THE HON’BLE SRI JUSTICE B.SESHASAYANA REDDY Company Petition Nos.35 and 36 of 2011 Date:15th April,2011 M/s.Deccan Chargers Sporting Ventures Limited, a Company Incorporated under the Companies Act, 1956 having its registered office at No.36, Sarojini Devi Road, Secunderabad – 500 003, rep. by its Director Sri T.Vinay Ravi Reddy …1st Transferor Company/ Petitioner in C.P.No.35 of 2011 *** M/s.Odyssey India Limited, a Company incorporated under the Companies Act, 1956, having its registered office at No.36, Sarojini Devi Road, Secunderabad – 500 003, rep. by its Director Sri P.K.Iyer. ….2nd Transferor Company/ Petitioner in C.P.No.36 of 2011 *** THE HON’BLE SRI JUSTICE B.SESHASAYANA REDDY Company Petition Nos.35 and 36 of 2011 COMMON ORDER: These two Company Petitions have been filed under Sections 391 and 394 of the Companies Act, 1956, (for short, ‘the Act’), seeking sanction and confirmation of this Court for the scheme of amalgamation as consented by the shareholders of both the petitioner companies and the transferee company-M/s.Deccan Chronicle Holdings Limited, with effect from 01.04.2010. 2. M/s.Deccan Chargers Sporting Ventures Limited (hereinafter referred to as ‘the 1st transferor company’) was incorporated as a public limited company on 10.04.2008 under Corporate Identity No.U92413AP2008PLC058620 and obtained the certificate of commencement of business from the Registrar of Companies, A.P., Hyderabad on 30.06.2008. The authorised share capital of the 1st transferor company as on 31.03.2010 was Rs.50,00,00,000/- divided into 5,00,00,000 equity shares of Rs.10/- each and the entire share capital has been issued, subscribed and paid up as on 31.03.2010 each, fully paid up. The entire equity share capital is held by the Deccan Chronicle Holdings Limited-transferee company and its nominees. 3. M/s.Odyssey India Limited (hereinafter referred to as ‘the 2nd transferor company’) was incorporated on 27.03.1995 under the name and style of Heritage Books Private Limited in the State of Tamil Nadu. Subsequently, the name of the Heritage Books Private Limited was changed to Odyssey India Private Limited on 08.10.2002. By virtue of Section 44 of the Act, the company became a public limited company and consequently, the name of the company changed to Odyssey India Limited on 30.09.2003. The authorised share capital of the 2nd transferor company as on 31.03.2010 was Rs.15,00,00,000/- divided into 1,50,00,000 equity shares of Rs.10/- each. The issued, subscribed and paid up capital of the 2nd transferor company is Rs.11,25,00,000/- divided into 1,12,50,000 equity shares of Rs.10/- each, fully paid up, and the entire equity share capital is held by the transferee company and its nominees. 4. M/s.Deccan Chronicle Holdings Limited-transferee company was incorporated on 16.12.2002 in the State of Andhra Pradesh under Certificate of Incorporation No.40110 of 2002-03 and obtained commencement of business certificate on 30.12.2002. The present authorised share capital of the transferee company is Rs.70,00,00,000/- divided into 3.5 crores of equity shares of Rs.2/- each. The present issued, subscribed and paid up share capital of the transferee company is Rs.48,69,44,438/- divided into 24,34,72,219 equity shares of Rs.2/- each fully paid. 5. The transferee company is engaged in the business of printing and publishing of newspapers etc. and the transferor companies are the wholly owned, subsidiary companies of the transferee company. In order to consolidate and supplement the business of the transferor companies, it has been proposed to amalgamate the transferor companies with the transferee company and also to avail the infrastructure and service facilities of the transferor companies. The circumstances that have necessitated for the proposed scheme of amalgamation are stated in para.17 of the respective petitions. The meeting of the shareholders of the 1st transferor company came to be dispensed with as per order dated 04.03.2011 passed in C.A.No.190 of 2011. So also the meeting of the shareholders of the 2nd transferor company came to be dispensed with as per order dated 04.03.2011 passed in C.A.No.191 of 2011. 6. The above Company Petitions came up for hearing on 21.03.2011. Notice was directed to be taken out to the Regional Director, Ministry of Corporate Affairs, Chennai; the Registrar of Companies, Andhra Pradesh, Hyderabad and to the Official Liquidator, Hyderabad. The petitioners were also directed to take out publication in BUSIENSS STANDARD, English daily and in ANDHRA BHOOMI, Telugu daily, Hyderabad Editions. Accordingly, publications have been effected and proof has been filed. 7. No objections have been received from any quarter. The Official Liquidator and the Registrar of Companies, Andhra Pradesh, Hyderabad, placed on record their reports, reporting no objection. 8. Heard learned counsel appearing for the petitioners and perused the proposed scheme of amalgamation, report of the Official Liquidator and the affidavit of the Registrar of Companies. 9. The scheme of amalgamation is explicit that the transferee company is holding 100% shares in both the transferor companies. A learned single Judge of this Court in In re Nebula Motors Limited[1] held that there is no need for the transferee company to approach the Court for necessary sanction. It is appropriate to refer Section 394 of the Companies Act, which reads as hereunder: Provisions for facilitating reconstruction and amalgamation of companies.— 394. (1) Where an application is made to the Court under Section 391 for the sanctioning of a compromise or arrangement proposed between a company and any such persons as are mentioned in that section, and it is shown to the Court- (a) that the compromise or arrangement has been proposed for the purposes of, or in connection with, a scheme for the reconstruction of any company or companies, or the amalgamation of any two or more companies; and (b) that under the scheme the whole or any part of the undertaking, property or liabilities of any company concerned in the scheme (in this section referred to as a 'transferor company') is to be transferred to another company (in this section referred to as 'the transferee company') The Court may, either by the order sanctioning the compromise or arrangement or by a subsequent order, make provision for all or any of the following matters :-- (i) the transfer to the transferee company of the whole or any part of the undertaking, property or liabilities of any transferor company; (ii) the allotment or appropriation by the transferee company of any shares, debentures, policies, or other like interests in that company which, under the compromise or arrangement, are to be allotted or appropriated by that company to or for any person; (iii) the continuation by or against the transferee company of any legal proceedings pending by or against any transferor company; (iv) the dissolution, without winding-up, of any transferor- company; (v) the provision to be made for any persons who, within such time and in such manner as the Court directs, dissent from the compromise or arrangement; and (vi) such incidental, consequential and supplemental matters as are necessary to secure that the reconstruction or amalgamation shall be fully and effectively carried out: Provided that no compromise or arrangement proposed for the purposes of, or in connection with, a scheme for the amalgamation of a company, which is being wound-up, with any other company or companies, shall be sanctioned by the Court unless the Court has received a report from the Company Law Board or the Registrar that the affairs of the company have not been conducted in a manner prejudicial to the interests of its members or to public interest: Provided further that no order for the dissolution of any transferor company under Clause (iv) shall be made by the Court unless the Official Liquidator has, no scrutiny of the books and papers of the company, made a report to the Court that the affairs of the company have not been conducted in a manner prejudicial to the interests of its members or to public interest. (2) Where an order under this section provides for the transfer of any property or liabilities, then, by virtue of the order, that property shall be transferred to and vest in, and those liabilities shall be transferred to and become the liabilities of, the transferee company; and in the case of any property, if the order so directs, freed from any charge which is, by virtue of the compromise or arrangement, to cease to have effect. (3) Within thirty days after the making of an order under this section, every company in relation to which the order is made shall cause a certified copy thereof to be filed with the Registrar for registration. If default is made in complying with this sub-section, the company, and every officer of the company who is in default, shall be punishable with fine which may extend to fifty rupees. (4) In this section- (a) 'property' includes property, rights and powers of every description; and 'liabilities' includes duties of every description; and (b) 'transferee company' does not include any company other than a company within the meaning of this Act; but 'transferor company' includes any body corporate, whether a company within the meaning of this Act or not." 10. A plain reading of the said provision indicates that if it is shown to the court that an arrangement has been proposed for the amalgamation of any two or more companies; the Court having regard to the provisions contained in Section 391 of the Act and the procedure envisaged thereunder and the proviso incorporated under Section 394, sub-section (1), is satisfied that the proposed arrangement for amalgamation is not in any manner prejudicial to the interests of its members or to public interest shall sanction the scheme. It is obvious, therefore, that the section requires the sanction of the scheme for amalgamation of two companies. In the instant case, there are two transferor companies and one transferee company. Both the transferor companies are subsidiaries of the transferee company. The scheme of amalgamation has been approved by the shareholders of both the transferor companies. On perusing the scheme and the objects of these companies, I do not see any impediment in sanctioning the scheme of amalgamation as approved by the shareholders of both the transferor companies. The scheme of amalgamation has been enclosed in Annexure-7 to the respective petitions. The scheme of amalgamation is stated to be beneficial for both the transferor companies. Hence, the scheme as approved by the shareholders of both the transferor companies is sanctioned. 11. Accordingly, both the company petitions stand allowed. A certified copy of this common Order shall be filed before the Registrar of Companies within thirty (30 days) from the date of receipt of the same for registration. Both the petitioner companies shall pay Rs.5,000/- each to the Official Liquidator and the Registrar of Companies, Andhra Pradesh, Hyderabad. The order of this Court shall be drafted in Form No.42. ______________________ B.SESHASAYANA REDDY, J. Date:15th April, 2011. cs THE HON’BLE SRI JUSTICE B.SESHASAYANA REDDY Company Petition Nos.35 and 36 of 2011 Date:15th April, 2011 [1] 2003 (5) ALD 327