All India Film Corporation ... vs ...
2015 Latest Caselaw 7550 Del

                   IN THE HIGH COURT OF DELHI
                  COMPANY PETITION NO. 272/2015
                                      Reserved on 14th September, 2015
                              Date of pronouncement: 5th October, 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:
All India Film Corporation Private Limited
                                      Petitioner/Transferor Company No. 1
The All India Investment Corporation Private Limited
                                    Petitioner/Transferor Company No. 2
World Media International Limited
                                    Petitioner/Transferor Company No. 3
      WITH
World Media Private Limited
                                          Petitioner/Transferee Company

                                Through Mr. Mahesh Agarwal and
                                Mr.Rajeev Kumar, Advocates for the
                                petitioners
                                Ms.     Aparna     Mudiam, Assistant
                                Registrar of Companies for the
                                Regional Director
                                Mr. Sanjay Katyal, 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 All India Film Corporation Private

Limited (hereinafter referred to as the transferor company no. 1); The All

India Investment Corporation Private Limited (hereinafter referred to as

the transferor company no. 2); and World Media International Limited

(hereinafter referred to as the transferor company no. 3) with World

Media 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 no. 1 was originally incorporated under

the Companies Act, 1913 on 27th October, 1944 under the name and

style of All India Film Corporation Limited. The company changed its

name to All India Film Corporation Private Limited and obtained the fresh

certificate of incorporation from the Registrar of Companies, NCT of Delhi

& Haryana at New Delhi on 27th May, 1980.

4. The transferor company no. 2 was originally incorporated under

the Companies Act, 1913 on 29th September, 1952 under the name and

style of The All India Investment Corporation Limited. The company

changed its name to The All India Investment Corporation Private Limited

and obtained the fresh certificate of incorporation from the Registrar of

Companies, NCT of Delhi & Haryana at New Delhi on 23 rd September,

1976.

5. The transferor company no. 3 was incorporated under the

Companies Act, 1956 on 25th November, 1991 with the Registrar of

Companies, NCT of Delhi & Haryana at New Delhi.

6. The transferee company was originally incorporated under the

Companies Act, 1913 on 17th October, 1949 under the name and style of

Kishori Lal Shyam Lal and Company Private Limited. The company

changed its name to L.M. Distributors Private Limited and obtained the

fresh certificate of incorporation from the Registrar of Companies, NCT of

Delhi & Haryana at New Delhi on 18th January, 1982. The company

again changed its name to L.M. Distributors Limited and obtained the

fresh certificate of incorporation on 30th September, 1988. Thereafter, the

company changed its name to World Media Limited and obtained the

fresh certificate of incorporation on 10 th October, 1991. The company

finally changed its name to World Media Private Limited and obtained the

fresh certificate of incorporation on 19th September, 2002.

7. The present authorized share capital of the transferor company

no.1 is Rs.34,04,900/- divided into 34,04,900 equity shares of Rs.1/-

each. The present issued, subscribed and paid-up share capital of the

company is Rs.2,24,806/- divided into 2,24,806 equity shares of Rs.1/-

each.

8. The present authorized share capital of the transferor company

no.2 is Rs.15,00,000/- divided into 14,000 equity shares of Rs.100/- each

aggregating to Rs.14,00,000/- and 1000 preferenc e shares of Rs.100/-

each aggregating to Rs.1,00,000/-. The present issued, subscribed and

paid-up share capital of the company is Rs.9,80,000/- divided into 9,800

equity shares of Rs.100/- each.

9. The present authorized share capital of the transferor company

no.3 is Rs.1,00,00,000/- divided into 9,50,000 equity shares of Rs.10/-

each aggregating to Rs.95,00,000/- and 50,000 non-cumulative

redeemable preference shares of Rs.10/- each aggregating to

Rs.5,00,000/-. The present issued, subscribed and paid-up share capital

of the company is Rs.5,00,690/- divided into 50,069 equity shares of

Rs.10/- each.

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

Rs.1,00,00,000/- divided into 10,00,000 equity shares of Rs.10/- each.

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

Rs.1,01,000/- divided into 10,100 equity shares of Rs.10/- each.

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

transferor and transferee companies have been filed on record along with

CA(M) 49/2015 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.

12. 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 amalgamation will result in reduction of overheads, administrative,

managerial and other expenditure, and bring about operational

rationalization, organizational efficiency and optimal utilization of various

resources. It is further claimed that consolidation of entities will result in

significant reduction in the multiplicity of legal and regulatory compliances

required at present to be carried out by the companies and also avoid

duplication of administrative functions and eliminate multiple record-

keeping.

13. 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 companies in the following ratio:

"01 equity share of Rs.10/- each of the transferee company, credited as fully paid up, for every 887 fully paid up equity shares of Rs.1/- each held in the transferor company no. 1."

It is provided that the transferor company no. 2 is a wholly owned

subsidiary of the transferee company. Therefore, the investment in the

shares of the transferor company no. 2 shall get cancelled and there will

be no issue and allotment of shares of the transferee company, upon the

Scheme becoming effective. It is further provided that the entire issued,

subscribed and paid up capital of the transferor company no. 3 is held by

the transferee company and its subsidiaries. Accordingly, in compliance

with Section 19 of the Companies Act, 2013, there shall be no issue and

allotment of shares of the transferee company upon amalgamation of the

transferor company no. 3.

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

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

petitioner companies.

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

in their separate meetings held on 6th February, 2015 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.

16. The petitioner companies had earlier filed CA (M) No. 49/2015

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 sanctio n of the

Scheme of Amalgamation. Vide order dated 29 th April, 2015, 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.

17. The petitioner companies have thereafter filed the present petition

seeking sanction of the Scheme of Amalgamation. Vide order dated 20th

May, 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 '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 15th June, 2015. Copies of the

newspaper clippings containing the publications have been filed along

with the said affidavit.

18. 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 24th July, 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

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.

19. 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 9th September, 2015. Relying on Clause

10.2 of Part-II of the Scheme, he has stated that, upon sanction of the

Scheme of Amalgamation, all the employees of the transferor companies

shall become the employees of the transferee company without any

break or interruption in their services. He has further submitted that in

Clause 8 of Part-II of the Scheme, it has been stated that the

amalgamation of the transferor companies with the transferee company

shall be accounted as per the 'Pooling of Interest method' as specified in

Accounting Standard-14 issued by the Institute of Chartered Accountants

of India. He further submitted that in Clause 20.1 of Part-II of the

Scheme, it has been stated that upon this scheme becoming effective,

the transferor companies 1 to 3 shall stand dissolved without the process

of winding up.

20. Although the Regional Director, Northern Region has not raised

any objection to the Scheme of Amalgamation, however, in Para 9.1 of

his report he has submitted that there is no mention whether the

transferee company is an NBFC and if it is registered with RBI to carry on

such business. He, therefore, prays that the company may be asked as

to whether it is registered with RBI as NBFC, and if so, whether it had

obtained the prior written permission from RBI with regard to the

proposed Scheme of Amalgamation. In response to the aforesaid

observation, the petitioner companies in the affidavits dated 11th

September, 2015 of Mr. Dinesh Bhatia, authorized signatory of the

transferor companies no. 1 & 3, Mr. Anil Kumar Mehra, authorized

signatory of transferor company no. 2 and Mr. Sunil Mohan Buckshee,

authorized signatory of the transferee company have submitted that none

of the petitioner companies are carrying on any financial activities and is,

therefore, not required to be registered with the RBI as Non Banking

Finance Company. Thus, the prior written permission of RBI with regard

to the proposed Scheme of Amalgamation is not required. In support of

their submission, the petitioner companies have placed on record

certificates dated 10th September, 2015 from V. K. Arora & Associates,

Chartered Accountants, certifying that the petitioner companies are not

non-banking finance company and are not required to be registered as

NBFC with RBI. Learned counsel for the petitioners also relies on

paragraphs 11, 12 & 15 of this Court's order passed on 28.11.2014 in

Co.Pet. 437/2014 titled Tooba Buildtech Pvt. Ltd. & Ors.. In view of the

aforesaid, the observation raised by the Regional Director does not

subsist. It is, however, clarified that in case it is found that petitioner

companies have violated any provision of the Reserve Bank of India Act,

then the Directors of the petitioner companies guilty of said violation shall

continue to be liable irrespective of the sanction of the Scheme.

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

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

10th September, 2015 of Mr. Dinesh Bhatia, authorized signatory of the

transferor companies no. 1 & 3, Mr. Anil Kumar Mehra, authorized

signatory of transferor c ompany no. 2 and Mr. Sunil Mohan Buckshee,

authorized signatory 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 15th

June, 2015.

22. 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 constr ued 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

companies no. 1 to 3 shall stand dissolved without undergoing the

process of winding up.

23. 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 extensive records and prioritized hearings. He submits

that at least costs of Rs.1,00,000/- 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.1,00,000/- by way of costs in the Common Pool Fund of the Official

Liquidator, within two weeks.

24. The petition is allowed in the above terms.

Dasti.

SUDERSHAN KUMAR MISRA, J.

October 05, 2015