Nec Industrial Projects Limited vs ...
2015 Latest Caselaw 6750 Del

                   IN THE HIGH COURT OF DELHI
                  COMPANY PETITION NO. 607/2014

                                          Reserved on 21st July, 2015
                          Date of pronouncement: 9th September, 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:

NEC Industrial Projects Limited
                                      Petitioner/Transferor Company No. 1

Hunt Formwork Services Limited
                                      Petitioner/Transferor Company No. 2
      WITH

BSL Scaffolding Limited
                                           Petitioner/Transferee Company

                                  Through Ms. Jyoti Sharma,     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 to 394 of the

Companies Act, 1956 by the petitioner companies seeking sanction of

the Scheme of Amalgamation of NEC Industrial Projects Limited

(hereinafter referred to as the transferor company no. 1) and Hunt

Formwork Services Limited (hereinafter referred to as the transferor

company no. 2) with BSL Scaffolding 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, 1956 on 16th August, 1988 with the Registrar of

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

style of ENEC Engineering Industries Private Limited. The company

changed its name to NEC Industrial Projects Private Limited w.e.f. 21st

July, 1993. The company again changed its name to NEC Industrial

Projects Limited and obtained a fresh certificate of incorporation on 25th

March, 2009.

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

Companies Act, 1956 on 1st February, 1999 with the Registrar of

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

style of NEC Chemicals Limited. The company changed its name to BSL

Tractors Limited and obtained the fresh certificate of incorporation on 24th

March, 2006. The company again changed its name to Hunt Formwork

Services Limited and obtained the fresh certificate of incorporation on

21st June, 2011.

5. The transferee company was originally incorporated under the

Companies Act, 1956 on 22nd August, 1984 with the Registrar of

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

style of SGB India Limited. The company changed its name to British

Scaffolding (India) Limited and obtained the fresh certificate of

incorporation on 1st February, 1994. The company again changed its

name to BSL Scaffolding Limited and obtained the fresh certificate of

incorporation on 8th February, 2006.

6. The authorized share capital of the transferor company no. 1, as

on 1st February, 2014 was Rs.1,79,00,000/- divided into 17,90,000 equity

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

of the company was Rs.1,79,00,000/- divided into 17,90,000 equity

shares of Rs.10/- each fully paid up.

7. The authorized share capital of the transferor company no. 2, as

on 1st February, 2014 was Rs.50,00,000/- divided into 5,00,000 equity

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

of the company was Rs.50,00,000/- divided into 5,00,000 equity shares

of Rs.10/- each fully paid up.

8. The authorized share capital of the transferee company, as on 1st

February, 2014, was Rs.15,00,00,000/- divided into 1,50,00,000 equity

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

of the company is Rs.5,93,63,460/- divided into 59,36,346 equity shares

of Rs.10/- each fully paid up.

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

transferor and transferee companies have been filed on record. 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.

10. 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 by

the petitioners that the proposed amalgamation will result in greater

economies of scale, reduction in overheads and other expenses. It is

further claimed that the proposed amalgamation will enable pooling of

resources of all the companies to their common advantage, resulting in

more productive utilization of the said resources, cost & operational

efficiencies which would be beneficial for all stakeholders.

11. 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:

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

"0.3 new equity share of Rs.10/- each of the transferee company, credited as fully paid up, for every 01 equity share of Rs.10/- each fully paid up held by the shareholders in the transferor company no. 2."

12. 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.

13. The Board of Directors of the transferor company no. 1, transferor

company no. 2 and the transferee company in their separate meetings

held on 13th February, 2014, 20th February, 2014 and 12th February, 2014

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.

14. The petitioner companies had earlier filed CA (M) No. 75/2014

seeking directions of this court to dispense with the requirement of

convening the meetings of their equity shareholders, and for convening of

separate meetings of their secured and unsecured creditors, which are

statutorily required for sanction of the Scheme of Amalgamation. Vide

order dated 25th April, 2014, this court allowed the application and

dispensed with the requirement of convening and holding the meetings of

the equity shareholders of the transferor and transferee companies and

directed convening of separate meetings of the secured creditors of the

transferee company and the 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

further directed the transferor companies to approach their respective

secured creditors to secure their consents and to file the same before this

Court along with the second motion petition. Thereafter, vide order dated

6th May, 2014, this court extended the date of the aforesaid meetings

from 20th May, 2014 to 18th June, 2014.

15. The Chairpersons of the ordered meetings of the secured creditors

of the transferee company and the unsecured creditors of the transferor

and transferee companies have filed their reports stating that the

meetings were duly held on 18th June, 2014, as directed, and that the

Scheme of Amalgamation has been approved unanimously/by majority

by the secured creditors of the transferee company and the unsecured

creditors of the transferor and transferee companies, present and voting,

in their respective meetings.

16. The petitioner companies have thereafter filed the present petition

seeking sanction of the Scheme of Amalgamation. Vide order dated 1st

October, 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 'Statesman' (English) and 'Veer

Arjun' (Hindi) editions. The petitioners have filed an affidavit showing

compliance regarding publication of citations in the aforesaid newspapers

on 13th November, 2014. Copies of the newspaper clippings containing

the publications have been filed along with the said affidavit. The

transferor companies nos. 1 & 2 have also annexed the no objections

received from their secured creditor namely Bank of Baroda to the

proposed Scheme of Amalgamation, in terms of order dated 25th April,

2014 passed by this Court.

17. 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 February,

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 its members, creditors or public interest, as

per second proviso of Section 394(1) of the Companies Act, 1956.

18. 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 27th February, 2015. Relying on Clause

8.1 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 13.1

of the Scheme, it has been stated that the amalgamation shall be

accounted for in the books of accounts of the transferee company

according to 'Pooling of Interest Method' prescribed under Accounting

Standard-14 i.e. 'Accounting for Amalgamation' issued by the Institute of

Chartered Accountants of India. He further submitted that in Clause 9 of

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

effective, the transferor companies shall stand dissolved without the

process of winding up.

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

from any other party. The petitioner companies, in the affidavit dated 4th

April, 2015 of Mr. Rakesh Kumar Singh, Director of the transferee

company, have submitted that they have not received any objection

pursuant to the citations published in the newspapers on 13.11.2014.

20. Considering the approval accorded by the equity shareholders,

secured and unsecured 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 companies no. 1 & 2 shall stand

dissolved without undergoing the process of winding up.

21. Learned counsel for the Official Liquidator prays that costs may be

imposed on the petitioner company in view the fact that the matter has

involved examination of extensive records and prioritized hearings.

Looking to the circumstances, the petitioner companies shall deposit cost

of Rs.25,000/- each, in all amounting to Rs.75,000/-, in the Common Pool

Fund of the Official Liquidator within four weeks. Learned counsel for the

petitioners submitted that the same is acceptable to her clients.

22. The petition is allowed in the above terms.

Dasti.

SUDERSHAN KUMAR MISRA, J.

September 09, 2015