THE HON'BLE MR JUSTICE G.V.SEETHAPATHY COMPANY PETITION No :76 of 2010 DATED:19-07-2010 ORDER: This petition is filed under Sections 391 and 394 of the Companies Act, 1956 ( for brevity, ‘the Act’) seeking sanction for the proposed scheme of amalgamation of the petitioner company-M/s Ilabs Information Technology & Life Sciences Park Private Limited, Hyderabad (hereinafter referred to as ‘transferor company’) with M/s Chintalapati Holdings Private Limited, Hyderabad (hereinafter referred to as ‘transferee company’). 2. Heard learned counsel for the petitioner-company; learned Assistant Solicitor General, representing the Central Government; and the learned counsel representing the Official Liquidator, attached to this Court. Perused the records. 3. The transferor company was originally incorporated as private Limited company under the name and style ‘M/s Taurus Biotech Private Limited’ on 22-02-2000 and subsequently, its name was changed as ‘M/s Ilabs Information Technology & Life Sciences Park Private Limited’ and fresh certificate of incorporation was obtained from the Registrar of Companies on 16-05-2005. The registered office of the transferor company is situate at Ilabs Centre, Madhapur, Hyderabad. The authorized share capital of the transferor company as on 31-03-2009 is Rs.10,00,000/- divided into 1.00 lakh equity shares of Rs.10/- each. The issued, subscribed and paid up capital of the transferor company is Rs.1,00,000/- divided into 10,000 equity shares of Rs.10/- each fully paid up. 4. The objects of the transferor company are: 1) to manufacture, produce, process, buy, sell, trade, exchange, export, import, act as agents, stockiest, distributors and or otherwise, deal in any other manner, in Biotechnology products, tissue culture products, enzymes, vaccines, Bio- pesticides, insecticides and fungicidal sprays, Bio-fertilizers, Bio-chemicals and chemicals related to agricultural and medical use, Bio-engineering products, genetic engineering products,pheromones, fermentation products, seed and seedings production, and all kinds of Bioproducts or products manufactured therefrom or products manufactured for use, in its production; 2) to carry on the business of infrastructure development including constructing Information Technology and Biotechnology Parks, Sale, lease and maintain such parks or premises; 3) to carry on the business of Information Technology, IT enabled services, BPO, Bio-Technology and other related areas. 5. The objects of the transferor company are set out in detail in the Memorandum of Articles of Association, annexed to the petition. 6. The transferee company was incorporated as a private limited company on 20-01-2000 with its registered office also at Madhapur, Hyderabad. The authorized share capital of the transferee company as on date is Rs.5.00 crores divided into 50 lakh equity shares of Rs.10/-each. The issued, subscribed and paid up capital of the transferee company as on date is Rs.2.00 crores divided into 20.00 lakh equity shares of Rs.10/- each fully paid up. 7. The objects of the transferee company are set out in detail in the Memorandum of Association and also extracted in the petition and they are not reiterated here for the sake of brevity. 8. It is stated that the transferor company is 100% subsidiary of the transferee company. The transferor company is engaged in the business of producing, processing and selling of Bio-tech products. The transferee company is engaged in investments with a main focus in development of IT & ITES, Bio-tech and other infrastructure projects. It is proposed to amalgamate the transferor company with the transferee company as it would lead to synergy of operations for both the companies and the proposed amalgamation will give more thrust and integrate their business facilities and infrastructure under one single unit. It is also stated that the proposed amalgamation would ultimately contribute to the business and profitability of the amalgamated company and it will be in the interest of both the companies and their shareholders. The salient features of the proposed scheme of amalgamation are set out in detail in the scheme, which is annexed to the petition and also extracted in the petition. The Board of Directors of the transferor company and the transferee company in their respective meetings held on 18-02-2010 and 19-02-2010 respectively approved the scheme of amalgamation, subject to the consent of the shareholders and confirmation by this Court. 9. Earlier, the transferor company filed C.A.No.229 of 2010 claiming that the convention of the meeting of the shareholders of the company may be dispensed with. As there are two shareholders for the transferor company and both of them have stated consent for the proposed scheme of amalgamation by way of affidavits, which are placed on record, this Court by order, dated 29-03-2010, allowed the said application and directed that the meeting of the shareholders be dispensed with. 10. While admitting the petition on 20-04-2010, this Court directed issuance of notices to the Regional Director, Ministry of Corporate Affairs, Chennai, and the Official Liquidator, attached to this Court, besides ordering publication of general notice in ‘Andhra Bhoomi’ Telugu daily and ‘Business Standard’ English daily of Hyderabad Editions. In response to the said notices, the learned Assistant Solicitor General, representing the Registrar of Companies, filed common affidavit stating no objection to the proposed amalgamation except that the transferee company should pay the stamp duty as per the regulations of the Indian Stamp Act,1899 ( for brevity, ‘the Act’). 11. Learned counsel for the petitioner would submit that as the transferor company is a 100% subsidiary of the transferee company by virtue of the explanation to Clause (d) of Article 20 of Schedule-IA of the Act, the stamp duty need not be paid as there is no change in the total value of the shares issued or converted on account of the amalgamation of the transferor company which is 100% subsidiary of the transferee company and no shares would be allowed consequent upon the said amalgamation. 12. This Court in the order, dated 12-03-2010 held as follows: “The Central Government raised objection with regard to payment of stamp duty under Schedule-IA, Article 20(d). Learned counsel appearing for the petitioner companies submits that there is no allotment of shares by the transferee company to the transferor companies since the transferee company is holding 100% shares. Therefore, Schedule-IA, Article 20(d) is not applicable to the facts of the case. The scheme of amalgamation is explicit that the transferee company is holding 100% shares in all the three transferee companies. Hence, the objection raised by the Central Government is not sustainable”. 13. In view of the above decision and also the explanation to Clause (d) of Article 20 of Schedule-1A of the Act, having regard to the fact that the petitioner- transferor company is 100% subsidiary of the transferee company and there is no further allotment of shares by the transferee company consequent upon the proposed amalgamation, it is held that the question of payment of stamp duty does not arise and the objection raised by the Central Government in that regard is not sustainable. 14. Learned counsel representing the Official Liquidator, filed a report in O.L.R.No.302/2010 stating that on verification of the information in material papers made available by the petitioner company the affairs of the transferor company do not appear to have been conducted in a manner prejudicial to the interest of its members or to the public interest, subject to the fact that ‘No Objection Certificate’ from the secured creditor-UTI bank has to be obtained by the petitioner company. It is also stated that the scheme of amalgamation has taken due care for protecting the services of the permanent employees of the petitioner company and no adverse remarks have been made by the auditors in their report and annexed to the balance sheet as on 31-03-2009. 15. Today, learned counsel for the petitioner has filed ‘No Objection Certificate’ from the Axis bank (formerly UTI bank), wherein it is stated that the said creditor has no objection for the proposed scheme of amalgamation of the transferor company with its holding company. 16. No objections have been received from any quarter in response to the general notice issued by way of publication in the newspapers. It is stated that as the transferor company is a 100% subsidiary of the transferee company, no separate application need be filed by the transferee company seeking sanction of the proposed scheme of amalgamation in lieu of the decisions of this Court reported in ANDHRA BANK HOUSING FINANCE LIMITED, HYDERABAD v. M/S ANDHRA BANK[1] and IN RE NEBULA MOTORS LIMITED[2]. 17. In the circumstances, having regard to the fact that the transferor company is a 100% subsidiary of the transferee company and the proposed scheme of amalgamation is approved by the Board of Directors of the transferor company and the shareholders also stated consent for the proposed scheme and the sole creditor also stated no objection for the same and there being no objection from any quarter in response to the general notice, and as the proposed scheme of amalgamation is stated to be for the benefit of both the companies, its shareholders, creditors and employees, it is considered that the proposed scheme of amalgamation can be sanctioned and the same is accordingly sanctioned, with effect from the appointed date i.e. 01-04-2008. Consequently, the petitioner company stands dissolved, without going through the process of winding up, with effect from 01-04-2008. Petitioner shall file a certified copy of this order within 30 days from the date of receipt of the same before the Registrar of Companies, Hyderabad for the purpose of registration and necessary follow up action. 18. Accordingly, Company Petition is allowed. _______________________ G.V.SEETHAPATHY,J 19th July, 2010. Tsy [1] 2003(3) ALD 654 [2] 2003(5) ALD 327