Delhi High Court
Emaar Mgf Land Limited vs ... on 30 May, 2016
Author: Sudershan Kumar Misra
Bench: Sudershan Kumar Misra
IN THE HIGH COURT OF DELHI
COMPANY APPLICATION (MAIN) NO. 77/2016
Reserved on 18th May, 2016
Date of pronouncement: 30th May, 2016
In the matter of
The Companies Act, 1956 & the Companies Act, 2013 (to the extent
applicable):
And
Application under Sections 391(1) and 394
read with Sections 100 to 104 of the
Companies Act, 1956
Scheme of Arrangement between:
Emaar MGF Land Limited
Applicant/Demerged Company
AND
MGF Developments Limited
Applicant/Resulting Company
Through Mr. Rajeev K. Goel, Advocate
for the applicant
SUDERSHAN KUMAR MISRA, J.
1. This joint application has been filed under Sections 391(1) and 394 read with Sections 100 to 104 of the Companies Act, 1956 by the applicant companies seeking directions of this court to convene meetings of their shareholders, secured and unsecured creditors to consider and approve, with or without modification, the proposed Scheme of Arrangement between Emaar MGF Land Limited (hereinafter referred to as the demerged company) and MGF Developments Limited (hereinafter referred to as the resulting company).
CA (M) 77/2016 Page 1 of 12
2. The registered offices of the demerged and resulting companies are situated at New Delhi, within the jurisdiction of this Court.
3. The demerged company was originally incorporated under the Companies Act, 1956 on 18th February, 2005 with the Registrar of Companies, NCT of Delhi & Haryana at New Delhi under the name and style of Emaar MGF Land Private Limited. The company changed its name to Emaar MGF Land Limited and obtained the fresh certificate of incorporation on 13th August, 2007.
4. The resulting company was incorporated under the Companies Act, 1956 on 16th September, 1996 with the Registrar of Companies, NCT of Delhi & Haryana at New Delhi.
5. The present authorized share capital of the demerged company is Rs.60,00,00,00,000/- divided into 3,00,00,00,000 equity shares of Rs.10/- each aggregating Rs.30,00,00,00,000/- and 3,00,00,00,000 preference shares of Rs.10/- each aggregating Rs.30,00,00,00,000/-. The issued, subscribed and paid-up share capital of the company is Rs.9,12,61,98,450/- divided into 91,26,19,845 equity shares of Rs.10/- each. The demerged company has also issued 2,500 compulsory convertible unsecured debentures of Rs.10,00,000/- each aggregating Rs.2,50,00,00,000/-. Further, the demerged company has also issued the CA (M) 77/2016 Page 2 of 12 following redeemable non-convertible secured debentures, viz. (i) 22,600 redeemable secured non-convertible debentures of Rs.10,00,000/- each aggregating Rs.22,60,00,00,000/-; (ii) 5,750 redeemable secured non- convertible debentures of Rs.4,32,501/- each aggregating Rs.2,48,68,80,750/-; (iii) 3,750 redeemable secured non-convertible debentures of Rs.10,00,000/- each aggregating Rs.3,75,00,00,000/-; and
(iv) 2,250 redeemable secured non-convertible debentures of Rs.7,90,821/- each aggregating Rs.1,77,93,47,250/-.
6. The present authorized share capital of the resulting company is Rs.60,00,00,000/- divided into 6,00,00,000 equity shares of Rs.10/- each. The issued and subscribed share capital of the company is Rs.59,76,50,700/- divided into 5,97,65,070 equity shares of Rs.10/- each. The paid up share capital of the company Rs.32,87,07,885/- divided into 2,98,82,535 fully paid up equity shares of Rs.10/- each aggregating Rs.29,88,25,350/- and 2,98,82,535 partly paid equity shares of Rs.10/- each, paid up value of Rs.1/- per share aggregating Rs.2,98,82,535/-.
7. Copies of the Memorandum and Articles of Association of the demerged and resulting companies have been filed on record. The audited balance sheets, as on 31st March, 2015, of the demerged and resulting companies, along with the report of the auditors, have also been filed.
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8. A copy of the Scheme of Arrangement has been placed on record and the salient features of the Scheme have been incorporated and detailed in the application and the accompanying affidavits. It has been submitted by the applicants that demerged undertaking of the demerged company shall stand merged in the resulting company. It is claimed that the proposed demerger would lend greater focus on the operation of each of the demerged company's business/projects and enable further growth and expansion of each business/project. It is further claimed that the proposed demerger would enable sustainable long term growth, profitability, cost reduction and efficiencies and continuous customer service through focused management attention as different set of skills and resources would be available to meet competitive, regulatory environment and customer service requirements.
9. So far as the share exchange ratio is concerned, the Scheme provides that, upon coming into effect of this Scheme, the resulting company shall issue and allot equity shares to the shareholders of the demerged company in the following ratio:
"09 equity shares of Rs.10/- each of the resulting company, credited as fully paid up, for every 416 equity shares of Rs.10/- each held by the shareholders in the demerged company."CA (M) 77/2016 Page 4 of 12
10. It has been submitted by the applicants that no proceedings under Sections 235 to 251 of the Companies Act, 1956 or under the corresponding provisions of the Companies Act, 2013 are pending against the applicant companies.
11. The Board of Directors of the demerged and resulting companies in their separate meetings held on 11th May, 2016 have unanimously approved the proposed Scheme of Arrangement. Copies of the Resolutions passed at the meetings of the Board of Directors of the demerged and resulting companies have been placed on record.
12. The demerged company has 16 equity shareholders and a direction is sought to convene and hold their meeting to seek their approval to the proposed Scheme of Arrangement. Considering the facts and circumstances aforesaid, the meeting of the equity shareholders of the demerged company shall be held on 12th July, 2016 at 01:30 p.m. at Ghalib Institute, Mata Sundari Lane, Aiwan-E-Ghalib Marg, Near Bal Bhavan, ITO, New Delhi - 110002. Mr. K. K. Nangia, Advocate, (Mobile No. 9910390945) is appointed as the Chairperson and Mr. Shekhar Kumar, Advocate, (Mobile No. 9871008884) is appointed as the Alternate Chairperson to conduct the said meeting. The Quorum of the meeting of the equity shareholders of the demerged company shall be 05 in number and more than 25% in value of the total share capital.
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13. The demerged company has 21 secured creditors (including secured debenture holders) and a direction is sought to convene and hold their meeting to seek their approval to the proposed Scheme of Arrangement. Considering the facts and circumstances aforesaid, the meeting of the secured creditors of the demerged company shall be held on 12th July, 2016 at 11:30 a.m. at Ghalib Institute, Mata Sundari Lane, Aiwan-E-Ghalib Marg, Near Bal Bhavan, ITO, New Delhi - 110002. Mr.Ankur Arora, Advocate, (Mobile No. 9811929774) is appointed as the Chairperson and Ms. Tina Mago, Advocate, (Mobile No. 9999443522) is appointed as the Alternate Chairperson to conduct the said meeting. The Quorum of the meeting of the secured creditors of the demerged company shall be 05 in number and more than 25% in value of the total secured debt.
14. The resulting company has 07 equity shareholders and a direction is sought to convene and hold their meeting to seek their approval to the proposed Scheme of Arrangement. Considering the facts and circumstances aforesaid, the meeting of the equity shareholders of the resulting company shall be held on 12th July, 2016 at 12:30 p.m. at Ghalib Institute, Mata Sundari Lane, Aiwan-E-Ghalib Marg, Near Bal Bhavan, ITO, New Delhi - 110002. Mr. Ashok Gurnani, Advocate, (Mobile No. 9810109039) is appointed as the Chairperson and CA (M) 77/2016 Page 6 of 12 Mr.Akshay Chandra, Advocate, (Mobile No. 9910401230) is appointed as the Alternate Chairperson to conduct the said meeting. The Quorum of the meeting of the equity shareholders of the resulting company shall be 03 in number and more than 25% in value of the total share capital.
15. The resulting company has 01 secured creditor and a direction is sought to convene and hold its meeting to seek its approval to the proposed Scheme of Arrangement. Considering the facts and circumstances aforesaid, the meeting of the secured creditor of the resulting company shall be held on 12th July, 2016 at 10:30 a.m. at Ghalib Institute, Mata Sundari Lane, Aiwan-E-Ghalib Marg, Near Bal Bhavan, ITO, New Delhi - 110002. Mr. N.K. Tyagi, Advocate, (Mobile No. 9871402101) is appointed as the Chairperson and Mr. Dishant Sharma, Advocate, (Mobile No. 9971463025) is appointed as the Alternate Chairperson to conduct the said meeting. The Quorum of the meeting of the secured creditor of the resulting company shall be 01 in number.
16. The demerged company has 2,130 unsecured creditors (including unsecured debenture holders) and a direction is sought to convene and hold their meeting to seek their approval to the proposed Scheme of Arrangement. Considering the facts and circumstances aforesaid, the meeting of the unsecured creditors of the demerged company shall be held on 11th July, 2016 at 11:00 a.m. at Kamani Auditorium, 1, CA (M) 77/2016 Page 7 of 12 Copernicus Marg, New Delhi - 110001. Mr. Mukesh Sukhija, Advocate, (Mobile No. 9810296468) is appointed as the Chairperson and Mr.Hari Om Gautam, Advocate, (Mobile No. 9810057143) is appointed as the Alternate Chairperson to conduct the said meeting. The Quorum of the meeting of the unsecured creditors of the demerged company shall be 200 in number and more than 25% in value of the total unsecured debt.
17. The resulting company has 120 unsecured creditors and a direction is sought to convene and hold their meeting to seek their approval to the proposed Scheme of Arrangement. Considering the facts and circumstances aforesaid, the meeting of the unsecured creditors of the resulting company shall be held on 12th July, 2016 at 03:00 p.m. at Ghalib Institute, Mata Sundari Lane, Aiwan-E-Ghalib Marg, Near Bal Bhavan, ITO, New Delhi - 110002. Mr. Subhiksh Vasudev, Advocate, (Mobile No. 9810710871) is appointed as the Chairperson and Mr.Jitender Bharwaj, Advocate, (Mobile No. 9811672065) is appointed as the Alternate Chairperson to conduct the said meeting. The Quorum of the meeting of the unsecured creditors of the resulting company shall be 25 in number and more than 25% in value of the total unsecured debt.
18. In addition to the aforesaid unsecured creditors, the demerged company and the resulting company have other specified liabilities viz. advance received from customers against confirmed bookings in various CA (M) 77/2016 Page 8 of 12 real estate projects; advance received from joint development partners; maintenance deposits received from customers; security deposits received from tenants for leasing out of properties; security deposits received from vendor/brokers/employees as performance sureties; provisions for leave encashment, gratuity, compensation in respect of delayed delivery of projects, brokerage commission etc. Learned counsel for the applicants has submitted that these advances and liabilities are not due for payment as on date and the consents of these persons are not required since their advances will be adjusted in various heads i.e. advance received from customers will be adjusted against the final payment to be made by such customer at the time of taking possession; advance received from joint development partners will be adjusted against balance payment to be made in terms of joint development agreement; maintenance deposits will be transferred to respective resident welfare associations as and when such associations are formed on completion of respective projects; and security deposits received from tenants will be adjusted/refunded upon termination/expiry of lease agreements etc. Learned counsel for the applicants has further submitted that no compromise is being proposed with any of the creditors of the applicant companies under the proposed Scheme and their interests will not be adversely affected by the proposed demerger. He has further submitted that, post amalgamation, the applicant companies will pay their respective creditors and other liabilities in the normal course of their CA (M) 77/2016 Page 9 of 12 businesses. He, therefore, seeks exemption for the aforesaid categories of creditors/liabilities for convening their meetings. In support of his submission, learned counsel placed reliance on judgments of this court in the matter of International Institute of Planning and Management Private Limited (CA(M) 87/2010); and Share India Securities Limited (CA(M) 155/2009) wherein under similar circumstances, dispensation of the meetings has been granted. Considering the case laws on the subject and the submissions made at the bar, the requirement of obtaining the consents/no objections of the customers, joint development partners, tenants, vendors/brokers etc., as prayed for by the applicants, is dispensed with.
19. In case the quorum as noted above for the above meetings is not present at the meetings, then the meetings shall be adjourned by half an hour, and thereafter the persons present and voting shall be deemed to constitute the quorum. For the purpose of computing the quorum the valid proxies shall also be considered, if the proxy in the prescribed form duly signed by the person entitled to attend and vote at the meetings is filed with the registered offices of the demerged and resulting companies at least 48 hours before the meetings. The Chairpersons and Alternate Chairpersons shall ensure that the proxy registers are properly maintained.
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20. The Chairpersons and Alternate Chairpersons shall ensure that notices for convening the aforesaid meetings of the equity shareholders, secured and unsecured creditors of the demerged and resulting companies, along with copies of the Scheme of Arrangement and the statement under Section 393 of the Companies Act, 1956, shall be sent to the equity shareholders, secured and unsecured creditors of the demerged and resulting companies by ordinary post at their registered or last known addresses at least 21 days before the date appointed for the meetings, in their presence or in the presence of their authorized representatives. Notice of the meetings shall also be published in the Delhi editions of the newspapers "Business Standard" (English) and (Hindi) editions in terms of the Companies (Court) Rules, 1959 at least 21 days before the date appointed for the meetings.
21. The Chairpersons and Alternate Chairpersons will be at liberty to issue suitable directions to the management of the demerged and resulting companies so that the aforesaid meetings of the equity shareholders, secured and unsecured creditors of the demerged and resulting companies are conducted in a just, free and fair manner.
22. The fee of the Chairpersons and the Alternate Chairpersons for the aforesaid meetings shall be Rs.50,000/- each in addition to meeting their CA (M) 77/2016 Page 11 of 12 incidental expenses. The Chairpersons will file their reports within two weeks from the date of holding of the aforesaid meetings.
23. The application stands allowed in the aforesaid terms.
Dasti SUDERSHAN KUMAR MISRA, J.
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