M/S Nokia Siemens Network India Private ... vs Nil on 9 January, 2009

[Cites 5, Cited by 1]

Karnataka High Court

M/S Nokia Siemens Network India Private ... vs Nil on 9 January, 2009

Equivalent citations: AIR 2009 (NOC) 1499 (KAR.), 2009 (2) AIR KAR R 414 2009 CLC 573 (KAR), 2009 CLC 573 (KAR)

Bench: B.V.Nagarathna

 

 

LN 'me: HIGH -L:<)um* 0:» 1<A2<M'1'A;<A AT BAN£h§:L§}RE
i}A'!'EI.} THIS 'l'l~IB caimay 0:» JAN   _

BEFORE

'mar. HUN 131,12: MRS. Ju:a"r:§:.1:: I»:$,4V.jj.N}'§{(}}§;§{A'!"f£iii-5  7

(.3UP.N,0_.34f 230%-

BE}'l'Wb3i§N:

Mjs. Nokia Siemens Nt2tvk<>rk_l11{1ia    " a '
Private Limited, A compt:-my ink;-drpo1_a_téai __ 
Under the Provisions ojfvthe Eoxnpafnies «V V' "
Act and haviI;g--i3:s---registered.'oﬂicé gﬁ... _
10111 Floor, Rahe;:1»Tom4,rs;;.26-2i2;- ,
iVI.G.Road,; Baixgéiic-T.¢-56§}._{)0I_ " V. " _
Rep.by its Vauﬁgorizcd xepfesetgtativé
    

4 V ...P1:J'i"!'i'l()Nh:i<
(av Ski. Una}! 2_.Aw_ {2;3~.l.z"§Pw1:}:3b:i<S, m.}vs._}

 HJ5'S}~'UNL)EN'l'

  (BY ".*:;.R}.;_)£:r;pA;< 81'» VAAYARAM, ADV. FUR 0.1, AND
 '-sR1,B.Pi2AM01), can FOR ROG)

'!'h;is GOP is ﬁled under Section 391 to 394 of the

 u "(1itr1:npani<i:s (ﬂlouxt) Kuies, praying to sancﬁan the scheme of
" aI:aa1gamation~Anncxnre~A in the petition so as to be binding

on all the shareholders, secured and unsecured cmditom of
the petitioner] transfemr ooznpany and on the transfcme
company.

 



 

This CUP having been heanzi and rescxvcd, for.
this day, court pronounced the fbllowing:   --  V

ORDERS

 

The petitioner in this case... is M/' s.Nbi:ia Vsifgméns '

Network India Private Limited, a  

sanction of amalgamation  ..M[ s  Ngtsvofkat. V }'

Private Lixnitezd (heieinafter     a  }tra11sfcree
company} 34) as to ._tt1e_r'VA:«1;%.;;iii3Zx;g on Aa;VlAlv the abate
holdcxs, secured and  '{)f the transferor
as Well as   is the
proposed   V

2.   £6   'petitioner company, it was

incqzjgrératcd én.1:§.1993 under the pmvisions of the

  85:: having its registered oﬂice at 10"! ﬂoor

   27, M.G.Roa.d, Bangalore-I. The main

obﬁeécts  irxansfcmr cmnpany as set out in Anncxure-B

 to {iea.i.§n, deveiop, manufacture and trade in computer

   such as software data products and allied hardware

V.   tclezxymmunjcation and other industztics. The authorized

'4 share of the mmsferee (>9-mpany is Rs.2f:St),(}O(3,(J0(}/ - divided

into 25,0{X},00{J equity shares of i-£5.11)/~ each. The issucd,

subscribed and paid up capital of the petitioner is pmscntiy

&.

 



 

Rs.124,250,(){){}]-- ziivixicd into 12,425,u:.x) equit3r. shaz;es of

Rs.I()/- each. The mansfemr company . tE:a.c

latest audited balance sheet up  31.3.i3Ut'}';'* .011: the_ 

assets and liabilities of the gist  iixitiilc 

company petition.

3. The Board o>}\"*V!§l;_:.z-E1AV:'£'1fa11:sferor coxﬁmny
approved a1:1d  vadopf:'cd fl&3eV  gmalgamation can
29.2.2002

; .qf 1";§1;tVf:"i:i:ans£ie1*o1' company is pmposeci :t:§:i1cv':%t1V:v§nsfe1ee company, which has Gurgaon, Haryana, subject to the cronﬁﬁizggﬁon The beam resolution to that cﬁiect datéii is produced at Am1cxurc~F to the V' . the tzansfezor company, it is a Wholly V of the transfcme company. According to the transfcror company has only two shamlﬁiidcrs, namely M/s. Nokia Siemens Networks Privats A ' _ ' {transfeme company} holding 1,2-91,24,990 equity :;harcs of Rs.I(}/-- each i.e., 99.99% paid up capitai of transfcror company and M/s Nokia Siemﬁcns Tictoliikennc ﬂy, Finland hoisting 10 equity shares of Rs.1()/- each. Aocoiding to the transfcmr company it has two securexi creditors and several unsecured credimrs. A / submitted their written consent and no *t£:1e scheme of amalgamation. The said order Annexure-G to the company petition.' Vh'j1e»f' AV sanction for the scheme of by way of this petition, tﬁe"'«-scheme V of is?' produced at Annexme-A to and the sanction is sought 'eift'ec%1;' being the appointed day. V

6. I H learned counsel for V.M.PI'£@w "the" petitioner and Sriﬂeepak. counsei for and Sri.B.P1'amod. (.1.G.S.() for the leﬁegistltaraof Lf.eze.paf::des (R00). for the petitioner While ta!<:m' g me V VV _ "f.:f'3.C.'dx<}CﬂlIlcBtS annexed to the company petition has H H 'A that the pwposed scheme of amalgamation would "beiaeﬁcial to both the petitioner i.e., the trransferor " eozinpany as well as transferee ecempany which will enabie would be beneﬁcial for all stock Jwkiers. H¢V..Vf;i1j<:§17§;fo1'e, submits that considerizag the fact that the buj§ir1e¥3s- of the tra:nsfc;mr company as weli as the being allied, them is :10 legal far': the "

proposed amalgamation ofythe He submits that there is no Jza' {if after amalgamation and tﬁa$,. ad be ai"l%)ttcd to the transferee after merger. x b

8. wﬁlﬁcial Liquidator has sub1nitt¢d UTLR. under the provisions of Section 394{ 1} ' the '(for "é'.f:t which states that M/s.Umcsha i<,As.socia;té:g Accountant were appointed to . A éxéﬂiiﬁﬁ boo.' ks "bf « accnunts and other rccontis of the and on scrutiny of thﬁ books of atrcounts ot,.'ra4'=::1*:'.:{éV;Jated 3'&COI'€i$ of the campany, they have opined that affairs of the: transfemr company have not been ' v.<;{;.$i;*.ductcd in a manner prejudicial to the public interest as yer the second pmviso to sub--section (1) of Section 394 of Companies Act and there being no adverse ﬁndiag in tilt? functioning of the company, appropriate orders may be made with regard to according sanction to tilt: pmposaed amaigamaﬁon. /ff//' increase its authorized capital the authorized capital of ~~T.r.r_.msferor4 company without any further ad or; deeel as 'eohtenvpkzted 1-We . in the scheme, it wfil oniy "

provisions of the 'Act 1956,1313: it wit! t also involve Ices of _ the 'Céﬁirti! Govemment Revenue,'-a. 'ta Iistate

(e) Clubbtrej:"of the 054-"i'!'a1 of the feror co _ texthaf eff transferee company 'a ef since Section pf the ..Ac":t,71*956 is only a mnwpﬁitﬁte ﬁling of the of regisbution fee to the .Re_gistfar_qf.,"Cempang'es and payment of .,¢i:¢i;;:;,__t;;; :heV.State--'C.-Jvamnent which has fto stat"u1un'Iy.._ complied with. In this '-.eon:wd1'er¢;*- itis "c2I§6~ respeetﬁdly submitted that the oﬁgfzn.aI*3_i'de No.26/2007ﬁIed by the Regional L*iréc=ior_ the deabion of this Hon'iE;!e o't_reri'uh'ng the objections raised by ; ' "the Regional Director in a similar case is pending " before the Bench of this court.

Qf the Thcznsferee Company, the .TI*¢2_nsferee Company :e not going to allot any shares to the shareholders of the Transferor A' Company, and hence there re no meaning in

10. The second objection is that the transferee company has not ﬁled a separate petition before the High 'Court at Delhi for the purpose of obtaining sanction and hence the X}.

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14. In response to the said objection, has submitted that the merger of the authoﬁzetti transferor company with that of doesﬁ not violate the provisions of ".9?:_\"0Ip;ithe Companies Act. Even aceﬁiiiipg th" "Of the A-Vet

-company and therefom, it is not necessaxy to to-iiee: comply with certain provisions of the Actiusi itkvoiixd Tnesult in duphcation of procedure mav"plu$°'n;_;-LAcnﬁxexeitemise cumbersome. In support of the company, reliance is placed on a decision of igradesh High Court in the case of SABOU LJ:;AsmG;. PRIVATE L'l'D., In re reported in [(2ou3)117 Comp V' ~€;fa5"2?.2s].

-11- etc... then the company has to. within doing so, give notice thereof to the specifying the shares consolidated, A stock reconverted etc., and would entail a Under sjwhere a company having a share capital beyond the 'agcompany not being a company members beyond the registeiied 1t:'..V§n.aﬂjg'5r§VVr§i£n the Registrar, notice of the within thirty days authorising the increase and the increase and also make ."£fherefore.i:'§«g1nder Sections 95 and 97 of the Companies Act, noﬁcevihas to be issued by a company to the Registrar of A within days of consolidation of any share capital or conversion of shares into stock and a default would result in penal consequences. The object of Sections 95 and 97 of the Act is to keep the Registrar informed about the changes and to incorporate them in the Memorandum and Articles of Association of the Company. But. where a & .15..

contention of the Regional Llrixectio-i" " 4.:

cause substantial revenue A'G«d3vermn'e,nt and the State Govemment.v%:'is..énot ofhis submission. oounsei relied upon a judgement of this case of Mphasis Limited vs m1V(:u<,2wﬁi';:<A:{;s;a?5):. he also submits that against ':1:_fi .';1judg1ne:;t, --.os3 1§4o.2o/2007 has been tiled by the it is pending consideration 23¢' in me ease" "" Nor RATNABALI enmum, MARKEJS um., <

-;7..

of fees deposited earlier by E-ISL which get me:_tgee{-,:v:ith RCML. in the said case. the Securities and _ of India (S1335!) had issued a circular dated .. that in the ease cf merger '<;ia;:t"x_Tas}" ai compulsion of law, fees would not ﬁaye'.t;o be e a transfeiee entity provided of V the tmnsfemr entity __held "t';'E1e" majozity shareholding in the tx'an';4.é[fen':e'e1},;£iVt;y.

21. lnterpzetirig,*':;:{.fhe Hon'ble Supreme Court held 5£ha§"";ﬁi§ier» 39 i; (if the Companies Act, 1956, is proposed. generally as an aitereaﬁve Where a scheme appears to be feaeibie andieorkabie. A11: Sﬁeauld be preferred to a Winding up perafupon the facts of each case Where a Sdlieme Section 391 eouid be construed as an iiqixiciation. Under Circuiar dated 30.9.2002, what ' SVEBI intended to say was, the fresh " .jfgt1£ﬂQj!€r]i'€giStI'atiO31 fees Wcsuid not be payable by the which went in for amalgamation] merger as an % alternative to liquidation. In other Words, if the eompangﬁs :'net worth was negative and ifthat company was on the brink of iiquidation which compelled ii to go for a scheme under Section 391, SE23! exempted such companies for payment of ya ..gg)_ wherein, it has been held that there is no or reason for the two amalgamated companies .' 'Veiieiy again on the same authorised capital V aizeady paid the duty particularly: th e;'e1 in the share capita} of t.§1e_ so to attract payment of any addiﬁohz-iffee or

24. it is brought g9:§§e1--_ judgment has been appealed /0? has been ﬁled by the is no stay of the operation cage. However, in the holding in favour of the Kegiooei appeal or the issuance of a notice "toe Director, the pet;itioner--company 2/ﬁe jjabiew t'o"' pay the requisite stamp duty and i'e§;5tréttion'"on the increased authorised share capital of fi1e tira11fsfe'fe_e Feompany as per Clause 7'.

'23, 'Ii: ﬁle event of Division Bench reversing the decision of judge iu the case of Mphaszs Ltd, reported in 11,}-:2 __:2§oo*7 Karnataka 337's new that the beegfonai ilrirector is at liberty to issue notice to the petitioner regarding the payment of requisite stamp duty and registration fee. ﬁ<~

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26. The other objection raised by the Kegonaj. is that the transfeme company has not ﬁled a before the Uelhi High Court: seeking sanct1°9n"ofj = of Amalgamation.

27". The reply given by the     is
that the transfemr    of the

transferee company. holds 99.99% of the paid up as also the beneﬁcial 10 equity shapes.

P'urtber"ﬁ6 is:§i7i"edV'v;11nder the scheme which does ﬁembem and creditors of the t:'ansibree-'ct2~.;§mpany., is, the tmnsfe1ee--c<m1pany the V. holder eq1§ity..._s.hares has consented to the scheme of Tlawrefom. a separate petition, by the is not necessary. In support of his 'V subﬁiigéﬁqﬁ; 4' learned counsel for the petititmer has Ielied « VV ' - the" feiiowing decisions:

. (2.3 113% 2006 Karnataka 255 in the case of Vfbmckt Housing Ltd, We. Nii, wherein it has been held that the hoiding wmpany being the holder of 100"/9 of shares of its subsidiaiy company, in the meeting ef the shareholders of the transferor company convened as directed by this court &

-.22 -

under Section 391 of the Act, the very same shareholders of the transieree company having participated in ___ﬂ:1e said meeting and approved the scheme of it cannot be said that the decision cannot "

company, its members and creditgxg. 5;? tﬁireetdfzs' of the 'l'ransfe1ee company in the meetifﬁg 'held. "

adopted the scheme of '1'he'V:i¥ie.§sa1ye india permitted the 'i'ranst'eree' enter into a contract to take The schextle of transfer does not aﬁ'eet_ the the creditors of as.WHE5etween themseives and the eomisszriyf. V are issued atad there being no reorganiﬁéatrien _ share eapitai of the transferor in fi1e':§e'Ci1'cu11xstanees, there would be no need V iﬁvﬁesfbzee company to ﬁie an applieation and a t A ;§e«titioi1'v'iij;1ti{er Sections 391 to 394 of the Act. ._ pa) in the case of Nebula Motors Ltd V/s, Nit in 20035) ALL) 327 the Andhra Ptadesh fiigh Court has held that in a scheme of amalgamation of the subsidiary cempany with holding company for convenience of business and eﬂicient administration Wouid not involve any reorganisation or Ivestxnctuiing of shares of members of ﬁr

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adjueted to the Pmﬁt {$5 Less Account of Tzansfezee Company." ' '

31. In View of the equity share§"'held u company being canceiied and there £10. ssixaxes in the transferee to a1:;:_y the ratio of the aforesaid "£1; my" Véejvgiit is not x1ec:essar_v for the txansfeiee. the instant case to approach the for Bani" the scheme.

32. V the circumstances that neceszéétated 3e'he:i1e_jV6f__wt::ialgamaﬁon and arrangement are as fdiiovire:

" "ﬁg "1'l.ie'-»Aketiﬁoimer/'i'ransfemr Company is a ' Wboﬁy oWneci"' subsid1a' Iy of the 'i'ra::1sfe3:ee 1 As per the share capital smxcture of iéeifiitioner/'i'ransfemr Company, the Company holds 124,234,990 equity 'Sheree aggregating to about 99.99"/o of the totaﬁ x 'T paid up capital of the Petitionerf'l'ransieror " Company. The Traxxsferee Cempany also hams the beneﬁcial interest in the remaining 10 equity shares of the Peti§oner['I'r*ansfemr Company. Having regard to the beneﬁts sought to be achieved as narrated herein beiow, it became necessary for the Tmnsferee Company and the /5%.

-23- Peﬁtioner/'i"ranst"eror Company to Scheme ofAmaigamaﬁon." V'

33. The benefits sought to be eiehieved by ti1e.:e2:1d_ee};eﬁte '4 and its effects axe culled outas uz:icie1'*:'.V_. a} The amalgamation will Gf of the "i'ra11sieror and the_'_Tiz3;1s§7eree. Ctcmpariy to their common a<:Ai§ianta;§§e,§V-- in m are productive utilisatrioe cost and opexationalé _eﬂieie12_..eiee' 'Wf0lﬂ£3,« "be beneﬁcial foraii 'V V' '23) The Jesuit greater economies of 'in koveieheads and other V'

c) 'l'heAama1gam.eﬁee V' business synergies and 'i311ei;1eSs be carried on more eeeee . " :i) .'i'3ﬁe creditors and institutions, if any are not y_ V ihe proposed amalgamation as their ' '-- is maintained.

c) There: be an improvement in the ﬁnancial __ A saﬁeﬁire and cash ﬂow management of the _ _" Tfansferee Company.

. ;l'f1Ae amaigamaﬁen shat} result in the combination of manpower resources of both the Companies and a single management StI'1.lCt'l.lI"('J for the Companies.

g) The combined managerial and technical expertise would enable the 'J'ra3.1sferee Company to develop 3. business and would be competitive and cogent. /9%.

.32.

open eyes have given their appmvai to scheme even if in the View of the "

could be a better scheme for the its members or creditors for sagfigora _ ' framed. The court cannot? 'Li; X such a scheme on that othenvise amount to:_""--f,.i.1e appeﬂate jurisdiction o{éer: the raifher than its supetvtisezry -

36. Having Iegand v--t!.1e= by the Ag:-ex Court é e;ase;, the sanctionixzg court has 1 :9 *i:ese;;si{ir:r._V'§é£1eet£:1ef scheme putforth for sanetiegz is .. requisite majority vote as reqanred' t;Lr1eier Sectiexi the Act and that the scheme is ne;t'viejative_;ai1y pfovision of law and is not eontrary to that the members or the creditors of the in a bonami' e manner and in good faith and'-«.._nof;' the minority in order to promote any the interest of the mmoiity and also where « 'the.se-heme affects members or its creditors either because it _Mi;;=}oives reorganisation of the share capital or othetwise. in the proposed scheme, as per eiause 7 extracted above, there is no reorganisation of the share capital anti when 100% subsidiary company" is seeking to amaigamate with its holding company where the scheme is not detrimentai in any S}/,.

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manner 1:0 the interests of the members or creditozzfef the transferee company, in my eensicziered 'i2éW.ﬁet necessary to examine the scheme by the terrzitoriai jurisdiction the eittiafeg Since the instant scheme does members or the cxeciitors of . "es if" V does not invoive in my view, the instant echezﬁe amalgamation of the suhsidiargf é eompany fer the Hence, the as per Annexure-A is sancti;e:g¢;;1«. on all the shareholders eieditors of the petitioner (tranefemr " _ mzd eii 'ti::*;--'i:t*aasfeIe;e company. y petiiien is accordingly aitowaﬁ. ' Vﬁﬁee is directed to draw up a decree in Emma A X1' " 5542. The petiﬁzmereompaay shall ﬁie a certiﬁed campy of "order with the Registrar of (3-emiaaaiee Within Bi} days fzem the date of receipt of thie order. I S01/-.3 (*2 Tudgg' mm*; blur] 23*

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