Ecotrust Capital Private Limited vs Talentgenie Consultants Private ...
2016 Latest Caselaw 6547 Del

         IN THE HIGH COURT OF DELHI AT NEW DELHI


                                      Judgment delivered on: 19.10. 2016


CO.PET. 323/2016



IN THE MATTER OF:-
ECOTRUST CAPITAL PRIVATE LIMITED
                      ....Petitioner No. 1/Transferor Company

                                  AND


CHEMICAL AND METALLURGICAL
DESIGN COMPANY LIMITED
                     .....Petitioner No. 2/Transferee Company
                     /Demerged Company

                                  AND


UNISYSTEMS PACKERS PRIVATE LIMITED
                      .....Petitioner No. 3/Resulting Co. No. 1

                                  AND


TALENTGENIE CONSULTANTS PRIVATE LIMITED
                     ....Petitioner no. 4/Resulting Co. No. 2

                   Through: Mr. Deepak Diwan, Mr. Vinod Kumar and Ms.
                            Himanshi Taneja, Advocates for the Petitioners
                            Ms. Aparna Mudiam, Assistant Registrar of
                            Companies for the Regional Director



CO.PET. 323/2016                                               Page 1 of 14
                              Mr. Rajiv Bahl, Advocate for the Official
                             Liquidator

  CORAM:
  HON'BLE MR JUSTICE SIDDHARTH MRIDUL


                             JUDGMENT

SIDDHARTH MRIDUL, J

1. This Joint Petition has been filed under sections 391(2) & 394 of the

Companies Act, 1956 by the Petitioner Company Nos. 1 to 4 respectively

seeking sanction of the Composite Scheme of Arrangement of Ecotrust

Capital Private Limited("Transferor/Petitioner Company No. 1" or "ECPL")

and Chemical And Metallurgical Design Company Limited ("Transferee

/Demerged / Petitioner Company No.2" or "CMDCL") and Unisystems

Packers Private Limited ("Resulting Company No. 1/ Petitioner Company

No. 3" or "UPPL") and Talentgenie Consultants Private Limited ("Resulting

Company No. 2 / Petitioner Company No. 4" or "TCPL") whereby ECPL is

first merged with CMDCL and subsequently the Proposed Amalgamated

Company demerges its Industrial Undertaking into UPPL and the Investment

Undertaking into TPPL (including the Investments which is acquired as a

result of the Amalgamation of ECPL into CMDCL).

2. The Resulting Companies Nos. I-II, have been hereinafter, jointly

referred to as "Resulting Companies". The Transferor Company, Transferee

Company / Demerged Company and the Resulting Companies, 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 details of the date of incorporation of the Petitioners, authorized

share capital, issued, subscribed and paid up capital of the Petitioners, have

been set out in Scheme.

5. Transferor Company /ECPL was incorporated on 25 th April, 2008

under the provisions of the Act.

6. The authorized share capital of Transferor Company / ECPL is

Rs.25,00,000/- (Rupees Twenty Lakhs only), divided into 2,50,000 (Two

Lakhs Fifty Thousand) Equity Shares of the face value of Rs.10/- each.

While the issued, subscribed and paid-up share capital of Transferor

Company / ECPL is Rs. 16,00,000/- (Rupees Sixteen Lakhs Only), divided

into 1,60,000 (One Lakh Sixty Thousand) Equity Shares of Rs.10/-each.

Transferee Company / Demerged Company / CMDCL was incorporated on

4th November, 1965 with the Registrar of Companies, NCT of Delhi &

Haryana.

7. The authorized share capital of Transferee Company / Demerged

Company / CMDCL is Rs.1,00,00,000/- (Rupees One Crore Only), divided

into 1,00,000 (One Lakh) Equity Shares of the face value of Rs.100/- each.

While the issued, subscribed and paid-up share capital of Transferee

Company / Demerged Company / CMDCL is Rs. 8,09,400/- (Rupees Eight

Lakhs Nine Thousand Four Only), divided into 8,094 (Eight Thousand and

Ninety Four) Equity Shares of Rs.100/-each.

8. Resulting Company No. 1 / UPPL was incorporated on 2nd December,

2009 under the provisions of the Act.

9. The authorized share capital of Resulting Company No. 1 / UPPL is

Rs.1,00,000/- (Rupees One Lakhs Only), divided into 10,000 (Ten

Thousand) Equity Shares of the face value of Rs.10/- each. While the issued,

subscribed and paid-up share capital of Resulting Company No. 1 / UPPL is

Rs. 1,00,000/- (Rupees One Lakh Only), divided into 10,000 (Ten

Thousand) Equity Shares of Rs.10/-each.

10. Resulting Company No. 2 / TCPL was incorporated on 9 th August,

2012 under the provisions of the Act.

11. The authorized share capital of Resulting Company No. 2 / TCPL is

Rs.1,00,000/- (Rupees One Lakhs Only), divided into 10,000 (Ten

Thousand) Equity Shares of the face value of Rs.10/- each. While the issued,

subscribed and paid-up share capital of Resulting Company No. 1 / UPPL is

Rs. 1,00,000/- (Rupees One Lakh Only), divided into 10,000 (Ten

Thousand) Equity Shares of Rs.10/-each.

12. 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).

13. 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. The copies of the BOD resolutions dated 28.01.2016,

27.01.2016, 29.01.2016 and 29.01.2016 with respect to Petitioner No.1, 2, 3

and 4, respectively, have been filed and the same are on record.

14. 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 (M) No. 37 of 2016 (Application for First Motion),

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

The audited financial statements, as on March 31, 2015, pertaining to each of

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

are on record.

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

features of the Scheme have been incorporated and detailed in the present

petition and the accompanying affidavit. It has been urged on behalf of the

Petitioners that the proposed Composite Scheme of Arrangement would,

inter alia, entail the following benefits:

"Whereas Chemical and Metallurgical Design Company Limited (CMDCL) is in three vertical businesses viz.

1) Running a high end Business Center in Nehru Place, New Delhi by the name of Paharpur Business Center.

2) Investments in shares securities, mutual funds and other finance instruments.

3) Owns an industrial plot at Okhla Industrial Area in which the company is in the process to set up a packaging industry.

And Whereas Ecotrust Capital Private Limited (ECPL) is interalia holding 77.46% of shares in CMDCL as one of the Promoters and also has a division for investments in shares, securities and other finance investments.

And Whereas the ultimate beneficial shareholders of the CMDCL and ECPL are the same and are also holding the equity shares in the same proportion in both the companies (apart from 6 other family members who hold 1 share each in CMDCL so as to comply with the legal requirements of Company law which stipulates that there should be atleast seven shareholders in a closely held Public Limited Company).

And Whereas Consultants were engaged to restructure the CMDCL and ECPL in such a manner that the businesses not having synergies should be moved to Special Purpose Vehicles (SPVs) so that each of the three different businesses/undertakings is hived off into a separate company so as to have focused businesses under professional management as vehicles of growth and remove unnecessary layers of shareholding.

And Whereas two companies from within the group have been identified and chosen as Special Purpose Vehicles (SPVs) viz Talentgenie Consultants Private Limited (TCPL) and Unisystems Packers Private Limited (UPPL) so that the three undertakings i.e. Business Center undertaking, Investment and Finance undertaking and the Industrial undertaking are held by three separate companies.

And Whereas the Consultants have proposed the structuring in such a manner that ECPL is first merged with CMDCL and subsequently the Proposed Amalgamated Company demerges its Industrial Undertaking into UPPL and the Investment Undertaking into TPPL

(including the Investments which is acquired as a result of the Amalgamation of ECPL into CMDCL).

The factors which induced the decision were, inter alia, as follows:

1. The business strategies for the three businesses are altogether different

2. The association of collaborators and strategic partners will not mature until core businesses are segregated into separate entities

3. Dedicated business will only attract Joint Venture parties. By focused management it is easier to reach levels of excellence.

4. The three verticals do not have any synergies.

And Whereas it is envisioned that the growth of these businesses would require induction of capital funding to be generated through

(a) Strategic investors

(b) Technical & financial collaborators

(c) Private equity investors

(d) Banks and financial institutions

(e) IPOs And Whereas private funds and collaborations are mostly sector specific. Therefore in order to realize the long term growth, it has been decided that

1. The 'Business Centre Division' will be carried by CMDCL.

2. The 'Industrial Division' will be under UPPL.

(i) The 'Investment Division' will be under TCPL."

16. So far as the share exchange ratio is concerned Clause 1.2(c) of Part-B

and Clause 1.1 of Part-E of the Scheme provides:

Upon the Scheme becoming effective and upon amalgamation of ECPL with the Transferee Company, the Transferee Company shall issue 100 equity shares of Rs. 100/- each fully paid up of CMDCL as a token to shareholders of ECPL as the ultimate beneficial shareholders of CMDCL and ECPL are the same and also hold the shares in the same proportion in both the companies (apart from 6 other immediate family members who hold 1 share each in CMDCL so as to comply with the legal requirements of Company law which stipulates that there should be at least seven shareholders in a closely held Public Limited Company). These 100 equity shares will be issued to the shareholders of ECPL in the same proportion as their shareholding in ECPL.

As per the Valuers Report, both UPPL and TCPL will each issue 100 fully paid up equity Shares of Rs. 10 to the ultimate beneficial shareholders of Demerged company as a token since the ultimate beneficial shareholders of ECPL, CMDCL , UPPL and TCPL are the same and they also hold shares in the same proportion in all four companies. These equity shares will be issued to the ultimate beneficial shareholders of CMDCL in the same proportion as their shareholding in all the companies."

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

application (i.e. application for the first motion) being Company Application

(M) No. 37 of 2016) whereby a prayer was sought, seeking directions for

dispensing with the requirement of convening meetings of the Equity & and

Unsecured Creditors of Petitioner Company Nos. 1 to 4 respectively, there

being no Secured Creditors of Petitioner Company Nos. 1 to 4 and

Unsecured Creditors of Petitioner Company No. 1, 3 & 4 respectively. Vide

order dated 8th March 2016, this Court allowed the Application and

dispensed with the requirement of convening meetings of Equity

Shareholders of the Petitioner Companies and Unsecured Creditors of

Petitioner Company No. 2.

18. Pursuant to the same, the Petitioners, have filed the instant petition

(i.e. Second Motion). Notice in this petition was issued by this Court, by way

of the order dated 19.04.2016. Notice was accepted on behalf of the Official

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

19. It has been noted that Citations were published, on 3 rd September,

2016 in Delhi Editions of the newspapers, namely, 'Business Standard'

(English, Delhi Edition) and 'Jansatta' (Hindi, Delhi Edition), in compliance

with the order of this Court dated 19.04.2016. An affidavit dated 09.09.2016

demonstrating service of the petition on the Official Liquidator, Registrar of

Companies and the Regional Director, Northern Region.

20. Pursuant to the notices issued, the Official Liquidator sought

information from the Petitioner Companies. Based on the information

received, the Official Liquidator D. P. Ojha had filed his report dated _,

September 2016 wherein he has stated that he has not received any

complaint against the proposed Scheme 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 or to public interest.

21. In response to the notices issued in the Petition, Mr Narendra Kumar

Bhola, the Learned Regional Director, Northern Region, Ministry of

Corporate Affairs after receiving the report from the Registrar of Companies,

filed their report on 3rd October, 2016. That vide Para 8 of the said Report, it

has been submitted that Petitioner Company No. 2 has a pending Income

Tax liability of Rs. 12,331,179/- for the A.Y. 2006-07 & 2007-08.

22. On the date of hearing the Learned Counsels of the Petitioner

Companies submits that the said observation is made in reference to

Petitioner Company No. 2 which is a continuing Company and has no

bearing on the sanction of the Scheme.

23. Further the Regional Director vide Para 9, has submitted that the

Registrar of Companies, Delhi & Haryana vide para 31 of his report has

stated that it has mentioned in the valuation Report to the proposed Scheme

of Arrangement that the Appointed Date for such a merger would be 1 st

April, 2015 and for demerger would be 1st April, 2015 (post Amalgamation)

whereas as per the Scheme of Arrangement, the Appointed Date is fixed as

1st April, 2016 and for the demerger would be 1st April, 2016(post

Arrangement). Further, the Regional Director has subsequently clarified that

a certificate regarding appointed date has been furnished by the Chartered

Accountants concerned stating that the appointed date inadvertently has been

typewritten as 01.04.2015 instead of 01.04.2016.

24. No objection has been received to the Composite Scheme of

Arrangement from any other party. Mr. Vishwa Kamal Meattle, Director of

the Petitioner Companies, has filed an Affidavit dated 3 rd October, 2016

confirming that neither the Petitioner Companies nor their Legal Counsel has

received any objection pursuant to citations published in the newspapers.

25. In view of the foregoing, upon considering the approval accorded by

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

affidavits filed by the Regional Director, Northern Region, Ministry of

Corporate Affairs and 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 section 391

and 394 of the Companies Act, 1956. The Petitioners will however, comply

with the statutory requirements in accordance with law.

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

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

27. 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.

28. 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.

29. The transferor company shall stand dissolved without being wound up.

30. 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.

31. Learned counsel appearing on behalf of the Official Liquidator prays

that costs of at least Rs.50,000/- may be paid by the petitioners, keeping in

view the fact, that the matter called for examination of extensive records and

prioritized hearings. Learned counsel appearing on behalf of the petitioners

states that the same is acceptable to him.

32. In view of the foregoing, the petitioners shall deposit a sum of

Rs.50,000/- by way of costs, with the Official Liquidator, Delhi.

33. Consequently, the petition is allowed and disposed of, in the aforesaid

terms.

SIDDHARTH MRIDUL, J OCTOBER 19, 2016 ra/sd