Dcm Engineering Limited vs ...
2016 Latest Caselaw 3631 Del

                   IN THE HIGH COURT OF DELHI
                  COMPANY PETITION NO. 836/2015

                                           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 to 394 of the
Companies Act, 1956

Scheme of Amalgamation of:

DCM Engineering Limited
                                          Petitioner/Transferor Company
      WITH

DCM Limited
                                          Petitioner/Transferee Company

                               Through Mr. Mahesh Agarwal and
                               Mr.Rajeev Kumar, 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 to 394 of the

Companies Act, 1956 by the petitioner companies seeking sanction of

the Scheme of Amalgamation of DCM Engineering Limited (hereinafter

referred to as the transferor company) with DCM 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 originally incorporated under the

Companies Act, 1956 on 5th September, 1990 with the Registrar of

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

style of DCM Precision Engineering Private Limited. The company

changed its name to DCM Precision Engineering Limited and obtained

the fresh certificate of incorporation on 5th February, 1998. The company

again changed its name to DCM Engineering Limited and obtained the

fresh certificate of incorporation on 23rd March, 2004.

4. The transferee company was originally incorporated under the

provisions of Indian Companies Act, 1882 on 26th March, 1889 with the

Registrar, Joint Stock Companies, Punjab under the name and style of

Delhi Cloth & General Mills Company Limited. The company changed its

name to DCM Limited and obtained a certificate in this regard from the

Registrar of Companies, NCT of Delhi & Haryana at New Delhi on 6th

October, 1983.

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

Rs.24,00,00,000/- divided into 2,39,99,000 equity shares of Rs.10/- each

aggregating to Rs.23,99,90,000/- and 100 13.50% redeemable

cumulative preference shares of Rs.100/- each aggregating to

Rs.10,000/-. The issued, subscribed and paid-up share capital of the

company is Rs.20,05,00,000/- divided into 2,00,50,000 equity shares of

Rs.10/- each fully paid up.

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

Rs.80,00,00,000/- divided into 6,00,00,000 equity shares of Rs.10/- each

aggregating to Rs.60,00,00,000/-; 3,20,000 9.5% - 6th redeemable

cumulative preference shares of Rs.25/- each aggregating to

Rs.80,00,000/-; 36,80,000 preference shares of Rs.25/- each

aggregating to Rs.9,20,00,000/- and 10,00,000 cumulative convertible

preference shares of Rs.100/- each aggregating to Rs.10,00,00,000/-.

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

Rs.17,37,59,195/- divided into 1,73,79,037 equity shares of Rs.10/- each

fully paid up aggregating to Rs.17,37,90,370/- less calls in arrears of

Rs.31,175/-.

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

transferor and transferee companies have been filed on record with the

joint application, being CA(M) 130/2015, earlier filed by the petitioners.

The audited balance sheets, as on 31st March, 2014, of the transferor

and transferee companies, along with the reports of the auditors, had

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 petition and the accompanying affidavit. It has been

submitted by the petitioners that the transferor company is a subsidiary of

the transferee company which holds approx. 75.06% of the share capital

of the transferor company. It is claimed that the proposed Scheme would

result in creation of a single entity with better financial strength which

would result in improving the competitive position of the businesses of

the combined entity. It is further claimed that the proposed amalgamation

would result in consolidation of the businesses presently being carried on

by the transferor company and the transferee company would help in

diversification of business risks and would also help in cost optimization

in the system.

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:

"20 equity shares of Rs.10/- each fully paid up of the transferee company for every 77 equity shares of Rs.10/- each fully paid up 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 or under Sections 210,

212(1) to (7) & (11) to (17), 214, 215, 216(1) & (3), 217, 219, 220, 223,

224(1), (3) and (4) and 225 or any other applicable 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 8th December, 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 have been placed on record.

12. The petitioner companies had earlier filed CA (M) No. 130/2015

seeking directions of this court to dispense with the requirement of

convening the meeting of the equity shareholders of the transferor

company and for convening of separate meetings of the secured and

unsecured creditors of the transferor company and equity shareholders,

secured and unsecured creditors of the transferee company, which are

statutorily required for sanction of the Scheme of Amalgamation. Vide

order dated 1st September, 2015 this court allowed the application and

dispensed with the requirement of convening and holding the meeting of

the equity shareholders of the transferor company and directed

convening of separate meetings of the secured and unsecured creditors

of the transferor company and equity shareholders, secured and

unsecured creditors of the transferee company, 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 company and equity shareholders,

secured and unsecured creditors of the transferee company have filed

their reports stating that the meetings were duly held on 17th October,

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

approved unanimously by the secured and unsecured creditors of the

transferor company and equity shareholders, secured and unsecured

creditors of the transferee company, 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 14th January, 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 26th February,

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 15th March, 2016 stating that the ROC in

his report has not made any adverse comments to the Scheme of

Amalgamation and that the Regional Director has no objection to the

proposed Scheme of Amalgamation.

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

from any other party. The petitioner companies, in the affidavits dated

18th March, 2016 of Mr. Apil Agarwal, authorized signatory of the

transferor company and Mr. Ashwani Singhal, authorized signatory of the

transferee company have submitted that neither the petitioner companies

nor their counsel have received any objection pursuant to the citations

published in the newspapers on 14th January,2016.

18. 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.

19. 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.

20. The petition is allowed in the above terms.

Dasti.

SUDERSHAN KUMAR MISRA, J.

May 16, 2016