Madhya Pradesh High Court
Sunrise Tanks Private Limited Thr. vs Waterwell Moulding Private Limited. on 22 April, 2016
Company Petition Nos.2/2015 & 3/2015
(1)
HIGH COURT OF MADHYA PRADESH,
BENCH AT GWALIOR
JUSTICE ROHIT ARYA
COMPANY PETITION No. 2/2015
In the matter of:
Sunrise Tanks Private Limited
Petitioner/Transferree Company
AND
Waterwell Mouldings Private Limited
Transferor Company
COMPANY PETITION No. 3/2015
In the matter of:
Waterwell Mouldings Private Limited
Petitioner/Transferor Company
AND
Sunrise Tanks Private Limited
Transferree Company
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Shri A.V.Bhardwaj, Advocate for the petitioners.
Shri Vivek Khedkar, Advocate for respondent/Registrar
of Companies.
Shri J.D.Suryavanshi, Advocate for the Official
Liquidator.
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Company Petition Nos.2/2015 & 3/2015
(2)
ORDER
22/04/2016 Company Petition No.2/2015 has been filed by Sunrise Tanks Private Limited, a Company incorporated under the Companies Act, 1956 and having its registered Office at "Kanchan", Roshnighar Lane, Near Achleshwar Temple, Gwalior, Madhya Pradesh (hereinafter refereed to as the "Transferree Company") under Sections 391 and 394 of the Companies Act, 1956 (for short "the Act") seeking order of this Court for amalgamation with Waterwell Mouldings Private Limited, a Company incorporated under the provisions of the Act and having registered Office at "Kanchan", Roshnighar Lane, Near Achleshwar Temple, Gwalior (MP) (hereinafter referred to as the "Transferor Company").
Company Petition No.3/15 by the Transferor Company has been filed under Ss.391 and 394 of the Act seeking order of this Court for merger of the Transferor Company with the Transferree Company.
2. Both the Company Petitions have been heard analogously and are being disposed of by this common order.
3. The scheme of amalgamation is on record as Annexure "A" annexed by the Transferor Company in Company Petition No. 3/2015. The Transferor Company had also filed Company Petition No. 1/2015 preceding the aforesaid two company petitions. The Company Judge, after hearing the parties and upon careful perusal of the Company Petition and annexures attached thereto, vide order dated 6/2/15, had directed the the petitioners-Companies to convene meetings of secured and unsecured creditors. However, meeting of share-holders of Company Petition Nos.2/2015 & 3/2015 (3) Transferror Company and Transferree Company was dispensed with in view of express consent given by the share-holders of both the Companies towards proposed amalgamation of the transferor and transferree companies. Ms. Nandita Dubey, Advocate (as she then was) was appointed as Chairperson to convene the meetings of secured and unsecured creditors of Transferor, as well as, the Transferree Company.
4. In compliance of the aforesaid order of this Court, advertisement in hindi daily Nai Duniya and english daily Hindustan Times was published bringing to the notice of public at large about convening of meeting.
5. The report of Chairperson about meeting of secured creditors of Transferree Company, under her signatures, is on record as Annexure "L" of Company Petition No. 2/15. Upon perusal of the report, it is evident that for convening meeting of secured creditors of the Transferree Company, notices were published on 24/2/15 and 25/2/15 by way of advertisements in hindi daily Nai Duniya and english daily Hindustan Times, bringing to the notice of public at large that meeting shall be convened on 21/3/15 at 3 p.m. onwards at "Kanchan", Roshnighar Lane, Near Achaleshwar Temple, Gwalior. The meeting of secured creditors was called to order on 21/3/15 at 3 p.m. There were four secured creditors viz. State Bank of India, Cholamandalam Investment & Finance Ltd., HDFC Bank Ltd., and Tata Capital Financial Services Ltd. Notice to the creditors was issued individually as well. The Chairperson has further stated in the report that it had transpired that outstanding dues of HDFC Bank Ltd. were settled and NOC regarding closure of loan was received on 19/3/15. Another secured creditor Cholamandalam Investment & Finance Company Ltd. did not attend the meeting. State Bank of India Company Petition Nos.2/2015 & 3/2015 (4) was represented by its authorized officer Mr. Janmejaya Jena and Tata Capital Financial Services Ltd. was represented by its authorized Officer Mr. Arvind Jeet Singh Hora (para 2 of the report). The Chairperson has further stated in the report that at the commencement of the meeting, order of this Court dated 6/2/15 was read over and explained to the aforesaid secured creditors and the Scheme of Amalgamation (hereinafter referred to as "the scheme") and statement under S.393 of the Act were treated as read and the secured creditors were informed that they were free to present their views on the scheme. Thereafter, the following resolution, as stated in the Ballot papers distributed to the secured creditors, proposed by Mr. Janmejaya Jena and seconded by Mr. Arvind Jeet Singh Hora, was moved and read out in the meeting:
"RESOLVED THAT subject to the sanction by the Hon'ble High Court of Madhya Pradesh Bench at Gwalior, the scheme of arrangement as embodied in the Scheme of Amalgamation of Waterwell Mouldings Pvt. Ltd. with Sunrise Tanks Pvt. Ltd. from the appointed date being 31 st March, 2014, in terms of the draft laid before the Meeting and signed by the Chairman for the purpose of identification with such alterations or modifications as may be directed by the Hon'ble High Court while sanctioning the said scheme, be and hereby approved".
Thereafter, polling on the said resolution for approval of the Scheme had taken place. Ms. Rajnesh Jain, Company Secretary, and Mr. Udit Saxena, Advocate were appointed as Scrutinizers. Secured creditors were requested to cast their votes and deposit the same in the ballot box placed in the Meeting Hall. The meeting was thereafter declared as closed. The scrutineers submitted joint report on 21/3/15 with record of ballot papers, whereunder, it was stated that secured creditors have agreed and approved the resolution approving of the arrangements embodied in the scheme of amalagmation Company Petition Nos.2/2015 & 3/2015 (5) in the meeting of secured creditors of the Transferree Company. The Chairperson consequently submitted that as per scrutineers report, creditors present in person, 2/3 in number and 99.55% value, voted in favour of resolution dated 27/3/15 for approval of the arrangement embodied in the scheme of amalgamation.
Likewise, report of the Chairperson on meeting of Unsecured Creditors of the Transferree Company is on record of Company Petition No.2/15 as "Annexure N". The meeting was convened on 21/3/15 at 4.30 pm at "Kanchan", Roshnighar Lane, Near Achleshwar Temple, Gwalior (MP) for which paper publications were also issued in Hindi daily "Nai Duniya" and English daily "Hindustan Times". Eight un-secured creditors out of ten attended the meeting, one in person and seven by proxy with a total aggregate outstanding dues of Rs.1,85,05,409/-. The aforesaid resolution was proposed by Mr.Lalit Jain, Gwalior and seconded by Mr.Akash Gupta, both unsecured creditors of the transferree company. None of the unsecured creditors in the meeting raised any query in regard to the Scheme of Amalgamation. Ms. Ranjesh Jain (CS) and Mr. Udit Saxena (Advocate) were appointed as Scrutineers and the unsecured creditors were then requested to cast their votes on the ballot already distributed to them and to deposit the same in the ballot box kept in the meeting hall. After the unsecured creditors cast their votes, the meeting was declared as closed. As per the joint report of Scrutineers dated 21/3/15, the unsecured creditors about 96.67% in value and more than majority in number, present in person and/or by proxy voted unanimously in favour of the Resolution for approval of the arrangement embodied in the Scheme of Amalgamation.
6. Likewise, the Chairperson has also submitted report of meeting of secured creditors of the Transferor Company Company Petition Nos.2/2015 & 3/2015 (6) annexed as "Annexure L" of the Company Petition. Upon perusal of the report, it is evident that for convening meeting of the secured creditors of the Transferor Company, notices were published on 24/2/15 and 25/2/15 by way of advertisements in Hindi daily "Nai Duniya" and English daily "Hindustan Times" , bringing to the notice of public at large that the meeting shall be convened on 21/3/15 at 10 a.m. at "Kanchan", Roshnighar lane, Near Achleshwar Temple, Gwalior (MP). Besides, the secured creditors of the Transferor Company were individually served. Accordingly, the meeting was convened on the scheduled date and time at the notified place. It was informed that State Bank of India is the only secured creditor of the Company and represented by its authorized office Mr. Janmejaya Jena at the meeting. On commencement of the meeting, order passed by this Court on 6/2/15 (Supra) was read out and explained to the secured creditor present. Besides Scheme Of Amalgamation and the statement under section 393 of the Act were also treated as read. The authorized representative of the secured creditor was called upon to express his views on the scheme. Thereafter the resolution was proposed by the authorized representative Mr. Janmejaya Nena. No queries were raised in the meeting with regard to the scheme of amalgamation. Accordingly, it was resolved as under:-
"RESOLVED THAT subject to the sanction by the Hon'ble High Court of Madhya Pradesh Bench at Gwalior, the scheme of arrangement as embodied in the Scheme of Amalgamation of Waterwell Mouldings Pvt. Ltd. with Sunrise Tanks Pvt. Ltd. from the appointed date being 31 st March, 2014, in terms of the draft laid before the Meeting and signed by the Chairman for the purpose of identification with such alterations or modifications as may be directed by the Hon'ble High Court while sanctioning the said scheme, be and hereby approved".
Company Petition Nos.2/2015 & 3/2015 (7) Thereafter, a poll on the said resolution for approval of scheme was directed and Ms. Rajnesh Jain (CS) and Mr. Udit Saxena (Advocate) were appointed as Scrutineers of poll. Both the scrutineers accepted appointment. The secured creditor was requested to cast vote on the ballot paper already distributed to him and deposit the same in the ballot box placed in the meeting hall. After the secured creditor had cast his vote, the meeting was declared as closed. Both the scrutineers submitted joint report dated 21/3/15 along with ballot papers. Based on scrutineers' report, the secured creditor present in person, 100% value voted in favour of the Resolution for approval of the arrangement embodied in the Scheme of Amalgamation.
Likewise, report of the Chairperson on meeting of Unsecured Creditors of the Transferor Company is on record of Company Petition No.3/15 as "Annexure N". The meeting was convened on 21/3/15 at 12 pm at "Kanchan", Roshnighar Lane, Near Achleshwar Temple, Gwalior (MP) for which paper publications were also made in Hindi daily "Nai Duniya" and English daily "Hindustan Times". Eight un-secured creditors attended the meeting, one in person and seven by proxy with a total aggregate outstanding dues of Rs.59,09,156/-. The resolution was proposed by Mr. Ajay Agrawal (A.K.Agarwal & Associate, Gwalior) and seconded by Mr. Anish Sharma (R.K.Rasin Plast Pvt. Ltd.). None of the unsecured creditors in the meeting raised any query in regard to the Scheme of Amalgamation. Ms. Ranjesh Jain (CS) and Mr. Udit Saxena (Advcoate) were appointed as Scrutineers and the unsecured creditors were then requested to cast their votes on the ballot already distributed to them and to deposit the same in the ballot box kept in the meeting hall. After the unsecured creditors cast their votes, the meeting was declared as closed. As per the joint report of Scrutineers dated 21/3/15, the Company Petition Nos.2/2015 & 3/2015 (8) unsecured creditors, more than ¾ in value and more than majority in number, present in person and/or by proxy voted unanimously in favour of the Resolution for approval of the arrangement embodied in the Scheme of Amalgamation.
7. In compliance of the order passed by this Court dated 20/4/15, counsel for the petitioners had supplied copies of the petitions with annexures to Shri J.D.Suryavanshi, Advocate appearing for the Official Liquidator and Shri Vivek Khedkar, Advocate appearing for Registrar of Companies in the matter. Thereafter, sufficient opportunity was afforded to counsel for the Official Liquidator and Registrar of Companies for filing their counter affidavits. Counter affidavits were filed in Company Petition No.2/15 by the Official Liquidator on 28/7/15 and by Regional Director, North Western Region on behalf of Registrar of Companies on 15/12/15 (affidavit dated 4/12/15), while in Company Petition No. 3/15, the Official Liquidator had filed counter affidavit on 30/10/15 and the same on behalf of Registrar of Companies was filed on 1/2/16. The Regional Director in his affidavit filed in Company Petition No.2/15 under para 2(g) has stated that the report of the office of the Registrar of Companies, Madhya Pradesh, has been received vide his letter No. ROC-G/391-394/STA/2015/1482 dated 8/7/15 and as per the said report, there is no complaint against the petitioner-Company including any complaint/representation against the scheme of amalgamation of the petitioner-Company. However, in para 2(c) it is submitted that petitioner be commanded to comply with the provisions of sections 61, 66 read with 117 of the Companies Act, 2013, so also to make payment of stamp duty, registration fee etc. and file the relevant e-form with respective Registrar of Companies. In para 2(d), it has been submitted that this Court be pleased to command the petitioner-
Company Petition Nos.2/2015 & 3/2015 (9) companies to comply strictly with the requirements of Accounting Standard - 14 and that such excess amount shall be credited to Capital Reserve Account on such transfer of undertaking. Besides the amount of such Capital Reserve should be shown separately stating the facts of the scheme of arrangement and be shown in the balance sheet. Further, the petitioner-companies be directed to give undertaking that reserves so created, if any, shall not be available for distribution of dividend and also the petitioner-companies to comply with Accounting Principles and amend the relevant clause of the scheme relating to accounting principles referred above. In para 2(e) it is submitted that clause 14 of the scheme provides for amendment of Memorandum of Association of the Transferee Company. As per the said clause of the scheme it is proposed that the sub clause (1) to (3) of Clause III(A) of the MOA of the transferor company shall be substituted in the Memorandum of Association of the transferee Company at sub clause (1) to (3) of the Clause III(B) of MOA of the transferee company. It is revealed from the MOA of the transferor company that there are only two sub-clause (1) & (2) OF Clause II(A) and no sub-clause (1) to (3) of III(A) are given in the MOA of the transferor company and therefore, such amendment are required to be corrected accordingly in this Scheme. The Hon'ble Court may therefore be pleased to direct the petitioner companies to place on record all the facts in the matter and amend the said clause of the scheme accordingly. In para 2(f), it has been stated that in compliance of the Circular No. 2/1/2014 dated 15/1/14 annexed with the counter affidavit as Annexure "A", issued by the Ministry of Corporate Affairs, the Directorate vide letter dated 16/4/15 had sent letter to the Chief Commissioner of Income Tax, Bhopal with a request to give specific comments of the Income Tax Department about the proposed scheme.
Company Petition Nos.2/2015 & 3/2015 (10) However, no reply has been received from the Income Tax Dpeartment so far. Hence, it is submitted that petitioners- Companies be directed to undertake compliance of Income Tax Act and rules in the matter.
With the aforesaid submissions, it has been stated that the deponent-Regional Director has on other objection except those referred to above and that the Scheme of Amalgamation of M/s Waterwell Mouldings Private Limited with M/s Sunrise Tanks Private Limited, is not prejudicial to the interest of shareholders of the petitioner company and the public at large.
In Company Petition No.3/15, the Regional Director by his affidavit dated 19/1/16 filed on 1/2/16 has adopted the affidavit dated 4/12/15 (Supra) and submitted that the same may be treated as affidavit in both the company petitions.
8. The Official Liquidator in his report dated 28/7/15 in Company Petition No. 2/15 and 27/10/15 in Company Petition No. 3/15 has stated in paragraphs 22 and 24 respectively that the Official Liquidator has not received any complaint against the proposed Scheme of Amalgamation from any person/party interested in the Scheme of Amalgamation in any manner. However, in para 23 of the report dated 28/7/15 (Supra), it is stated that subject to compliance of paras 16 and 21 of the report, it has been found that the affairs of the Transferor Company have not been conducted in a manner prejudicial to the interest of its members, creditors or to public interest. Likewise, in para 25 of the report dated 27/10/15, it is stated that subject to compliance of paras 18 and 23 of the Report, it appears that the affairs of the Transferor Company have not been conducted in a manner prejudicial to the interest of its members, creditors or to public interest. However, in both the reports, it has also been stated that necessary directions be issued to the petitioner-Companies to pay requisite stamp Company Petition Nos.2/2015 & 3/2015 (11) duty, cess, taxes, if any applicable on such transfer of immovable assets to the concerned Government department/Authorities.
9. For ready reference, paras 16 and 21 of the report of Official Liquidator dated 28/7/2015 filed in Company Petition No. 2/15 are reproduced as under:-
"16. That,as per valuation report dated 22/12/2014 of M/s A.K.Agrawal & Associates, Chartered Accountants, Gwalior, the Share Exchange Ratio is 4:1 (For every one share of Water Mouldings Private Ltd., the shareholders will get 4 shares of Sunrise Tanks Pvt. Ltd.). The net worth of Transferor Company and Transferee Company is 154.52p and Rs.35.79p per share respectively. The Share Exchange Ratio by taking net worth of both companies is 4.317:1 (154.52/35.79=4.317) i.e. for every one share of Waterwell Mouldings Private Ltd., the shareholders will get 4.317 shares of Sunrise Tanks Pvt. Ltd.) It reveals that Shareholders of Transferor Company will be entitled to get 4.317 Equity Shares of Transferee Company in exchange of one Equity Shares held by them in Transferor Company, where as in the scheme it is mentioned that Transferree Company will allot 4 Equity Share to Shareholders of the Transferor Company in exchange of 1 share, which is not in the interest of Shareholders of Transferor Company. Therefore, it is prayed that directions may kindly be issued to Transferee Company to make allotment of 4.317 nos. of Equity Shares to Shareholders of the Transferor Company in exchange of 1 Equity share held by them in Transferor Company.
21.That it is observed that assets including land, Buildings, Plant & Machineries etc. mentioned in Balance Sheet as on 31/03/2014 of the company are to be transferred to the Transferree Company after implementation of such Scheme of Amalgamation.
It is, therefore, prayed that necessary directions may kindly be issued to Transferee Company to pay stamp duty, cess, taxes, if any, applicable on Company Petition Nos.2/2015 & 3/2015 (12) such transfer of immovable assets to the concerned Government Authorities"
Similarly, paras 18 and 23 of the report of Official Liquidator dated 27/10/15 filed in Company Petition No. 3/15 are reproduced as under:-
"18. That,as per valuation report dated 22/12/2014 of M/s A.K.Agrawal & Associates, Chartered Accountants, Gwalior, the Share Exchange Ratio is 4:1 (For every one share of Water Mouldings Private Limited, the shareholders will get 4 shares of Sunrise Tanks Pvt. Ltd.). The net worth of Transferor Company and Transferee Company is 154.52p and Rs.35.79p per share respectively. The Share Exchange Ratio by taking net worth of both companies is 4.317:1 (154.52/35.79=4.317) i.e. for every one share of Waterwell Mouldings Private Ltd., the shareholders will get 4.317 shares of Sunrise Tanks Pvt. Ltd.) It reveals that Shareholders of Transferor Company will be entitled to get 4.317 Equity Shares of Transferee Company in exchange of one Equity Shares held by them in Transferor Company, where as in the scheme it is mentioned that Transferree Company will allot 4 Equity Share to Shareholders of the Transferor Company in exchange of 1 share, which is not in the interest of Shareholders of Transferor Company. Therefore, it is prayed that directions may kindly be issued to Transferee Company to make allotment of 4.317 nos. of Equity Shares to Shareholders of the Transferor Company in exchange of 1 Equity share held by them in Transferor Company.
23.That it is observed that assets including land, Buildings, Plant & Machineris etc. mentioned in Balance Sheet as on 31/03/2014 of the company are to be transferred to the Transferree Company after implementation of such Scheme of Amalgamation.
It is, therefore, prayed that necessary directions may kindly be issued to Transferee Company to pay stamp duty, cess, taxes, if any, applicable on such transfer of immovable assets to the concerned Government Authorities"
Company Petition Nos.2/2015 & 3/2015 (13)
10. Thereafter, this Court, vide order dated 22/2/16 in Company Petition No.2/15 ordered for publication in accordance with provisions of Rule 81 of the Company Code Rules, in compliance whereof publications dated 5/3/16 were made in hindi dailies "Nai Duniya" & "Dainik Bhaskar" and that dated 6/3/16 and 7/3/16 were made respectively in English dailies "Hindustan Times" and "The Times of India". It was notified through publication that hearing of the case will be held on 16/3/16 and any person desirous of supporting or opposing the proposed Scheme of Amalgamation may appear before this Court, duly represented by a counsel, on the aforesaid date. Copies of the newspaper cuttings are placed on record in both the petitions as Annexure A-1 Colly. No objections were received from either any person or through counsel as per the record of both the company petitions.
11. Under such circumstances, this Court doth hereby sanction the Scheme of Amalgamation set forth in Para 2 and annexed as "Annexure A" of the Company Petitions and doth hereby declare the same to be binding on shareholders, secured and unsecured creditors of both the Transferor & Transferree Company;
And this Court doth further order that:-
1. The Transferree Company shall increase the share capital as per objections raised by the Regional Director, North Western Region in Para 2(c) of his affidavit within a period of seven days from today, and shall also comply with the requirements of allotment of shares to the shareholders of the Transferor Company as specified in paragraphs 16 and 18 of the reports of Official Liquidator filed in Company Petition Nos.2/15 and 3/15 respectively, as indicated above, and shall also comply with the requirements as stated in paragraphs 21 and 23 Company Petition Nos.2/2015 & 3/2015 (14) of the such reports respectively relating to obligation of the Transferree Company to pay stamp duty, cess, taxes, if any applicable, on such transfer of immovable assets to the concerned Government Authorities.
2. The petitioner-companies shall adhere to Para 2(d) of the affidavit filed by the Regional Director, North Western Region.
3. The petitioners-Companies shall adhere to accounting principles as per Accounting Standard-14 as detailed in paragraph 2(d) of the report of Regional Director strictly without any exception and shall also ensure compliance of the requirements as reiterated in paragraph 2(e) of the said affidavit.
4. The present order shall not be construed as order granting exemption from payment of stamp duty, cess, taxes, if any, applicable on transfer of immovable assets, or any other charge, payable in accordance with any law or permission/compliance with any other requirement which may be specifically required under the law.
5. The petitioners-Companies shall also ensure compliance of Income Tax Act and Rules made therein.
Accordingly, both the Company Petitions are allowed on the aforesaid terms.
(Rohit Arya) Company Judge (and)