Lettuce Entertain You Limited vs ...
2015 Latest Caselaw 8446 Del

                   IN THE HIGH COURT OF DELHI
              COMPANY APPLICATION (MAIN) NO. 161/2015

                                      Reserved on 12th October, 2015
                          Date of pronouncement: 6th November, 2015
In the matter of
The Companies Act, 1956 & the Companies Act, 2013 (to the extent
applicable):

And

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

Scheme of Amalgamation of:

Lettuce Entertain You Limited
                                     Applicant/Transferor Company No. 1

PVR Leisure Limited
                                     Applicant/Transferor Company No. 2
       WITH

PVR Limited
                                     Non-Applicant/Transferee Company

                                Through Mr. Deepak Diwan, Advocate
                                for the applicants

SUDERSHAN KUMAR MISRA, J.

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

Companies Act, 1956 by the applicant/transferor companies seeking

directions of this court to dispense with the requirement of convening the

meetings of their equity shareholders, preference shareholders, secured

and unsecured creditors to consider and approve, with or without

modification, the proposed Scheme of Amalgamation of Lettuce Entertain

You Limited (hereinafter referred to as the applicant/transferor company

no. 1) and PVR Leisure Limited (hereinafter referred to as the

applicant/transferor company no.2) with PVR Limited (hereinafter

referred to as the transferee company) and to dispense with the

requirement of the transferee company to approach this Court for

seeking sanction of Scheme of Amalgamation.

2. The registered offices of the applicant/transferor companies and

the transferee company are situated at New Delhi, within the jurisdiction

of this Court.

3. The applicant/transferor company no. 1 was originally incorporated

under the Companies Act, 1956 on 21st November, 2012 with the

Registrar of Companies, NCT of Delhi & Haryana at New Delhi under the

name and style of K M Multiplexes and Fun Management Limited. The

company changed its name to Lettuce Entertain You Limited and

obtained the fresh certificate of incorporation on 28th February, 2013.

4. The applicant/transferor company no. 2 was incorporated under

the Companies Act, 1956 on 30th July, 2012 with the Registrar of

Companies, NCT of Delhi & Haryana at New Delhi.

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

company no. 1 is Rs.10,00,00,000/- divided into 1,00,00,000 equity

shares of Rs.10/- each. The present issued, subscribed and paid-up

share capital of the company is Rs.9,55,00,000/- divided into 95,50,000

equity shares of Rs.10/- each.

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

company no. 2 is Rs.25,14,96,800/- divided into 50,00,000 equity shares

of Rs.10/- each aggregating to Rs.5,00,00,000/-; 5,90,000 0.001% non-

cumulative convertible preference shares of Rs.341.52/- each

aggregating to Rs.20,14,96,800/-. The present issued, subscribed and

paid-up share capital of the company is Rs.21,93,58,514/- divided into

19,00,000 equity shares of Rs.10/- each aggregating to Rs.1,90,00,000/-;

5,86,667 0.001% non-cumulative convertible preference shares of

Rs.341.52/- each aggregating to Rs.20,03,58,514/-.

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

applicant/transferor companies and the transferee company have been

filed on record. The audited balance sheets, as on 31st March, 2015, of

applicant/transferor companies and the transferee company, 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 application and the accompanying affidavit. It is claimed

by the applicants that the proposed amalgamation will provide

operational synergies, which in turn will eliminate inefficiencies and

streamline corporate structures and cash flow. It is further claimed that

the proposed amalgamation will rationalize and optimize the group legal

entity structure to ensure greater alignment with the businesses by

reducing the number of legal entities.

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

provides that the entire paid-up equity and non-cumulative convertible

preference share capital of the transferor company no. 2 is directly held

by the transferee company and the entire paid-up equity share capital of

the transferor company no. 1 is held by the transferee company through

its wholly owned subsidiary viz. transferor company no. 2. Therefore,

upon this Scheme becoming effective, the entire share capital of the

transferor companies shall stand cancelled and no shares of the

transferee company shall be allotted to the transferor companies in

consideration for amalgamation.

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

Sections 237, 243, 250, 250A and 251 of the Companies Act, 1956 or

under Sections 210, 214, 215, 216(1), (3) & (4), 217, 219, 220, 223,

224(1), (3) & (4) and 225 of the Companies Act, 2013 are pending

against the applicant companies.

11. The Board of Directors of the applicant/transferor companies and

the Board of Directors of the transferee company in their separate

meetings held on 21st July, 2015 and 22nd July, 2015 respectively 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 applicant/transferor company no. 1 has 07 equity shareholders

and 64 unsecured creditors. All the equity shareholders and 51 out of 64

unsecured creditors, being 79.69% in number and 99.68% in value, 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 no. 1 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 no. 1, as on 31st

August, 2015.

13. The applicant/transferor company no. 2 has 07 equity shareholders

and 01 preference shareholder. All the equity shareholders and the sole

preference shareholder 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 preference shareholder of the

applicant/transferor company no. 2 to consider and, if thought fit,

approve, with or without modification, the proposed Scheme of

Amalgamation is dispensed with. There is no secured or unsecured

creditor of the applicant/transferor company no. 2, as on 31st August,

2015.

14. The applicant also seeks dispensation of requirement of the

transferee company to approach this Court 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 the

transferor companies are wholly owned subsidiaries of the transferee

company; no new shares will be issued by the transferee company in lieu

of the shares of the transferor companies; 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. Learned counsel for the

applicants has submitted that the present Scheme does not envisage any

compromise or arrangement by the transferee company with their

creditors and that the 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. Learned counsel

has also placed on record the certificate issued by Narender Singh &

Co., Chartered Accountants, showing the pre and post amalgamation net

worth of the transferee company accordingly to which there will be no

change in the net worth of the transferee company, post amalgamation.

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

the judgments of several High Courts, including this Court, in many cases

such as Sharat Hardware Industries Pvt. Ltd. (1978), 48 Com. Cas 23

(Delhi); Mahaamba Investments Ltd. V. IDI Limited (2001) 105 Com

Cas. 16 (Bom.); eMeter India Pvt. Ltd. (CA(M) 179/2012); Century

Seeds Private Ltd. (CA(M) 36/2015); and Jaisingh Wires Private

Limited (CA(M) 138/2015), wherein it has been held that there is no

requirement to file a separate or joint application on behalf of the

transferee company for sanction of the Scheme.

16. 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 this Court under Section

391(2) of the Companies Act, 1956 for sanction of the Scheme of

Amalgamation is dispensed with.

17. The application stands allowed in the aforesaid terms.

Dasti

SUDERSHAN KUMAR MISRA, J.

November 06, 2015