Karnataka High Court
Goldman Sachs Services Private Limited vs Nil on 27 July, 2012
Author: Jawad Rahim
Bench: Jawad Rahim
1
IN THE HIGH COURT OF KARNATAKA AT BANGALORE
DATED THIS THE 27th DAY OF JULY 2012
BEFORE
THE HON'BLE MR.JUSTICE JAWAD RAHIM
COMPANY PETITION NO.50/2012
BETWEEN:
GOLDMAN SACHS SERVICES PRIVATE LIMITED
INCORPORATED UNDER THE COMPANIES ACT,
1956 AND HAVING ITS REGISTERED OFFICE
AT CRYSTAL DOWNS,
EMBASSY GOLF LINKS BUSINESS PARK
OFF INTERMEDIATE RING ROAD,
BANGALORE - 560 071
... PETITIONER
(BY SRI RAMESH T, ADV., FOR M/S UNIVERSAL LEGAL)
AND:
NIL
... RESPONDENT
(BY SMT.M.B.SUJATHA, CGC FOR ROC)
THE COUNSEL FOR THE PETITIONER HAS FILED THE
ABOVE PETITION UNDER SECTION 391 & 394 OF THE
COMPANIES ACT, 1956, PRAYING TO SANCTION THE
SCHEME OF AMALGAMATION AT ANNEXURE-'A' BETWEEN
PATERNOSTER INDIA PVT. LTD., THE TRANSFEROR
COMPANY AND GOLDMAN SACHS SERVICES PVT. LTD., THE
PETITIONER/TRANSFEREE COMPANY AND THEIR
RESPECTIVE EQUITY SHAREHOLDERS, PREFERENCE
SHAREHOLDERS AND UNSECURED CREDITORS, SO AS TO
BE BINDING ON THE PETITIONER / TRANSFEREE COMPANY
AND ITS EQUITY SHAREHOLDERS, PREFERENCE
2
SHAREHOLDERS AND THE UNSECURED CREDITORS, AND
ALL OTHER PERSONS; AND ETC.,
THIS PETITION COMING ON FOR ORDERS, THIS DAY THE
COURT DELIVERED THE FOLLOWING:
ORDER
Petition under Sections 391 and 394 of the Companies Act, 1956, is by the transferee company seeking sanction of the scheme for amalgamation.
2. Heard learned counsel for the petitioner. Perused records made available, which reveals:
a) GOLDMAN SACHS SERVICES PRIVATE LIMITED is a private limited company which seeks sanction of the scheme for amalgamation of the petitioner company with PATERNOSTER INDIA PRIVATE LIMITED (transferor company), also a private limited company without winding up on terms and conditions spelled out in the scheme which is at Annexure-A.
b) Petitioner-transferee company, as per records, was incorporated on 19.9.2003 in the name and style GS SERVICES PRIVATE LIMITED and consequently its nomenclature was changed to GOLDMAN SACHS SERVICES 3 PRIVATE LIMITED. It has its registered office at Crystal Downs, Embassy Golf Links Business Park, Off Intermediate Ring Road, Bangalore-560 071, as evidenced from the Memorandum of Association (MoA) and Articles of Association (AoA) at Annexures B, C and D respectively.
c) The share capital of the transferee company as on 31.3.2011 is as under:
Authorized capital:
2,62,50,000 equity shares of Rs.10/-
each Rs.26,25,00,000/-
93,75,000 2% cumulative redeemable and non-convertible preference shares of Rs.100/- each Rs.93,75,00,000/- Issued, Subscribed & Paid-up capital: 1,93,83,325 equity shares of Rs.10/-
each Rs.19,38,33,000/-
87,24,025 2% cumulative redeemable and non-convertible preference shares of Rs.100/- each fully paid up Rs.87,24,03,000/-
d) The company claims to be in the business of technology process outsourcing and to process data covering software infrastructure for any industry.
e) The Board of Directors of the petitioner company in its board meeting resolved on 14.12.2011 approving and 4 adopting the scheme of amalgamation of PATERNOSTER INDIA PRIVATE LIMITED (transferor company) with GOLDMAN SACHS SERVICES PRIVATE LIMITED as seen from the resolution at Annexure-H.
f) Similarly, the transferor company was incorporated on 17.11.2006 as seen from the MoA and AoA at Annexures-
J, K and L. It has shifted from No.1102, 11th Floor, Kensington A Wing, Special Economic Zone, IT/ITES, Hiranandani Business Park, Powai, Mumbai-400 076, Maharashtra, to No.951-A, Rational House, Appasaheb Marathe Marg, Prabhadevi, Mumbai-400 025, with effect from 9.3.2012 as per its board resolution produced as Annexures-M and N respectively.
g) The share capital structure of the transferor company is as under:
Authorised capital:
17,60,000 equity shares of Rs.10/-
each Rs.1,76,00,000/-
11,44,000 7% non-cumulative redeemable preference shares of Rs.100/-* Rs.11,44,00,000/- Issued, Subscribed and Paid-up capital: *Correction carried out vide court order dt.23.8.12. 5
8,70,600 equity shares of Rs.10/-
each Rs.87,06,000/-
7,66,112 7% non-cumulative redeemable preference shares of Rs.100/- each fully paid up Rs.7,66,11,200/- It is averred, as on the date of application under Section 391 of the Companies Act, there was no change in the capital structure of the company. It is carrying on the same business as the transferee company. Both the companies are subsidiaries of GOLDMAN SACHS GROUP.
ClauseIII(B)15* and Clause III(B)(23) of the MoA of the transferor company and transferee company enable both the companies to amalgamate with each other into the scheme of amalgamation.
i) The Board of Directors of the transferor company have passed a resolution on 14.12.2011 approving the scheme of amalgamation vide Annexure-R.
j) The petitioner transferee company, on the basis of the resolution passed by the Board of Directors dated 14.12.2011 (Annexure-R), approving the scheme of amalgamation vide Annexure-A, had applied to this court under the provisions of under Section 391 of the Companies *Correction carried out vide court order dt.23.8.12. 6 Act to dispense with the convening of meeting of shareholders and unsecured creditors, in C.A.371/12. In the said petition, it was further averred that as on the date of application, there was no change in the capital structure of the transferor company, and it is carrying on the same business as the transferee company. Both the companies are subsidiaries of GOLDMAN SACHS GROUP. On merit, C.A.371/12 was allowed by order dated 1.3.2012.
k) Armed with the said order, further action has been taken by the companies. They have formulated a scheme which is now sought to be sanctioned. The declaration is, the scheme does not in any way override or circumscribe any of the provisions of the Companies Act and there was no initiation of any proceedings against the transferor and transferee company. They also declare no winding up petition was filed in any court in India.
l) Public notice of this petition was issued which was carried in THE NEW INDIAN EXPRESS (English daily newspaper) and SAMYUKTA KARNATAKA (Kannada daily 7 newspaper) on 17.4.2012, in response to which none has objected or entered contest.
3. The Regional Director, Ministry of Corporate Affairs, South East Region, Hyderabad, who was notified, has filed affidavit on 20.7.2012 and has made the following observations:
'(a) As regards to Accounting Treatment, even though it is stated in clause 13 of the scheme that the amalgamation shall be accounted in the books of account of the transferee company according to the pooling of interests method under Accounting Standard-14, the difference, if any, in accounting policy between the transferor company and the transferee company, the impact of the same till the amalgamation should be quantified and adjusted in the Capital Reserve of the transferee company as in the event of amalgamation of transferor company with transferee company and stands dissolved without being wound up, then the Pooling of Interest Method of Accounting should be followed and the difference, if any, between the value of assets and the value of liabilities should be adjusted to the "Capital Reserve" as prescribed in Accounting Standard-14. Hence, the transferee company is required to file necessary affidavit of undertaking of compliance of AS-14 before this Hon'ble Court.
(b) As stated in clause 4.1 of the scheme that as on the date of filing of this scheme with the Courts, out of 8,70,600 paid up equity share capital of transferor company 8,70,599 equity shares are held by Goldman Sachs (Mauritius) L.L.C., the immediate Holding Company, the transferee company is required to comply with applicable 8 provisions of FEMA and FEM Regulations while issuing new equity shares to the equity shareholders of transferor company in terms of scheme in the ratio of 1:90. Hence, the transferee company is required to file necessary undertaking affidavit before this Hon'ble Court.
(c) As stated in clause 11.2 of the scheme that upon the coming into effect of this scheme, the transferee company shall file necessary form of Notice of increase of Authorized Share Capital with Registrar of Companies, Karnataka in accordance with law, the transferee company is required to comply with provisions of Sec.97 of the Companies Act, 1956 with respect to the merger of authorized capital of transferor company with that of transferee company as provided by the scheme vide clause 11.1. Hence, the transferee has to comply accordingly.
(d) It may be seen from para 12.1.2 of the scheme that 7% Non-cumulative Redeemable Preference shares of the Transferor company are completely held by the Transferee Company therefore no consideration shall be payable pursuant to the amalgamation of the Transferor Company with the Transferee Company. Accordingly, the investment in the Transferor Company held by the Transferee Company would automatically stand cancelled, upon the Scheme becoming effective. Whereas, as per the Balance sheet of Transferor company as at 31.3.2011, such 7% Non-cumulative Redeemable Preference shares of Rs.100/- each are held by Paternoster Ltd, the Holding Company and not by transferee company. Therefore, the company needs to clarify the above para 12.1.2 and also clarify whether there need to the necessity of filing a fresh valuation report or modification of scheme.
(e) It may be seen from the petition that there is a prayer made for dissolution of transferor company without winding up before this Hon'ble High Court which involves the question of jurisdiction as the transferor company is registered in the state of 9 Maharashtra and Hon'ble High Court of Bombay at Mumbai has jurisdiction to order for dissolution of transferor company without winding up. Hence, the petitioner company is required to file an affidavit before this Hon'ble High Court with necessary submission either for removal of the same from petition or for ignorance of the said para.
(f) Since, the registered office of the transferor company is situated in the State of Maharashtra, the sanction of this scheme is subject to the sanction of scheme by Hon'ble High Court of Bombay at Mumbai also.'
4. Answering to the observations of the Regional Director, petitioner has filed the affidavit dated 26.7.2012 of Srivathsan Parthasarathy, one of the directors of the transferee company, furnishing the following undertaking:
'1. That the Petitioner / Transferee Company undertakes to comply with Accounting Standard 14 (AS-14) as per the Pooling of Interest Method of Accounting to account for the amalgamation of the Transferor Company with the Petitioner / Transferee Company and the difference, if any, between the value of assets and value of liabilities would be adjusted to 'Capital Reserve'.
2. That the Petitioner / Transferee Company shall comply with applicable provisions of the Foreign Exchange Management Act and Foreign Exchange Management Regulations, while issuing new Equity Shares to the Equity Shareholders of the Transferor Company in the ratio of 1:90 pursuant to the Scheme of Amalgamation.
3. In accordance with Clause 11.1 of the Scheme of Amalgamation, the Authorized Share Capital of 10 the Transferor Company shall stand transferred to and combined with the Authorised Share Capital of the Transferee Company and shall be reclassified without any further act or deed and the filing fees and stamp duty already paid by the Transferor Company on its Authorised Share Capital shall be deemed to have been so paid by the Transferee Company on the combined Authorised Share Capital and accordingly, the Transferee Company shall not be required to pay any fees/stamp duty on the Authorised Share Capital so increased.
Further, Clause 11.1 provides that the resolution approving the Scheme shall be deemed to be the approval for increase and re-classification in the Authorised Share Capital of the Transferee Company under Section 94 and other applicable provisions of the Companies Act, 1956 ('Act"). As such it is submitted that the Petitioner / Transferee Company is not required to comply with Section 97 of Act which requires a resolution to be passed for the increase of Authorised Share Capital of the Company and the subsequent filing of Notice of increase within 30 days with the Registrar of Companies. I humbly submit that the in accordance with Clause 11.2 of the scheme, the Petitioner/Transferee Company shall only file the necessary form of Notice of increase of the Authorised Share Capital with the Registrar of Companies as Section 97 of the Act would not be applicable.
4. That as per the Audited Financials as on 31st March 2011 of Paternoster India Private Limited, the Transferor Company, 766, 112, 7% Non- cumulative redeemable preference shares of Rs.100.00 each were held by Paternoster Limited. However, the Board of Directors of the Transferor Company passed a resolution on 14th December 2011 pursuant to Section 80(4) of the Act, approving the fresh issuance of 766, 112, 7% Non-cumulative Redeemable Preference Shares of Rs.100/- each to the Transferee Company and the proceeds of this new issue to be utilized for the purpose of redeeming the existing 766, 112, 7% 11 Non-cumulative redeemable preference shares of Rs.100.00 each held by Paternoster Limited. Accordingly, as on the date of filing the Scheme of Amalgamation before this Hon'ble Court, the fresh issuance of preference shares of the Transferor Company is completely held by the Transferee Company would automatically stand cancelled. The aforesaid details were duly considered by the valuer, while issuing the Valuation Report. Therefore, a fresh Valuation Report or modification of the Scheme is not required.
5. That pursuant to the Scheme of Amalgamation, the Petitioner/Transferee Company has prayed for dissolution to the Transferee Company being registered in the State of Maharashtra, the Hon'ble High Court of Judicature at Bombay has vide its Order dated 29th June 2012 sanctioned the Scheme of Amalgamation. Section 8 of the Order states that the Official Liquidator of Bombay has filed his report stating therein that the affairs of the Transferor Company has been conducted in a proper manner and that the Transferor Company may be ordered to be dissolved. Hence, this Hon'ble Court may kindly consider the same. A copy of the Order passed by the Hon'ble High Court of Bombay is herewith produced along with this Affidavit for kind perusal of this Hon'ble Court as ANNEXURE-A.'
5. I am satisfied the undertaking of the petitioner meets the requirement.
6. In the result, the petition is allowed. The scheme of amalgamation vide Annexure-A between PATERNOSTER INDIAPRIVATE*LIMITED(transferor company)and GOLDMAN *Correction carried out vide court order dt.23.8.12. 12 SACHS SERVICES PRIVATE LIMITED (transferee company) is sanctioned as prayed for. The transferor company is dissolve without winding up. Petitioner shall file a copy of this order along with the scheme of amalgamation before the Registrar of Companies within thirty days from the date of receipt of a copy of this order.
SD/-
JUDGE vgh*