Delhi High Court
Clyde Bergemann Beekay India ... vs ... on 29 August, 2016
IN THE HIGH COURT OF DELHI
COMPANY PETITION NO. 340/2015
Reserved on 18th July, 2016
Date of pronouncement: 29th August, 2016
In the matter of
The Companies Act, 1956 & the Companies Act, 2013 (to the extent
applicable):
And
Petition under Sections 391(2) to 394 of the
Companies Act, 1956
Scheme of Merger of:
Clyde Bergemann Beekay India Private Limited
Petitioner/Transferor Company
WITH
Clyde Bergemann India Private Limited
Petitioner/Transferee Company
Through Mr. Kamal Ahuja, 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(2) to 394 of
the Companies Act, 1956 by the petitioner companies seeking sanction
of the Scheme of Merger of Clyde Bergemann Beekay India Private
Limited (hereinafter referred to as the transferor company) with Clyde
Bergemann India 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 15th December, 2009 with the Registrar of Companies, NCT
of Delhi & Haryana at New Delhi.
4. The transferee company was incorporated under the Companies
Act, 1956 on 23rd April, 2007 with the Registrar of Companies, NCT of
Delhi & Haryana at New Delhi.
5. The present authorized share capital of the transferor company is
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 is
Rs.10,00,000/- divided into 1,00,000 equity shares of Rs.10/- each.
6. The present authorized share capital of the transferee company is
Rs.17,20,50,000/- divided into 1,72,05,000 equity shares of Rs.10/- each.
The issued, subscribed and paid-up share capital of the company is
Rs.15,07,47,900/- divided into 1,50,74,790 equity shares of Rs.10/- each.
7. Copies of Memorandum and Articles of Association of the
transferor and transferee companies have been filed on record with the
joint applicant, being CA(M) 79/2015, 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.
8. A copy of the Scheme of Merger 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 in
partnership business. The shares held by BSBK Engineers Private
Limited in the transferor company were transferred to the transferee
company thereby the transferor company became the wholly owned
subsidiary of the transferee company. It is claimed that the proposed
merger will lead to the pooling of expertise and financial resources and
more efficient use of existing resources for the benefit of the
shareholders and less cost to the company. It is further claimed that the
merger will facilitate operation on broader scale and allocation of
resources to more productive and profitable use leading to economies of
scale, which will in turn result in larger earnings for the stakeholders.
9. So far as the share exchange ratio is concerned, the Scheme
provides that since the transferor company is a wholly owned subsidiary
of the transferee company, therefore, upon the Scheme becoming
effective, the transferee company will not issue shares to itself and the
share capital of the transferee company will remain unaffected and the
inter-company shareholding will 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 30th January 2015 have unanimously
approved the proposed Scheme of Merger. Copies of the Resolutions
passed at the meetings of the Board of Directors of the transferor and
transferee companies had been placed on record.
12. The petitioner companies had earlier filed CA (M) No. 79/2015
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 Merger. Vide order dated 25th May, 2015, this court allowed
the application and dispensed with the requirement of convening and
holding the meetings of the equity shareholders and creditors of the
transferor and transferee companies, there being no secured creditor of
the transferor company, to consider and, if thought fit, approve, with or
without modification, the proposed Scheme of Merger.
13. The petitioner companies have thereafter filed the present petition
seeking sanction of the Scheme of Merger. Vide order dated 17th July,
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)
Delhi 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 1st August, 2015. Copies of the newspaper
clippings containing the publications have been filed along with the said
affidavit.
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 5th November,
2015 wherein he has stated that he has not received any complaint
against the proposed Scheme of Merger 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. A. K.
Chaturvedi, Regional Director, Northern Region, Ministry of Corporate
Affairs has filed his report dated 9th December, 2015. Relying on Clause
8 of the Scheme, he has stated that as on the effective date, there will be
no employees of the transferor company. He has further submitted that in
Clause 14.1 of the Scheme, it has been stated that the transferee
company will follow the pooling of interest method of accounting as
prescribed under the Accounting Standard-14 as notified under the
Companies (Accounting Standards) Rules, 2006. He further submitted
that in Clause 9 of the Scheme, it has been stated that upon this scheme
becoming effective, the transferor company shall stand dissolved without
the process of winding up.
16. Although the Regional Director has not raised any objection to the
proposed Scheme, but in para 10 of his report he has stated that even
though the transferor company is a wholly owned subsidiary of the
transferee company but in para 12 of the Scheme there is a proposal to
issue 0.15 new equity shares of Rs.10/- each in the transferee company
for every 01 equity share of Rs.10/- each held by the members in the
transferor company. The Regional Director has submitted that it is not
understood as to how the transferee company can issue shares to its
own.
17. In response to the aforesaid observation, the petitioner companies
have filed an application being CA 834/2016 stating that the provisions in
respect of issuance of fresh shares pursuant to amalgamation of
transferor company into the transferee company and share exchange
ratio were inadvertently included in the Scheme, which are not applicable
to the present merger. The petitioner, therefore, sought an amendment to
the Scheme by deleting clauses 12 & 13 of the Scheme and amending
clause 11 of the Scheme. The said amended Scheme was approved by
the Board of Directors of the petitioner companies in their Board Meeting
held on 21st January, 2016. Copies of the said Board Resolutions have
been placed on record along with the amended Scheme of Merger. The
application was allowed by this Court vide order dated 18.07.2016 and
the amended Scheme of Merger was taken on record. In view of the
aforesaid, the observation made by the Regional Director does not
subsist.
18. No objection has been received to the Scheme of Merger from any
other party. The petitioner companies, in the affidavits dated 4th March,
2016 of Mr. Chandra Shekhar Menon, Director of the transferor company
and of Mr. Dilip Kumar Sinha, Director of the transferee company, have
submitted that the petitioner companies have not received any objection
pursuant to the citations published in the newspapers on 1st August,
2015.
19. Considering the approval accorded by the equity shareholders and
creditors of the petitioner companies to the proposed Scheme of Merger
and the affidavits filed by the Regional Director, Northern Region, and the
Official Liquidator not raising any objection to the proposed Scheme of
Merger, there appears to be no impediment to the grant of sanction to the
Scheme of Merger. Consequently, sanction is hereby granted to the
amended Scheme of Merger annexed with CA 834/2016 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 merger, i.e. 1st April, 2014, the transferor company
shall stand dissolved without undergoing the process of winding up.
20. Learned counsel for the Official Liquidator prays that costs of at
least Rs.1,00,000/- 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 company
states that the same is acceptable to him. As already directed vide order
dated 18.07.2016, the petitioners shall deposit a sum of Rs.1,00,000/- by
way of costs with the Delhi High Court Bar Association Lawyers Social
Security and Welfare Fund, New Delhi.
21. The petition is allowed in the above terms.
Dasti.
SUDERSHAN KUMAR MISRA, J.
August 29, 2016
