* IN THE HIGH COURT OF DELHI AT NEW DELHI COMPANY JURISDICTION + CP No. 266 of 2007 % DATED 22.01.2008 In the matter of the Companies Act, 1956: Scheme of Amalgamation of: Dabur Foods Ltd. ... Transferor Company/Petitioner Company no.1 And Dabur India Ltd. ... Transferee Company/Petitioner Company no.2 Through : Mr. Nidhesh Gupta, Advocate for the applicant company VIPIN SANGHI, J. (ORAL) 1. This is a petition under Sections 391 and 394 of the Companies Act, 1956 seeking sanction of the Scheme of Amalgamation of Dabur Foods Ltd. (transferor company) and Dabur India Ltd. (transferee company). 2. The registered office of the transferor and transferee company are situated at Delhi within the jurisdiction of this Court. 3. The petitioner companies had filed Company Application (M) No. 141/2007 which was allowed by order dated 18th September 2007. By the aforesaid order, the requirement of CP No. 266 of 2007 Page 1 of 8 conducting statutory meetings of equity shareholders and secured creditors of the Transferor Company and the meetings of the equity shareholders, secured creditors and the unsecured creditors of the Transferee Company was dispensed with, on account of consent given by all of the above-mentioned concerned persons/entities. 4. However, the Transferor company was directed to convene the meeting of its unsecured creditors at Punjabi Bhawan, 10 Rouse Avenue, New Delhi on 3rd November 2007 for the purpose of considering and, if thought fit, approving the said Scheme of Amalgamation. Ms Lalit Mohini Bhat, Advocate and Ms Pooja Aganpal, Advocate were appointed as the Chairperson and the Alternate Chairperson respectively of the said meeting of unsecured creditors of the Transferor company. 5. The report of the appointed Chairperson of the meeting of the unsecured creditors of the Transferor company, Ms. Lalit Mohini Bhat, was filed with this Hon'ble Court on 6th November 2007. On the basis of that report of Ms. Bhat, this Court is satisfied on the following aspects: a) The requisite quorum of 20 unsecured creditors present personally or through proxy representing 15% of the total value of the unsecured debts, as required by the above-mentioned order, was present. CP No. 266 of 2007 Page 2 of 8 b) The meeting was attended by 80 unsecured creditors which totaled to Rs. 23,91,12,591/- of unsecured debts. The votes were cast by 57 unsecured creditors of the value of Rs. 23,54,94,464/- and representing 45.26% of the total value of the unsecured debts. The creditors cut off date was set as 31st August, 2007. The votes of the remaining 23 unsecured creditors were declared invalid, since they weren't creditors as on the Creditors cut off date, and they attended the meeting on the basis of the aforesaid advertisements in the newspapers. c) The said scheme of amalgamation was approved unanimously by the unsecured creditors, who were present and voting, in the meeting. The list of such unsecured creditors has been filed for record. 6. After the present petition was filed citations were directed to be published vide order dated 21st November 2007 in “The Statesman” (English edition) and “Jansatta” (Hindi edition), in terms of Companies (Court) Rules, 1959. An affidavit dated 3rd January, 2008 has been filed by the Chairperson appointed for the meeting about the publication of the citations in “The Statesman” (English) and “Jansatta” (Hindi) on 21st December, 2007. The said publication containing the said citations were also produced along with the affidavit. CP No. 266 of 2007 Page 3 of 8 7. Notices were issued to the OL and the Regional Director (Northern Region) vide order dated 21st November 2007. Pursuant to the notice issued to the OL, a report dated 8th January 2008 has been filed by the Official Liquidator. The Official Liquidator sought information from the petitioner company vide its letter no. OL/TECH/AMAL/88/274 dated 12th December 2007, upon which the requisite information was furnished by the Petitioner Companies. 8. The transferor company was incorporated on 03.12.1996. The registered office of the company is situated at 8/3, Asaf Ali Road, New Delhi – 110002. The registered office of the company is situated within the jurisdiction of this Court. 9. The authorised share capital of the transferor company as on 31st March, 2007 was Rs. 20,00,00,000/- divided into 2,00,00,000 equity shares of Rs. 10/- each. The issued, subscribed and paid up equity share capital of the Transferor company as on 31st March 2007 was Rs. 20,00,00,000/- divided into 2,00,00,000 equity shares of Rs. 10/- each. 10. The transferee company was incorporated on 16.09.1996. The registered office of the company is situated at 8/3, Asaf Ali Road, New Delhi – 110002. The registered office of the company is situated within the jurisdiction of this Court. CP No. 266 of 2007 Page 4 of 8 11. The authorised share capital of the transferee company as on 31st March, 2007 is Rs. 1,25,00,00,000/- divided into 1,25,00,00,000 equity shares of Rs. 1/- each. The issued, subscribed and paid-up equity share capital of the Transferee company as on 31st March 2007 was Rs. 86,28,83,808/- divided into 86,28,83,808 equity shares of Re. 1/- each. 12. The OL has considered the report of the Chairperson of the meeting of unsecured creditors of the Transferor company, as well as the accounts of Petitioner Companies as on 31st March 2007. The OL in its report has stated that he has not received any complaint against the scheme of amalgamation from any person/parties interested in the scheme in any manner and on the basis of information submitted by the petitioner companies. Thus it was inferred that the affairs of the Transferor company do not appear to have been conducted in a manner prejudicial to the interest of the members, creditors, or public interest in accordance with the provisions of Section 394(1) of the Companies Act, 1956. 13. The report has also been filed by the Regional Director (Northern Region) by an affidavit Shri Dhan Raj, dated 2nd January 2008, contending that by virtue of power delegated to him under Section 394A of the Companies Act, 1056 he is competent to make the affidavit. Relying on Clause 13.1 of Section D of the Scheme of CP No. 266 of 2007 Page 5 of 8 Amalgamation, it is contended that all the employees of the Transferor Company shall become the employees of the Transferee Company without any break or interruption in their services upon the sanctioning of the said Scheme of Amalgamation. 14. Relying on Para 6 of Section-C of the said Scheme, which provides for the Accounting Treatment, the Regional Director objected to the Scheme of Amalgamation on the ground that there was no mention in the relied paragraph whether the Petitioner Companies have complied with the the Accounting Standard-14 issued by the Chartered Accountants of India. 15. The objection of the Regional Director is answered by the Petitioner Companies and an affidavit of Ms Shalu Malhotra and Mr. Ashok Kumar Jain, Authorized Signatories of the Transferor and the Transferee Company, dated 8th January 2008, in reply to the objection taken on behalf of Regional Director, has been filed. 16. in the affidavits, it was submitted that clauses (c) to (e) of para 6 of Section-C of the said Scheme clearly lay down that any excess/deficit of the value of the assets over the value of the liabilities and reserves of the Transferor company vested in the Transferee company shall be treated in the books of the Transferee company in accordance with “Pooling of Interests Method” as CP No. 266 of 2007 Page 6 of 8 prescribed under Accounting for Amalgamation issued by th Institute of Chartered Accountants of India. Clauses (c), (d) and (e) of para 6 read as follows: “6. Accounting Treatment (c) The Transferee Company shall record the reserves of the Transferor Company in the same form and at the same values as they appear in the financial statements of the Transferor Company at the close of business of the day immediately preceding the Appointed Date. The balances in the Profit and Loss Account of the Transferor Company shall be similarly aggregated with the balances in Profit and Loss Account of the Transferee Company. (d) The excess, if any, of the value of the assets over the value of the liabilities of the Transferor Company vested in the Transferee Company pursuant to this Scheme as recorded in the books of account of the Transferee Company shall, after adjusting the amounts recorded in terms of Clause (c) above and investments canceled in terms of Clause (f) below, be treated in the balance sheet of the Transferee Company in accordance with “The Pooling of Interests” method as prescribed under Accounting Standard – 14 issued by the Institute of Chartered Accountants of India. (e) The deficit, if any, in the value of the assets over the value of the liabilities of the Transferor Company vested in the Transferee Company pursuant to this Scheme as recorded in the books of account of the Transferee Company shall, after adjusting the amounts recorded in terms of Clause (c) above and investments canceled in terms of Clause (f) below, be treated in the balance sheet of the Transferee Company in accordance with “The Pooling of Interests” CP No. 266 of 2007 Page 7 of 8 method as prescribed under the Accounting Standard – 14 issued by The Institute of Chartered Accountants of India.” 17. In view of the aforesaid, the Regional Director has no subsisting objection. 18. There is no other legal impediment to sanction of the Scheme of Amalgamation which is annexed to the petition. Consequently, sanction is hereby granted to the Scheme of Amalgamation under Sections 391 and 394 of the Companies Act, 1956. the Transferee company will comply with the statutory requirements in accordance with law. Certified copies of this order be filed with the Registrar of Companies within five weeks. It is also clarified that this order will not be construed as an order granting exemption from payment of stamp duty that is payable in accordance to law. Upon sanction becoming effective from the appointed date of merger, that is 1st April 2007, the Transferor company stands dissolved without being wound up. The OL may be paid expenses amounting to Rs. 10,000/- within two weeks. 19. The petition is disposed of in terms of the above order. January 22, 2008 VIPIN SANGHI, J. ab/P.K. BABBAR CP No. 266 of 2007 Page 8 of 8