Narmada Asbestos Pipes Private ... vs Carnation Developers Private ...
2016 Latest Caselaw 7455 Del

           IN THE HIGH COURT OF DELHI AT NEW DELHI

                                         Judgment Reserved On:18.11.2016
                                       Judgment Pronounced On:19.12.2016


CO.PET. 316/2015
IN THE MATTER OF:-

NARMADA ASBESTOS PIPES PRIVATE LIMITED

                                    Transferor Company/ Petitioner Company-I

                                     AND

CARNATION DEVELOPERS PRIVATE LIMITED

                                  Transferee Company / Petitioner Company-II

                         Through:     Mr. Sumit Roy and Mr. Vishal Dutt,
                                      Advocates for Petitioners
                                      Ms. Aparna Mudiam, Assistant Registrar
                                      of Companies for the Regional Director
                                      Mr. Rajiv Bahl, Advocate for the Official
                                      Liquidator

CORAM:
HON'BLE MR. JUSTICE SIDDHARTH MRIDUL


                              JUDGMENT

SIDDHARTH MRIDUL, J

1. The present Petition has been filed jointly, under Sections 391 to 394 of

the Companies Act, 1956 (hereinafter referred to as 'the Act') read with Rules 6

and 9 of the Companies (Court) Rules, 1959, by Narmada Asbestos Pipes

Private Limited (hereinafter referred to as 'Transferor Company/Petitioner

No.1') and Carnation Developers Private Limited (hereinafter referred to as

'Transferee Company/Petitioner No.2') for approval of the Scheme of

Amalgamation (hereinafter referred to as 'the Scheme') between the Transferor

Company and Transferee Company.

2. The Transferor Company and the Transferee Company, have been

hereinafter, jointly referred to as 'the Petitioners'.

3. The registered offices of the Petitioners are situated in the National

Capital Territory of Delhi, and therefore, this Court has the necessary

jurisdiction to adjudicate the present petition.

4. The Transferor Company was incorporated on 24.03.2006 under the

provisions of the Act and a certificate of incorporation was issued by the

Registrar of Companies, Rajasthan. Thereafter, the registered office of the

Transferor Company was shifted to Delhi on 07.09.2013 and a certificate in this

behalf was issued by the Registrar of Companies, Delhi and Haryana.

5. The Transferee Company was incorporated on 02.08.2010 under the

provisions of the Act and a certificate of incorporation was issued by the

Registrar of Companies, Rajasthan. Thereafter, the registered office of the

Transferee Company was shifted to Delhi on 12.06.2013 and a certificate in this

behalf was issued by the Registrar of Companies, Delhi and Haryana.

6. The authorized share capital of Transferor Company, as on 31.02.2014, is

Rs.36,00,000/-, divided into 3,60,000 equity shares of Rs.10/- each. The issued,

subscribed and fully paid-up share capital of Transferor Company, as on

31.02.2014, is Rs.35,72,670/-, divided into 3,57,267/- equity shares of Rs.10/-

each.

7. The authorized share capital of the Transferee Company, as on

31.02.2014, is Rs.1,00,00,000/-, divided into 10,00,000/- equity shares of

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

Transferee Company, as on 31.02.2014, is Rs.3,03,030/-, divided into 30,303

equity shares of Rs.10/- each.

8. It has been averred on behalf of the Petitioners that there are no

proceedings pending against them, under Sections 235 to 251 of the Act

(including their corresponding sections of the Companies Act, 2013).

9. It has been further submitted on behalf of the Petitioners that the Scheme

has been approved by the respective Board of Directors (BOD) of the

Petitioners on 22.12.2014. The copies of the BOD resolutions dated 22.12.2014,

have been filed by the Petitioners and the same are on record.

10. The Copies of the Memorandum of Association and Articles of

Association, of each of the Petitioners, have been duly filed as Annexures to

Company Application (Main) No. 31 of 2015 (Application for First Motion),

which earlier came to be filed by the Petitioners. The same are on record. The

audited financial statements, as on 31.03.2014, pertaining to each of the

Petitioners, have also been duly filed by all the Petitioners and the same are on

record.

11. A copy of the Scheme has been duly placed on record and the salient

features of the Scheme have been incorporated and set out in detail in the

present petition. It has been urged on behalf of the Petitioners that the proposed

amalgamation of the Transferor Company, with and into the Transferee

Company would, inter alia, entail the following benefits:

(i) The Transferor Company involved in the amalgamation is a

subsidiary of the Transferee Company with a majority shareholding

of 99.97% of its paid up share capital and is also jointly developing a

residential group housing project on the consolidated Project Land

with the Transferee Company as detailed out in the application

bearing Company Application (M) No. 31 of 2015 as well as in the

present petition. Apart from the aforesaid project, no other business is

undertaken by the Transferor Company;

(ii) The Scheme will result in consolidation of the business for holding

investments in the shares of the Companies in a single entity and

would result in reduction of overheads, administrative, managerial

and other expenditure and bring about operational rationalization,

organizational efficiency and optimal utilization of various resources;

(iii) The Scheme will lead to efficient administration and operation of the

Petitioners and also prevent cost duplication thus resulting in higher

profits and increased value of shares of the shareholders;

(iv) The Scheme will enable maximum utilization of resources of the

Petitioners as it will significantly reduce the maintenance and

operation cost of the Companies ;

(v) The Scheme will increase the bargaining power of the resulting

company for the purpose of obtaining loan/ finances and to undertake

big construction projects (including the ongoing consolidated project)

as increase in total value of the net assets of resulting company will

enable the resulting Company to qualify for undertaking bigger

projects;

(vi) The Scheme will provide an opportunity to the resulting company to

manage efficiently the skilled and experienced manpower available

with the Petitioners to optimum potential;

(vii) The Scheme will result in the optimum utilization of the business

contacts, supplier base, expertise in sourcing building materials and

existing project lands, of the Transferor Company by the merged

entity resulting in better brand values of the resulting company; and

(viii) The Scheme will result in overall enhancement of shareholder's value

and integration of capabilities for better handling of projects. The

amalgamation of the Transferor Company and the Transferee

Company shall enable the said companies to able to have business

access and market with customers for better and efficient utilization

of resources of the companies and greater synergy of operation and

economies. The Scheme would also benefit all stake holders

including shareholders, employees etc.

12. The Share Exchange Ratio for the Amalgamation has been provided for

in the Scheme and the same is summarised hereinbelow:

"So far as the share exchange ratio is concerned, the Scheme provides that, upon coming into effect of this Scheme, no shares of the transferee company shall be allotted in lieu or exchange of its holding in the transferor company and the share capital including the authorized share capital, and issued, subscribed and paid-up share capital of the transferor company shall stand cancelled."

13. To recapitulate, the Petitioners had, in the earlier round, filed an

application (i.e. application for the First Motion), being Company Application

(M) No. 31 of 2015, whereby a prayer was sought, seeking directions for

dispensing with the requirement of convening meetings of the equity

shareholders and unsecured creditors of the Transferor Company and direction

for dispensing with the requirement of convening meetings of the equity

shareholders and secured creditors of the Transferee Company.

14. By way of order dated 16.04.2015, the said application was allowed and

the requirement of convening meetings of the equity shareholders, secured and

unsecured creditors of each of the Petitioners, to consider and approve, with or

without modifications, the Scheme, was dispensed with.

15. Pursuant to the same, the Petitioners, have filed the instant petition (i.e.

Petition for Second Motion). Notice in this petition was issued by this Court, by

way of the order dated 10.07.2015. Notice was accepted on behalf of the

Official Liquidator (OL) and the Regional Director (RD), Northern Region.

16. Furthermore, vide order of this Court dated 10.07.2015, citations were

directed to be published. It has been stated by way of affidavit dated

08.12.2016 filed by the Transferee Company that Citations were published, on

21.09.2015, in Delhi Editions of the newspapers, namely, 'Hindustan Times'

(English) and 'Dainik Bhaskar' (Hindi), in compliance with the said order.

17. Pursuant to the notices issued, report of the Official Liquidator (OL)

dated 02.12.2015 has been filed, wherein, inter alia, it has been stated that the

OL has not received any complaint qua the Scheme of Amalgamation and/or

from person/party interested in the scheme. Further, it has been stated in the

said report dated 02.12.2015 that on the basis of information submitted by the

Petitioners, it appears, that the affairs of the Transferor Company do not appear

to have been conducted in a manner prejudicial to either the interest of their

members or the public at large.

18. In other words, it has been stated by the OL in the report dated

02.12.2015 that the affairs of the Transferor Company, do not fall foul of the

provisions of the Second Proviso to Section 394(1) of the Act. Thus, it has been

averred on behalf of the OL, in effect, that he would have no objections, if this

Court were to sanction the Scheme.

19. Further, in response to the notices issued in the Petition, the Regional

Director, Northern Region, Ministry of Corporate Affairs, filed an affidavit

dated 01.03.2016 wherein, inter alia, it has been stated that he has no objection

to the sanction of the proposed Scheme, except the observations enumerated in

paragraph 9 of the said affidavit dated 01.03.2016, stating that the Petitioners

are required to comply with the terms and conditions relating to various lease-

hold lands allotted by the Urban Improvement Trust, Bhiwadi, Rajasthan, to the

Petitioners, which are also subject matter of the Scheme.

20. In response to the aforesaid affidavit filed by RD, the Petitioners have

filed Affidavits dated 27.07.2016 wherein, it has been stated that apart from the

undertaking as provided in the Scheme of Amalgamation, the Petitioners have

unequivocally undertaken to comply with the terms and conditions as contained

in the respective lease deeds relating to the lease-hold land allotted by the Urban

Improvement Trust, Bhiwadi, Rajasthan, in favour of the Petitioners which

forms the subject matter of the present petition.

21. Ms. Aparna Mudiam, Assistant Registrar of Companies, appearing on

behalf of the RD, Northern Region, states that in view of the undertaking made

on behalf of the Petitioners, that the terms and conditions as contained in the

respective lease deeds relating to the lease-hold land allotted by the Urban

Improvement Trust, Bhiwadi, Rajasthan, shall be complied with by the

Petitioners, the objection raised vide affidavit of the RD dated 01.03.2016,

stands satisfied and that no further objections against the present Scheme

remain.

22. It has been noted that no objections have been received to the Scheme

from any other party. It has been stated by way of affidavit dated 08.12.2016

filed by the Transferee Company that neither the Petitioners nor their counsel

have received any objection pursuant to the citations published in the

newspapers dated 21.09.2015.

23. In view of the foregoing and upon considering the approval accorded by

the members and creditors of the Petitioners to the proposed Scheme; the

circumstance that the objections raised by the affidavit filed by the Regional

Director, Northern Region, Ministry of Corporate Affairs stand satisfied; the

report of the Official Liquidator attached to this High Court, whereby no

objections have been raised to the proposed Scheme, there appears to be no

impediment to the grant of sanction to the Scheme. Consequently, sanction is

hereby granted to the Scheme under sections 391 to 394 of the Companies Act,

1956. The Petitioners will however, comply with the statutory requirements in

accordance with law.

24. A certified copy of the order, sanctioning the scheme, be filed with the

ROC, within thirty (30) days of its receipt.

25. Resultantly, it is hereby directed that the petitioners will comply with all

provisions of the scheme and, in particular, those which are referred to

hereinabove.

26. Notwithstanding the above, if there is any deficiency found or, violation

committed qua any enactment, statutory rule or regulation, the sanction granted

by this court to the scheme will not come in the way of action being taken,

albeit, in accordance with law, against the concerned persons, directors and

officials of the petitioners.

27. The Transferor Company shall stand dissolved without being wound up.

28. It is made clear, that this order shall not be construed as an order granting

exemption, inter alia, from, payment of stamp duty or, taxes or, any other

charges, if, payable, as per the relevant provisions of law or, from any

applicable permissions that may have to be obtained or, even compliances that

may have to be made, as per the mandate of law.

29. The Petitioners shall deposit a sum of Rs.1,00,000/-, by way of costs, in

the Delhi High Court Bar Association Lawyers' Social and Welfare Fund, New

Delhi, within a period of two weeks from today.

30. Consequently, the petition is allowed in the aforesaid terms and is

disposed of accordingly.

SIDDHARTH MRIDUL, J.

DECEMBER 19, 2016 sb/dn