Lifelong Finishing Academy ... vs ...
2015 Latest Caselaw 7178 Del

                   IN THE HIGH COURT OF DELHI
                  COMPANY PETITION NO. 89/2015
                                    Reserved on 9th September, 2015
                        Date of pronouncement: 21st September, 2015
In the matter of
The Companies Act, 1956 & the Companies Act, 2013 (to the extent
applicable):

And

Petition under Sections 391(2) & 394 of the
Companies Act, 1956

Scheme of Amalgamation of:

Lifelong Finishing Academy Private Limited
                                   Petitioner/Transferor Company No. 1

Securitech Software Limited
                                       Petitioner/Transferor Company No. 2

Lifelong Descarpack Medical Devices Private Limited
                                  Petitioner/Transferor Company No. 3

Creative Appliances Private Limited
                                       Petitioner/Transferor Company No. 4
      WITH

Lifelong Real Estate Private Limited
                                            Petitioner/Transferee Company

                               Through Mr. Rajeev Kumar Goel,
                               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(2) & 394 of

the Companies Act, 1956 by the petitioner companies seeking sanction

of the Scheme of Amalgamation of Lifelong Finishing Academy Private

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

Securitech Software Limited (hereinafter referred to as the transferor

company no.2); Lifelong Descarpack Medical Devices Private Limited

(hereinafter referred to as the transferor company no. 3) and Creative

Appliances Private Limited (hereinafter referred to as the transferor

company no. 4) with Lifelong Real Estate 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 incorporated under the

Companies Act, 1956 on 12th August, 2008 with the Registrar of

Companies, NCT of Delhi & Haryana at New Delhi.

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

Companies Act, 1956 on 26th April, 2002 with the Registrar of

Companies, NCT of Delhi & Haryana at New Delhi.

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

Companies Act, 1956 on 19th October, 2010 with the Registrar of

Companies, NCT of Delhi & Haryana at New Delhi.

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

the Companies Act, 1956 on 31st May, 1994 with the Registrar of

Companies, NCT of Delhi & Haryana at New Delhi as private limited

company under the name and style of Creative Appliances Private

Limited. The company was converted into a public limited company and

obtained the fresh certificate of incorporation on 4th December, 2001. The

company again converted into private limited company and obtained the

fresh certificate of incorporation on 7th March, 2011.

7. The transferee company was originally incorporated under the

Companies Act, 1956 on 26th March, 2008 with the Registrar of

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

style of Lifelong Business Relations Private Limited. The company

changed its name to Lifelong Real Estate Private Limited and obtained

the fresh certificate of incorporation on 25th March, 2010.

8. The present authorized share capital of the transferor company

no.1 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.1,00,00,000/- divided into 10,00,000 equity shares of Rs.10/- each.

9. The present authorized share capital of the transferor company

no.2 is Rs.3,00,00,000/- divided into 30,00,000 equity shares of Rs.10/-

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

is Rs.98,09,630/- divided into 9,80,963 equity shares of Rs.10/- each.

10. The present authorized share capital of the transferor company

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

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

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

11. The present authorized share capital of the transferor company

no.4 is Rs.25,00,000/- divided into 2,50,000 equity shares of Rs.10/-

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

is Rs.5,80,000/- divided into 58,000 equity shares of Rs.10/- each.

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

Rs.25,00,000/- divided into 2,50,000 equity shares of Rs.10/- each. The

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

Rs.11,00,000/- divided into 1,10,000 equity shares of Rs.10/- each.

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

transferor and transferee companies have been filed on record on record

with the joint application, being CA(M) 16/2015, 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.

14. 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 submitted by

the petitioners that the transferor and transferee companies are closely

held group companies and the proposed amalgamation would result in

business synergy, consolidation and pooling of their resources. It is

claimed that the proposed amalgamation will result in usual economies of

a centralized and a large company including elimination of duplicate

work, reduction in overheads, better and more productive utilization of

human and other resources and enhancement of overall business

efficiency. It will enable these companies to combine their managerial

and operating strength, to build a wider capital and financial base and to

promote and secure overall growth of their business.

15. 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 (one) equity share of Rs.10/- each of the transferee company, credited as fully paid up, to every shareholder of the

transferor company no. 1 (irrespective of number of shares held by these shareholders)."

"1 (one) equity share of Rs.10/- each of the transferee company, credited as fully paid up, for every 47 equity shares of Rs.10/- each held in the transferor company no. 2."

"1 (one) equity share of Rs.10/- each of the transferee company, credited as fully paid up, to every shareholder of the transferor company no. 3 (irrespective of number of shares held by these shareholders)."

"1 (one) equity share of Rs.10/- each of the transferee company, credited as fully paid up, to every shareholder of the transferor company no. 4 (irrespective of number of shares held by these shareholders)."

16. 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.

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

in their separate meetings held on 6th September, 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 had been placed on record.

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

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 sanction of the

Scheme of Amalgamation. Vide order dated 6th February, 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.

19. The petitioner companies have thereafter filed the present petition

seeking sanction of the Scheme of Amalgamation. Vide order dated 23rd

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 'Business Standard' (English) and

(Hindi) editions. Affidavit of Service has been filed by the petitioners

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 16th April, 2015. Copies of the

newspaper clippings containing the publications have been filed along

with the said affidavit.

20. 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 7th September,

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.

21. 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 31st August, 2015. Relying on Clause

7(a) 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

11(a) of the Scheme, it has been stated that amalgamation shall be an

'amalgamation in the nature of merger' as defined in Accounting

Standard-14 as prescribed under Companies (Accounting Standards)

Rules, 2006 and shall be accounted for under the 'pooling of interest'

method in accordance with the said accounting standard. He further

submitted that in Clause 6 of the Scheme, it has been stated that upon

this scheme becoming effective, the transferor companies nos. 1 to 4

shall stand dissolved without the process of winding up.

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

from any other party. The petitioner companies, in the affidavit dated 1st

September, 2015 of Mr. Lalit Gupta, Director of the transferor company

no. 1, have submitted that neither the petitioner companies nor their

counsel have received any objection pursuant to the citations published

in the newspapers on 16th April, 2015.

23. Considering the approval accorded by the 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 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

companies no. 1 to 4 shall stand dissolved without undergoing the

process of winding up.

24. 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.

25. The petition is allowed in the above terms.

Dasti.

SUDERSHAN KUMAR MISRA, J.

September 21, 2015