Karnataka High Court
Proteans Software Solutions Private ... vs Nil on 27 September, 2012
Author: L.Narayana Swamy
Bench: L.Narayana Swamy
1
IN THE HIGH COURT OF KARNATAKA AT BANGALORE
DATED THIS THE 27TH DAY OF SEPTEMBER 2012
BEFORE
THE HON'BLE MR. JUSTICE L.NARAYANA SWAMY
COMPANY PETITION No.62/2012
A/W
COMPANY PETITIONS No.63, 64, 65 & 43 OF 2012
COMPANY PETITION No.62 OF 2012
BETWEEN :
PROTEANS SOFTWARE SOLUTIONS PVT. LTD.,
REGISTERE OFFICE AT
SY NO. 13/1, KADUBEESANAHALLI VILLAGE,
OUTER RING ROAD, VARTHUR HOBLI,
BANGALORE-560087
...PETITIONER
( By Sri. UDAY SHANKAR ASSOCIATES )
AND :
NIL
...RESPONDENT
( By Sri. K S MAHADEVAN & V JAYARAM, ADV. FOROL)
COMPANY PETITION No.63 OF 2012
BETWEEN :
2
COREOBJECTS INDIA PRIVATE LIMITED
REGISTERED OFFICE AT SY NO. 13/1,
KADUBEESANAHALLI VILLAGE,
OUTER RING ROAD,
VARTHUR HOBLI,
BANGALORE-560103
...PETITIONER
( By Sri. UDAY SHANKAR ASSOCIATES )
AND :
NIL
...RESPONDENT
( By Sri. K S MAHADEVAN & V JAYARAM, ADV. FOROL)
COMPANY PETITION No.64 OF 2012
BETWEEN :
SYMPHONY INFOSPACE INDIA PVT. LTD.,
REGISTERED OFFICE AT
SY.NO.13/1, KADUBEESANHALLI VILLAGE,
OUTER RING ROAD,
VARTHUR HOBLI,
BANGALORE 560 087
...PETITIONER
( By Sri. UDAY SHANKAR ASSOCIATES )
AND :
NIL
...RESPONDENT
( By Sri. K S MAHADEVAN & V JAYARAM, ADV. FOROL)
COMPANY PETITION No.43 OF 2012
3
BETWEEN :
JOPASANA SOFTWARE &
SYSTEMS PRIVATE LIMITED
REGISTERED OFFICE AT
DSY NO.13/1,. KADUVEESANHALLI
VILLAGE, OUTER RING ROAD,
VARTHUR HOBLI
BANGALORE-560103
...PETITIONER
( By Sri. UDAY SHANKAR ASSOCIATES )
AND :
NIL
...RESPONDENT
( By Sri. K S MAHADEVAN & V JAYARAM, ADV. FOR OL
Smt. GOWHAR UNNISA CGC FOR ROC )
COMPANY PETITION NO.65 OF 2012
BETWEEN :
SYMPHONY SERVICES
CORPORATION (INDIA) PRIVATE LTD.,
REGISTERED OFFICE AT
SY.NO.13/1, KADUBEESANHALLI VILLAGE,
OUTER RING ROAD, VARTHUR HOBLI,
BANGALORE 560 087
...PETITIONER
( By Sri. UDAY SHANKAR ASSOCIATES )
AND :
NIL
...RESPONDENT
4
( By Sri. K.S.MAHADEVAN & JAYARAM, ADV. FOR OL
Sri. GOWHAR UNNISA CGC FOR ROC )
THESE COMPANY PETITIONS ARE FILED UNDER
SECTION 391 TO 394 OF THE COMPANIES ACT, 1956,
PRAYING TO SANCTION THE SCHEME OF AMALGAMATION
OF THE PETITIONER COMPANY WITH THE TRANSFEREE
COMPANY AS IN ANNEXURE-A HERETO, AND PASS AN
ORDER THAT UPON THE SCHEME OF AMALGAMATION
BECOMING EFFECTIVE THE PETITIONER COMPANY BE
DEEMED TO BE WOUND UP AND SHALL BE DISSOLVED
WITHOUT WINDING UP PROCEEDINGS AND ETC.,
THESE PETITIONS COMING ON FOR ORDERS, THIS
DAY, THE COURT MADE THE FOLLOWING:
ORDER
These Company Petitions have been filed by the Petitioner-Companies under Sections 391 to 394 of Companies Act, 1956 seeking permission to allow the Scheme of amalgamation, as per Annexure-A annexed to the petitions, with the Transferee Company. The Petitioner- Company in Company Petition No.62 of 2012, i.e. M/s. Proteans Software Solutions Private Limited; the Petitioner- Company in Company Petition No.63 of 2012, i.e. M/s. Coreobjects India Private Limited; the Petitioner-Company in Company Petition No. 64 of 2012 i.e. M/s. Symphony Infospace India Private Limited; the Petitioner-Company in 5 Company Petition No.43 of 2012 i.e. M/s. Jopasana Software and Systems Private Limited (the Petitioner- Companies hereinafter are referred to as "Transferor companies") are proposed to be merged with the Petitioner in Company Petition No.64 of 2012 i.e. M/s. Symphony Services Corporation (India) Private Limited (hereinafter referred to as "Transferee-Company").
2. The Transferor Company M/s. Proteans Software Solutions Private Limited was incorporated on 19 th June 2003 under the provisions of Companies Act, 1956 with the Registrar of Companies, Karnataka at Bangalore under the name and style of "M/s. Proteans Software Solutions Private Limited". The Registered Office of the Transferor-Company is situated at Sy. No.13/1, Kadubeesanhalli Village, Outer Ring Road, Varthur Hobli, Bangalore-560 087. The authorised share capital of the Transferor Company as on 31st March 2011 is Rs.1,25,00,000/- divided into 125,00,000 equity shares of Rs.1/- each. Issued, Subscribed and Paid-up Capital is Rs.98,56,750/- divided into 9,56,750 equity shares of Rs.1/- each. The main 6 objects of the Transferor-company, as set out in its Memorandum of Articles of Association, is to design, develop, maintain, export, import, deal in buy, sell, transfer, commission, service, train, consult in all types of systems software, application software, software integration, software products in any medium, in any area such as Engineering Electronics, Communication and Network, Medical, E-commerce, banking, internet, intranet, statistical, accounting, management, legal geographical, education, entertainment, multimedia; etc. and morefully described in the Memorandum of Articles of Association. The latest audited Balance Sheet, as on 31st March 2011 of the Transferor Company, is produced at Annexure-C to the petition.
3. The Transferor Company M/s. Coreobjects India Private Limited was incorporated on 26th February 1996 under the provisions of Companies Act, 1956 with the Registrar of Companies, Karnataka at Bangalore under the name and style of "Prosoft Business Solutions Private Limited". The name of the company was changed to its 7 present name, i.e. M/s. Coreobjects India Private Limited vide its certificate dated 29th January 1999. The Registered Office of the Transferor-Company is situated at Sy. No.13/1, Kadubeesanhalli Village, Outer Ring Road, Varthur Hobli, Bangalore-560 103. The authorised share capital of the Transferor Company as on 31st March 2011 is Rs.1,00,00,000/- divided into 1,00,00,000 equity shares of Rs.1/- each. Issued, Subscribed and Paid-up Capital is Rs.58,01,758/- divided into 58,01,758 equity shares of Rs.1/- each. The main objects of the Transferor-company, as set out in its Memorandum of Articles of Association is, to carry on the business in India and abroad of computer software/hardware consultancy; business application ad system software development; all forms of hardware and software designing and manufacturing, hardware assembly; turn-key project implementation; exports of all types of hardware, software, intermediate products, development tools and similar products; overseas development; executing service contracts; management and system consultancy and recruiting and lending of manpower for 8 both Indian and overseas clients; providing product support, online services, systems integration; establishing computer communication systems, computer networks, LAN/WAN installation/integration, telecommunication (including telephones) and related software; satellite communication set-up; providing internet services, design and developing computer games, computer animation, audio/video; computer multimedia development; information technology and development; information technology and development in any other related computer field; etc. and morefully described in the Memorandum of Articles of Association which is annexed at Annexure-B to the petition. The latest audited Balance Sheet, as on 31st March 2011 of the Transferor Company, is produced at Annexure-C to the petition.
4. The Transferor Company M/s. Jopasana Software & Systems Private Limited was incorporated on 22 nd September 1997 under the provisions of Companies Act, 1956 with the Registrar of Companies, Maharashtra and was shifted from State of Maharashtra to the State of 9 Karnataka from 4th August 2011 vide order of Company Law Board dated 4th August 2011. The Registered Office of the Transferor-Company is situated at Sy.No.13/1, Kadubeesanhalli Village, Outer Ring Road, Varthur Hobli, Bangalore-560 087. The authorised share capital of the Transferor Company as on 31st March 2011 is Rs.2,00,00,000/- divided into 20,00,000 equity shares of Rs.10/- each. Issued, Subscribed and Paid-up Capital is Rs.1,00,00,000/- divided into 10,00,000 equity shares of Rs.10/- each. The main objects of the Transferor-company, as set out in its Memorandum of Articles of Association, is to provide services and systems in computerisation and automation in India and abroad; to extend consultancy in computer application and computer software in marketing, management, finance, production, personnel, designing, graphics and other related fields in which computer use is possible, in India and abroad; to assemble, design, fabricate, install, equip, maintain, run, repair, sell, resell, hire, buy, import, export and to act as dealers, distributing agents and marketers, represent foreign companies, or 10 otherwise deal in all kinds of systems, hardware and software; to undertake design, research, development, assembling, procuring, producing, manipulating, altering, preparing, for market contract, buying, selling, reselling, hiring, exchanging, leasing, licensing, operating, trading in, acting as agents or otherwise dealing in all kinds of systems, hardware and software; etc. and morefully described in the Memorandum of Articles of Association which is annexed at Annexure-B with its petition. The latest audited Balance Sheet, as on 31st March 2011 of the Transferor Company, is produced at Annexure-C to the petition.
5. The Transferor Company M/s. Symphony Infospace India Private Limited was incorporated on 2 nd May 2008 under the provisions of Companies Act, 1956 with the Registrar of Companies, Karnataka at Bangalore. The Registered Office of the Transferor-Company is situated at Sy.No.13/1, Kadubeesanhalli Village, Outer Ring Road, Varthur Hobli, Bangalore-560 087. The authorised share capital of the Transferor Company as on 31st March 2011 is 11 Rs.5,00,000/- divided into 50,000 equity shares of Rs.10/- each. Issued, Subscribed and Paid-up Capital is Rs.3,13,100/- divided into 31,310 equity shares of Rs.10/- each. The main objects of the Transferor-company, as set out in its Memorandum of Articles of Association, is to design, develop, conceive, advice, prepare, convert, modify, maintain, improve, import, export, distribute, exchange, alter, let on hire-purchase, re-engineer or to otherwise deal in all types and provide services in every description of computer software programs, packages or products for application such as data processing, process control and automation production control distribution control in areas of industrial, scientific, commercial, domestic or any other use or application, etc. and morefully described in the Memorandum of Articles of Association which is annexed at Annexure-B. The latest audited Balance Sheet, as on 31st March 2011 of the Transferor Company, is produced at Annexure-C to the petition.
6. The Transferee-Company M/s. Symphony Services Corporation (India) Private Limited, was incorporated under 12 the provisions of Companies Act, 1956 with the Registrar of Companies, Karnataka at Bangalore on 29 th April 2002 under the name and style of "Global Symphony Software (India) Private Limited". Later, the name of the Transferee Company was changed to its present name vide certificate dated 18th March 2004. The Registered Office of the Transferee Company is situated at Sy. No.13/1, Kadubeesanhalli Village, Outer Ring Road, Varthur Hobli, Bangalore-560087. The authorised share capital of the Transferee-Company as at 31st March 2011 is Rs.5,00,00,000/- divided into 50,00,000 equity share of Rs.10/- each. The Issued, subscribed, and paid-up equity share capital of the Transferee Company is Rs.30,11,320/- divided into 3,01,132 equity shares of Rs.10/- each. The latest Balance Sheet of the Transferee-company is produced at Annexure-C of its petition. The main objects of the Transferee Company is to carry on the business of providing software consultancy, development, evaluation and production of computer software, computer services, data processing, training, research and development activities, 13 computer graphics, computer aided designing and analysis, re-engineering, customizing, import an export of all and every kind of software program, software data and software solutions, in India or anywhere in the world. and morefully described in Memorandum of Articles of Association in Company Petition No.64 of 2012.
7. The Board of Directors of the Transferor Company and the Transferee-company have approved the scheme of amalgamation of Transferor and Transferee companies at its meeting held on 02nd December 2011.
8. This Court, vide dated 16 th February 2012 in Company Applications No.139, 140, 141, 142 and 143 of 2012 respectively, dispensed with the holding of meeting of equity shareholders.
9. Thereafter, the present petitions have been filed. This Court, vide order dated 18 th April 2012 issued notice to the Regional Director and Official Liquidator and permitted the Petitioners to take out advertisement in English Daily "The Hindu" and Kannada Daily "Vijaya Karnataka" on or before 3rd May 2012 indicating the date of hearing as 23 rd 14 May 2012. Accordingly, the Petitioner has furnished the copy of advertisement taken out in the English daily "The Hindu" and "Vijaya Karnataka" vide Memo dated 22 nd May 2012.
10. Pursuant to the notice issued to the Regional Director, the Registrar of Companies, Karnataka has filed affidavit dated 26th July 2012 on behalf of the Regional Director with the following observation:
"1. The scheme provides for Accounting Treatment vide para 24 tht Accounting Treatment adopted shall be the "Pooling of Interest Method" in accordance with Accounting Standard-14. Whereas it is stated in clause 24(b) of Part 6 that the excess of the cost (Book value) of Investment held by Transferee company in the share capital of the Transferor Company No.1 and Transferor Co. No.4 over the book value of net assets of the Transferee Co. No.1 and 4 shall be adjusted against the general reserve of the transferee company or will be added to the credit balance of P & L A/c of the Transferee company, as the case may be in accordance with the Pooling of Interest method of accounting. However, as per the 15 Pooling of Interest method, this difference should be adjusted against Capital Reserve and not General Reserve as stated in para 24(b) of the scheme. Hence, the transferee company is required to file an affidavit of undertaking the above compliance as AS-14 accordingly before this Court.
2. As per Balance sheet as at 31.3.2011, 95.26% paid up share capital (9,94,500 equity share of Rs.10/- each) of Transferor Company.3 is held by foreign company i.e. Coreobjects Software Inc. USA, ultimate holding company, the transferee company is required to comply with applicable provisions of FEMA and FEM Regulations while issuing new equity shares to the equity shareholders of transferor company No.3 in the ratio of 1:5, 500 in terms of clause 17 of the scheme. Hence, the transferee company is required to file an affidavit of undertaking to comply with the applicable provisions of FEMA and FEM Regulations before this Hon'ble Court."
11. The learned counsel for the petitioners placing reliance on the judgment in M/s. NOKIA SIEMENS NETWORK INDIA PRIVATE LIMITED passed in Company 16 Petition No.34 of 2008 disposed of on 9th January 2009, contended that if a scheme by way of transfer of undertaking does not affect the rights of the members of the creditors of the transferee-company as between themselves and the company or does not involve re- organisation of the share capital of the transferee-company, no application by the transferee-company under Sections 391 or 394 of the Companies Act, 1956 would be necessary.
12. In view of the submission made by the learned counsel and also in the light of law declared by this Court, the observations made by the Regional Director, do not survive for consideration. Accordingly, service of Notice and the filing of separate petition by the Transferee Company, is not necessary and the same is dispensed with.
13. Upon the Scheme becoming effective, all employees of the Transferor Companies, in service on the effective date, shall be deemed to have become the employees of the Transferee company with effect from the 17 appointed date without any interruption in their service as a result of the transfer of the undertaking to the transferee company on the same and terms and conditions of employment, as were with the Transferor companies. On the basis of the continuity of service, the terms and conditions of their employment with Transferee company shall not be less favourable than those applicable to them with reference to the Transferor company on the effective date.
14. Pursuant to the advertisement of the petitioner, no shareholders, creditors and employees of the Transferee company have appeared and objected the proposed Scheme of Amalgamation. The Official Liquidator has filed the application. There is no objection for amalgamation as the Regional Director has also filed his affidavit with an observation that the Transferee Company has not filed any petition to that effect. Accordingly, as per Scheme Annexure-A, the Transferor company is permitted to the amalgamated with the Transferee company. Further, the Transferor company is ordered to be dissolved. 18
15. Hence the following:
ORDER i. The Company Petition is allowed.
ii. The Scheme of Amalgamation at Annexure-A to the petition is hereby sanctioned and the same shall be binding on the shareholders and creditors of the Petitioner Company and also the Petitioner Company.
iii. The Petitioner Company shall file copy of this order with the Registrar of Companies, Karnataka within thirty days from the date of receipt of a copy of this order.
Sd/-
JUDGE lnn