diversification.
15. So far as the share exchange ratio is concerned, the Scheme
provides as under:
"Upon amalgamation of the amalgamating companies no. 1
to 3 into the amalgamated company, no consideration shall
be payable by the amalgamated company and no shares
shall be allotted by the amalgamated company as the
amalgamating companies no. 1 to 3 are wholly owned
subsidiaries of the amalgamated company."
"A lump sum consideration of Rs.1,08,06,40,649/- shall be
payable by the transferee company to the amalgamated
company for the transfer and vesting of the School
Business Undertaking."
16. It has been submitted by the petitioners that no proceedings under
Sections 235 and 250A of the Companies Act, 1956 and the applicable
provisions of the Companies Act, 2013 are pending against the
amalgamated, amalgamating and transferee companies.
17. The Board of Directors of the amalgamated, amalgamating and the
transferee companies in their separate meetings held on 26th August,
2014 have unanimously approved the proposed Composite Scheme of
Arrangement. Copies of the Resolutions passed at the meetings of the
Board of Directors of the amalgamated, amalgamating and transferee
companies have been placed on record.
18. The petitioner companies had earlier filed CA (M) No. 166/2014
seeking directions of this court to dispense with the requirement of
convening the meetings of the shareholders and creditors of the
amalgamating and transferee companies and for convening of separate
meetings of the equity shareholders, secured and unsecured creditors of
the amalgamated company, which are statutorily required for sanction of
the Composite Scheme of Arrangement. Vide order dated 19th
December, 2014, this court allowed the application and dispensed with
the requirement of convening and holding the meetings of the
shareholders and creditors of the amalgamating and transferee
companies, and directed convening of separate meetings of the equity
shareholders, secured and unsecured creditors of the amalgamated
company, to consider and, if thought fit, approve, with or without
modification, the proposed Composite Scheme of Arrangement. The
Court also dispensed with the requirement of the transferee company
from following the procedure prescribed under Section 101(2) of the
Companies Act, 1956 with regard to reduction of its share capital.
19. The Chairpersons of the ordered meetings of the equity
shareholders, secured and unsecured creditors of the amalgamated
company have filed their reports stating that the meetings were duly held
on 31st January, 2015, as directed, and that the Composite Scheme of
Arrangement has been approved unanimously/by majority by the equity
shareholders, secured and unsecured creditors of the amalgamated
company, present and voting, in the meetings.
20. The petitioner companies have thereafter filed the present petition
seeking sanction of the Composite Scheme of Arrangement. Vide order
dated 20th February, 2015, 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 'Indian Express' (English)
and 'Jansatta' (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 14th March, 2015.
Copies of the newspaper clippings containing the publications have been
filed along with the said affidavit.
21. 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 27th March, 2015
wherein he has stated that he has not received any complaint against the
proposed Composite Scheme of Arrangement from any person/party
interested in the Scheme in any manner and that the affairs of the
amalgamating companies do not appear to have been conducted in a
manner prejudicial to the interest of their members, creditors or public
interest, as per second proviso of Section 394(1) of the Companies Act,
1956.
22. 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 April, 2015. Relying on Clauses
3.1(vii) of Section-A of Part-III, 4.1(viii) of Section-B of Part-III and 5.1 of
Section-C of Part-III of the Scheme, he has stated that, upon sanction of
the Composite Scheme of Arrangement, all the employees of the
amalgamating companies no. 1, 2 & 3 shall become the employees of the
amalgamated company respectively, without any break or interruption in
their services. He has further submitted that in Clause 8.1 of Part-IV of
the Scheme, it has been stated that accounting for the amalgamation of
the amalgamating companies and treatment of goodwill and reserves, if
any, in the financial statements of amalgamated company, shall be in
accordance with the provisions of the Accounting Standard-14, dealing
with accounting for amalgamations, issued by the Institute of Chartered
Accountants of India. He further submitted that in Clauses 3.7 of Section-
A of Part-III, 4.7 of Section-B of Part-III, and 5.7 of Section-C of Part-III of
the Scheme, it has been stated that, upon this scheme becoming
effective, the amalgamating companies no. 1, 2 & 3 shall stand dissolved
without the process of winding up.
23. Although no objection has been raised by the Regional Director in
his report, but in para 10 of his report, he has observed that as per
Clause 11 of Part-V of the Scheme, it has been stated that with effect
from the effective date, the name of the transferee company shall stand
changed to Mindchampion Learning Systems Limited or such other name
as may be approved by the Registrar of Companies, Delhi & Haryana.
He, therefore, prays that the petitioner company may be directed to
comply with the provisions of the Companies Act, 1956/2013 in this
regard. In reply to the aforesaid observation, the transferee company in
the affidavit dated 14th April, 2015 of Mr. Ashok Arora, authorized
signatory of the transferee company, have undertaken to comply with the
relevant procedures under the Companies Act, 1956/2013 with regard to
the change of name of the transferee company. The undertaking is
accepted and the petitioner company shall remain bound by the same. In
view of the above, the observation raised by the Regional Director stands
satisfied.
24. No objection has been received to the Composite Scheme of
Arrangement from any other party. The petitioner companies, in the
affidavit dated 8th April, 2015 of Mr. Ashok Arora, authorized signatory of
the petitioner companies, have submitted that neither the petitioner
companies nor their counsel have received any objection pursuant to the
citations published in the newspapers on 14th March, 2015.
25. Considering the approval accorded by the shareholders and
creditors of the petitioner companies to the proposed Composite Scheme
of Arrangement and the affidavits filed by the Regional Director, Northern
Region, and the Official Liquidator not raising any objection to the
proposed Composite Scheme of Arrangement, there appears to be no
impediment to the grant of sanction to the Composite Scheme of
Arrangement. Consequently, sanction is hereby granted to the
Composite 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, the amalgamating companies no. 1, 2 & 3 shall stand
dissolved without undergoing the process of winding up; and the School
Business Undertaking of the amalgamated company shall stand merged
in the transferee company.
26. Learned counsel for the Official Liquidator prays that costs may be
imposed on the petitioner companies in view the fact that the matter has
involved examination of voluminous record and prioritized hearings. He
submits that cost of at least Rs.3,00,000/- be imposed. Learned senior
counsel for the petitioners states that the petitioner companies are ready
and willing to pay cost of Rs.3.0 lakh. Looking to the circumstances, the
petitioner companies shall deposit cost of Rs.3.0 lakh in the Common
Pool Fund of the Official Liquidator within two weeks from today.
27. The petition is allowed in the above terms.
Dasti.
SUDERSHAN KUMAR MISRA, J.
May 08, 2015
