Delhi High Court
Spoton Media Private Limited vs ... on 12 August, 2016
IN THE HIGH COURT OF DELHI
COMPANY PETITION NO. 86/2016
Reserved on 29th July, 2016
Date of pronouncement: 12th August, 2016
In the matter of
The Companies Act, 1956 & the Companies Act, 2013 (to the extent
applicable):
And
Petition under Sections 391 to 394 read with
Sections 100 to 103 of the Companies Act,
1956
Scheme of Arrangement between:
SpotOn Media Private Limited
Petitioner/Transferor Company
AND
ValueFirst Digital Media Private Limited
Petitioner/Transferee Company
Through Mr. Rajeev Kumar, Advocate
for the petitioners
Ms. Aparna Mudiam, Asstt. 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 read
with Sections 100 to 103 of the Companies Act, 1956 by the petitioner
companies seeking sanction of the Scheme of Arrangement between
SpotOn Media Private Limited (hereinafter referred to as the transferor
company) and ValueFirst Digital 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 was incorporated under the Companies
Act, 1956 on 23rd October, 2007 with the Registrar of Companies, NCT of
Delhi & Haryana at New Delhi.
4. The transferee company was originally incorporated under the
Companies Act, 1956 on 17th October, 2003 with the Registrar of
Companies, NCT of Delhi & Haryana at New Delhi under the name and
style of ValueFirst Messaging Private Limited. The company changed its
name to ValueFirst Digital Media Private Limited and obtained the fresh
certificate of incorporation on 30th July, 2012.
5. The present authorized share capital of the transferor company is
Rs.10,00,000/- divided into 1,00,000 equity shares of Rs.10/- each. The
issued, subscribed and paid-up share capital of the company is
Rs.1,11,130/- divided into 11,113 equity shares of Rs.10/- each.
6. The present authorized share capital of the transferee company is
Rs.27,13,00,000/- divided into 2,70,74,900 equity shares of Rs.10/- each
aggregating to Rs.27,07,49,000/-; 45,100 0.1% cumulative compulsory
convertible preference shares of Rs.10/- each aggregating to
Rs.4,51,000/-; 10,000 8% non-cumulative compulsory convertible
preference shares of Rs.10/- each aggregating to Rs.1,00,000/-. The
issued, subscribed and paid-up share capital of the company is
Rs.19,66,200/- divided into 1,41,520 equity shares of Rs.10/- each
aggregating to Rs.14,15,200/-; 45,100 0.1% cumulative compulsory
convertible preference shares of Rs.10/- each aggregating to
Rs.4,51,000/-; 10,000 8% non-cumulative compulsory convertible
preference shares of Rs.10/- each aggregating to Rs.1,00,000/-.
7. Copies of Memorandum and Articles of Association of the
transferor and transferee companies have been filed on record with the
joint application, being CA(M) 14/2016, earlier filed by the petitioners.
The audited balance sheets, as on 31st March, 2015, of the transferor and
transferee companies, along with the report of the auditors, had also
been filed.
8. A copy of the 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 has been
submitted by the petitioners that the Scheme, inter alia, provides for
amalgamation of the transferor company into the transferee company
and the capital reduction of the transferee company. It is claimed that the
proposed amalgamation will enable optimal utilization of existing
resources and provide an opportunity to fully leverage the assets,
capabilities, experience, expertise and infrastructure of the applicant
companies. It is further claimed that the proposed capital reduction would
enable the transferee company to have a rational capital structure which
is commensurate with its remaining business and assets.
9. So far as the share exchange ratio is concerned, the Scheme
provides that the transferor company is a wholly owned subsidiary of the
transferee company and upon coming into effect of this Scheme, no
equity shares of the transferee company will be allotted in lieu or in
exchange of its holding in the transferor company and the equity share
capital of the transferee company shall stand cancelled.
10. 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.
11. The Board of Directors of the transferor and transferee companies
in their separate meetings held on 24th December, 2015 have approved
the proposed Scheme of Arrangement. 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 petitioner companies had earlier filed CA (M) No. 14/2016
seeking directions of this court to dispense with the requirement of
convening the meetings of their equity shareholders, preference
shareholders, secured and unsecured creditors, which are statutorily
required for sanction of the Scheme of Arrangement. Vide order dated
27th January, 2016, this court allowed the application and dispensed with
the requirement of convening and holding the meetings of the equity
shareholders, secured and unsecured creditors of the transferor
company and equity shareholders, preference shareholders, secured and
unsecured creditors of the transferee company, to consider and, if
thought fit, approve, with or without modification, the proposed Scheme
of Arrangement.
13. The petitioner companies have thereafter filed the present petition
seeking sanction of the Scheme of Arrangement. Vide order dated 8th
February, 2016, 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
'Jansatta' (Hindi) Delhi editions. Affidavit of service has been filed by the
petitioners showing compliance regarding service on the Regional
Director, Northern Region and the Official Liquidator, and also regarding
publication of citations in the aforesaid newspapers on 25th February,
2016. Copies of the newspaper clippings containing the publications have
been filed along with the affidavit of service.
14. 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 29th June, 2016
wherein he has stated that he has not received any complaint against the
proposed Scheme of Arrangement from any person/party interested in
the Scheme in any manner and that the affairs of the transferor company
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.
15. In response to the notices issued in the petition, Mr. Narender
Kumar Bhola, Regional Director, Northern Region, Ministry of Corporate
Affairs has filed his report dated 11th July, 2016 stating that the Regional
Director has no objection to the proposed Scheme of Amalgamation
subject to observations made by him in paras 10 & 11 of his report. The
Regional Director in para 10 of this report has submitted that since the
transferor company is a wholly owned subsidiary of the transferee
company, therefore, no shares are required to be issued after
amalgamation. In this regard it is submitted that the transferor company
became the wholly owned subsidiary of the transferee company only
after the appointed date. Further, in para 11 of his report, the Regional
Director has submitted that the transferor company has not yet filed its
annual return for the F.Y. ended 31.03.2011 and, thus, prima facie there
is violation of Section 92 of the Companies Act, 2013.
16. The petitioner companies vide affidavit dated 11th July, 2016 of
Mr.Vishwadeep Bajaj, authorized signatory of the petitioner companies,
have filed the response to the aforesaid observations stating that Clause
12 of the Scheme provides that, upon the Scheme becoming effective, no
shares of the transferee company will be issued. Therefore, for the
purpose of issuance of shares what is relevant is the effective date and
not the appointed date. Further, the transferor company became the
wholly owned subsidiary of the transferee company well before the date
of approval of the Scheme by the Board of Directors of the petitioners
companies as well as the date of filing of the petition before the High
Court. With regard to the second observation, it is submitted that the
transferor company has filed its annual return on 9th July, 2016. A copy of
the challan evidencing filing of return has been annexed with the affidavit.
In view of the aforesaid facts, the observations made by the Regional
Director stand satisfied.
17. No objection has been received to the Scheme of Arrangement
from any other party. The petitioner companies, in the affidavit dated 9th
July, 2016 of Sh. Vishwadeep Bajaj, 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 25th February, 2016.
18. Considering the approval accorded by the shareholders and
creditors of the petitioner companies to the proposed Scheme of
Arrangement and the affidavits filed by the Regional Director, Northern
Region, and the Official Liquidator not raising any objection to the
proposed Scheme of Arrangement, there appears to be no impediment to
the grant of sanction to the Scheme of Arrangement. Consequently,
sanction is hereby granted to the 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, 2015, the transferor
company shall stand dissolved without undergoing the process of winding
up.
19. Learned counsel for the Official Liquidator prays that costs of at
least Rs.2,50,000/- should be paid by the petitioners keeping in view the
fact that the matter has involved examination of extensive records and
also prioritized hearings. Learned counsel for the petitioner companies
states that the same is acceptable to him. As already directed vide order
dated 29.07.2016, the petitioners shall deposit a sum of Rs.2,50,000/- by
way of costs with Delhi High Court Bar Association Lawyers Social
Security and Welfare Fund, New Delhi.
20. The petition is allowed in the above terms.
Dasti.
SUDERSHAN KUMAR MISRA, J.
August 12, 2016
