Payal Polyplast Private Limited vs ...
2016 Latest Caselaw 3626 Del

                   IN THE HIGH COURT OF DELHI
                  COMPANY PETITION NO. 833/2015

                                              Reserved on 3rd May, 2016
                                  Date of pronouncement: 16th May, 2016
In the matter of
The Companies Act, 1956 & the Companies Act, 2013 (to the extent
applicable):

And

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

Scheme of Amalgamation of:

Payal Polyplast Private Limited
                                            Petitioner/Transferor Company
      WITH
Payal Petrochem Private Limited
                                           Petitioner/Transferee Company

                                  Through      Mr.    P. Nagesh     and
                                  Mr.Ashutosh Gupta, Advocates 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 Section 391 & 394 of the

Companies Act, 1956 by the petitioner companies seeking sanction of

the Scheme of Amalgamation of Payal Polyplast Private Limited

(hereinafter referred to as the transferor company) with Payal Petrochem

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 25th March, 2008 with the Registrar of Companies, NCT of

Delhi & Haryana at New Delhi.

4. The transferee company was incorporated under the Companies

Act, 1956 on 29th April, 2010 with the Registrar of Companies, NCT of

Delhi & Haryana at New Delhi.

5. The present authorized share capital of the transferor company is

Rs.5,00,00,000/- divided into 50,00,000 equity shares of Rs.10/- each.

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

Rs.3,23,73,000/- divided into 32,37,300 equity shares of Rs.10/- each.

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

Rs.4,01,00,000/- divided into 40,10,000 equity shares of Rs.10/- each.

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

Rs.4,01,00,000/- divided into 40,10,000 equity shares of Rs.10/- each.

7. 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, 2014, along with the reports of

the auditors, of the transferor and transferee companies have also been

filed.

8. 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 application and the accompanying affidavit. It is claimed

by the petitioners that the amalgamation will contribute in furthering and

fulfilling the objectives and business strategies of petitioner companies

thereby accelerating growth, expansion and development of their

business. The amalgamation would also provide the transferee company

a strong and focused base to undertake the business more

advantageously. It is further claimed that the amalgamated company as

the merged entity will have an enhanced shareholder's value accruing

from consolidation of the business operations resulting in economies of

scale, improving allocation of capital, and optimizing cash flows, thus

contributing to the overall growth prospects of the combined entity.

9. 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 company in the following ratio:

"01 equity share of Rs.10/- each of the transferee company for every 10,000 equity shares of Rs.10/- each held by the shareholders in the transferor company."

10. It has been submitted by the petitioners that no proceedings under

Sections 235 to 251 of the Companies Act, 1956 and corresponding

provisions of the Companies Act, 2013 are pending against the petitioner

companies.

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

in their separate meetings held on 28th March, 2015 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.

12. The petitioner companies had earlier filed CA (M) No. 134/2015

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 13th August, 2015 this court allowed the application and

dispensed with the requirement of convening and holding the meeting of

the equity shareholders of the transferor and transferee companies and

directed convening of separate meetings of their secured and unsecured

creditors, to consider and, if thought fit, approve, with or without

modification, the proposed Scheme of Amalgamation.

13. The Chairpersons of the ordered meetings of the secured and

unsecured creditors of the transferor and transferee companies have filed

their reports stating that the meetings were duly held on 19th September,

2015, as directed, and that the Scheme of Amalgamation has been

approved unanimously by the secured and unsecured creditors of the

transferor and transferee companies, present and voting, in the meetings.

14. The petitioner companies have thereafter filed the present petition

seeking sanction of the Scheme of Amalgamation. Vide order dated 5th

November, 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 4th March, 2016. Copies of the

newspaper clippings containing the publications have been filed along

with the said affidavit.

15. 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 18th March, 2016

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 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.

16. 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 21st March, 2016 stating that the

Regional Director has no objection to the proposed Scheme of

Amalgamation. However, in para 7 of his report, it has been mentioned

that the ROC in his report has stated that the company has not provided

the valuation report. In response to this observation, on 28.03.2016,

learned counsel for the petitioners has submitted that there are two

shareholders in the transferor company, who are also the shareholders in

the transferee company. Further, the transferee company has three

shareholders, one of whom is related to the other two shareholders. He

further prayed and was granted permission to place on record an affidavit

to the effect that, despite a share valuation report not being placed on

record, the shareholders of both the companies are agreeable to the

provisions made in the proposed Scheme with regard to the share

exchange ratio. In view thereof, the petitioner companies have placed on

record the affidavits dated 21st April, 2016 of each shareholder of the

transferee company stating therein that they have no objection to the

share exchange ratio proposed under the said Scheme and further that

they have no objection to the proposed merger of the transferor company

with the transferee company. In view of the aforesaid, the observation of

the Regional Director stands satisfied.

17. The Regional Director in para 8 of his report has further submitted

that para 3 of the Scheme provides that the name of the transferor

company shall replace the name of the transferee company. He,

therefore, prays that the petitioner companies may be directed to comply

with the relevant provisions of the Companies Act, 2013 and guidelines

issued by the Ministry from time to time. In response to the aforesaid

observation, learned counsel for the petitioners undertakes on behalf of

his client that all requisite steps will be taken by his client to effect the

proposed change of name of the transferee company. The said

undertaking is accepted by this Court and the petitioner shall remain

bound by the same. In view thereof, the observation of the Regional

Director stands satisfied.

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

from any other party. The petitioner companies, in the affidavit dated 23rd

March, 2016 of Mr. Nikhil Gupta, authorized signatory of the petitioner

companies have submitted that the petitioner companies have not

received any objection pursuant to the citations published in the

newspapers on 4th March, 2016.

19. Considering the approval accorded by the equity 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 having not raised 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

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 03.05.2016, the petitioners shall deposit a sum of Rs.1,00,000/- by

way of costs with the Common Pool Fund of the Official Liquidator.

21. The petition is allowed in the above terms.

Dasti.

SUDERSHAN KUMAR MISRA, J.

May 16, 2016