Lettuce Entertain You Limited vs Pvr Limited
2016 Latest Caselaw 6548 Del

        IN THE HIGH COURT OF DELHI AT NEW DELHI

                                            Judgment delivered on:19.10.2016

CO.PET. 854/2015

IN THE MATTER OF:-

LETTUCE ENTERTAIN YOU LIMITED
                      ....Petitioner No. 1/Transferor Company

                                      AND

PVR LEISURE LIMITED
                                  ...Petitioner No. 2/Transferor Company

                                      AND
PVR LIMITED
                                    ....Transferee/Non-petitioner Company

                                      AND

THEIR RESPECTIVE SHAREHOLDERS AND CREDITORS

                  Through:   Mr. Deepak Diwan, Mr. Vinod Kumar and Ms.
                             Himanshi Taneja, Advocates for the Petitioners

                             Ms. Aparna Mudiam, Deputy Registrar              of
                             Companies for the Regional Director

                             Mr. Rajiv Bahl, Advocate for the Official
                             Liquidator



CORAM:
HON'BLE MR JUSTICE SIDDHARTH MRIDUL



CO.PET.854/2015                                                     Page 1 of 10
                                JUDGMENT

SIDDHARTH MRIDUL, J

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

Companies Act, 1956 by the Petitioner / Transferor Company No.1& 2

respectively seeking sanction of the Scheme of Amalgamation of Lettuce

Entertain You Limited (Transferor / Petitioner Company No. 1) and PVR

Leisure Limited (Transferor /Petitioner Company No. 2) with PVR Limited

(Transferee / Non-Petitioner Company).

2. The registered office of the Petitioner / Transferor Companies and the

Transferee Company is situated at New Delhi, within the jurisdiction of this

Court.

3. Details with regard to the date of incorporation of Transferor

Companies, their Authorized, Issued, Subscribed and Paid up capital have

been given in the Petition.

4. Copies of the Memorandum and Articles of Association as well as the

latest Audited Annual Accounts for the year ended 31st March, 2015 of the

Petitioner companies respectively and the Transferee Company have also

been enclosed with the Company Application (Main) No. 161/2015.

5. Copies of the Resolutions passed by the Board of Directors of the

Transferor / Petitioner Company Nos. 1 & 2 respectively and Transferee

approving the Scheme of Amalgamation have also been placed on record.

6. It has been submitted that no proceedings under 210, 214, 215, 216(1),

216(3), 216(4), 217, 219, 220, 223, 224(1), 224 (3), 224(4) and 225 of the

Companies Act, 2013 (Section 237, 243, 250, 250(A), 251 of the Companies

Act, 1956) is pending against either of the Petitioner Companies.

7. So far as the share exchange ratio is concerned Clause 5.1 of the

Scheme mentions that the entire paid-up equity and non-cumulative

convertible preference share capital of Transferor / Petitioner Company

No. 2 is held by the Transferee Company, directly and the entire paid-up

equity share capital of Transferor / Petitioner Company No. 1 is held by

Transferee Company through its wholly owned subsidiary PVR Leisure,

Transferor / Petitioner Company No. 2. Therefore, upon this Scheme being

effective, the entire Issued, Subscribed and Paid up share capital of

Transferor / Petitioner Company No. 1 & 2 respectively shall, ipso facto,

without any further application, act or deed stand cancelled on the Effective

Date and no shares of Transferee Company will be issued or allotted with

respect to the equity and preference shares held by Transferee Company in

the Transferor / Petitioner Company No. 2 and to Transferor / Petitioner

Company No. 2 with respect to the equity shares held by PVR Leisure in

Lettuce in consideration for amalgamation.

8. The Petitioner Company had earlier filed CA (M) No. 161 of 2015

seeking directions of this Court for dispensation of the convening of

meetings of the Equity & Preference shareholders, Secured and Unsecured

Creditors of the Transferor Company Nos. 1 & 2 respectively and also, for

dispensing with the requirement of filling the separate or joint Application

by the Transferee Company under sections 391 to 394 of the Companies Act,

1956 on the ground that the scheme does not entail or involve any

arrangement between the Transferee / Non-Petitioner Company and its

shareholders since both the Transferor / Petitioner Companies are wholly

owned subsidiaries of the Transferee / Non- Petitioner Company. Further, no

new shares will be issued by the Transferee / Non-Petitioner Company in

lieu of the shares of the Transferor /Petitioner Companies and hence, there

will be no change in the control and management of the Transferee / Non-

Petitioner Company, therefore, the rights of the shareholders of the

Transferee / Non-Petitioner Company will not be affected in any manner

whatsoever by the scheme. This Court vide order dated 6th November, 2015,

allowed the application and dispensed with the requirement of convening

meetings of Equity Shareholders and Unsecured Creditors of Transferor

Company No. 1, there being no secured creditors of Transferor Company

No. 1. Further, the court dispensed with the requirement of convening

meetings of Equity & Preference Shareholders of Transferor Company No.

2, there being no Secured and Un-secured Creditors of the Transferor

Company No. 2 and granted exemption to the Transferee Company from

taking out separate proceedings under Section 391(2) of the Companies Act,

1956.

9. The Petitioner Companies had thereafter filed the present Petition

seeking sanction of the Scheme of Amalgamation. Vide order dated 20 th

November, 2016, notice of 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, Delhi

Edition) and 'Jansatta' (Hindi, Delhi Edition). Affidavit of Service and

Publication has been filed by the Petitioner showing compliance regarding

service of the Petition on the Regional Director, Northern Region and the

Official Liquidator, and also regarding publication of citations in the

aforesaid newspapers on 4th December, 2015.

10. 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 11 th

March, 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, creditors or to public interest.

11. In response to the notices issued in the Petition, the Learned Regional

Director, Northern Region, Ministry of Corporate Affairs after receiving the

report from the Registrar of Companies, issued the letter for clarifications

from the Petitioner Companies and the Petitioner Company submitted their

reply on 08th March, 2016 to the said letter. Thereafter the Learned Regional

Director had filed his Affidavit/Report dated 21st March, 2016 wherein vide

Para 6, the Regional Director had alleged that the Transferee Company had

violated the various provisions of the Companies Act, 2013 and the reply

dated 08.03.2016 submitted by the Petitioners is vague and unsatisfactory.

12. In response to the above observation of the Learned Regional

Director, Learned Counsel for the Petitioner Companies vide their rejoinder

dated 7th April, 2016 filed on 8th April, 2016 have submitted that the

Regional Director has erred in describing PVR Ltd, Transferee / Non-

Petitioner Company as Petitioner Company No. 3 whereas as per order dated

6th November, 2016, PVR Ltd, Transferee Company/ Non- Petitioner

Company was granted exemption from taking out a separate proceedings

under Section 391(2) of the Companies Act, 1956. Further, the Learned

Counsels submitted that observations made in Para 6(2) of RD's affidavit

dated 21st March, 2016 do not relate to the Petitioner Companies and the

alleged non-compliances have no bearing to the merits of the Scheme.

13. Pursuant to the rejoinder of the Petitioner Companies, the Learned

Regional Director Mr. Narender Kumar Bhola vide additional affidavit dated

18th July,2016 filed on 19th July, 2016 stating that vide para 4, the Registrar

of Companies, Delhi & Haryana vide letter dated 18th April, 2016 furnished

further report in the matter and submitted that the Transferee Company have

not complied with the Provisions of the Companies Act, 2013. The relevant

para of the Regional Report is reproduced hereunder:

"4(e). The petitioner company has not clearly explained why and how Section 185 of the Companies Act, 2013 should not apply in the matter. Nothing is stated clearly to refute the serious violation. The Petitioner company is merely struck its contention of non- applicability of the provisions of Section 185 of the Act without going into its entirety and nor commented upon the justification of extending short term loans, its utilization, booking huge losses and amalgamation of these entities in a short span of their incorporation;"

14. That subsequently, the Learned Regional Director again vide

representation/ affidavit dated 29th July, 2016 filed on 1st August, 2016

wherein vide Para 3 submits that the Regional Director had again received

the report dated 20th July, 2016 from the Registrar of Companies, Delhi &

Haryana stating that the Transferee Company has made the necessary

compliances of the Companies Act, 2013 and submitted that he has no

objection to the sanctioning of the Scheme. The relevant para of the RD

Report dated 29th July, 2016 is as under:

"2. Therefore the loan taken by Lettuce Entertain You Limited (Transferor Company No. 1) from PVR Leisure Limited(Transferor Company No. 2) is exempt from Section 185 according to Rule 10(!) of Chapter XII of the Companies Rule, 2014."

15. No objection has been received to the Scheme of Amalgamation from

any other party. Mr. Pankaj Dhawan, Authorised Signatory of the Petitioner

Companies, has filed an Affidavit dated 21st March, 2016 confirming that

neither the Petitioner Company nor their Legal Counsel has received any

objection pursuant to citations published in the newspapers.

16. The Petition was last fixed for hearing on 9th September, 2016 and the

matter was adjourned to 10th March, 2017. The Petitioners therefore filed an

Application bearing CA No.3696 of 2016 for preponing the hearing on the

ground that all parties entitled to file their report have given their no-

objection to the approval of the Scheme and accordingly, the Order

approving the Scheme will be in the nature of consensual order and nothing

else survives in the way of the sanction of the Scheme.

17. In view of the approval accorded by the Shareholders and Creditors of

the Petitioner Companies; representation/reports filed by the Regional

Director, Northern Region and the Official Liquidator, attached with this

Court 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.

18. A certified copy of the order be filed with the Registrar of Companies

within 30 days from the date of receipt of the same.

19. 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.

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

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

21. In terms of the provisions of sections 391 and 394 of the Companies

Act, 1956, and in terms of the Scheme , the whole or part of the

undertaking, the property, rights and powers of the Transferor Companies be

transferred to and vest in the Transferee Company without any further act or

deed. Similarly, in terms of the Scheme, all the liabilities and duties of the

Transferor Companies be transferred to the Transferee Company without any

further act or deed. It is, however, clarified that this order will not be

construed as an order granting exemption from payment of stamp duty or

taxes or any other charges, if payable in accordance with any law; or

permission/compliance with any other requirement which may be

specifically required under any law.

22. The Petition is allowed in the above terms.

SIDDHARTH MRIDUL, J OCTOBER 19, 2016 sd