IN THE HIGH COURT OF HIMACHAL PRADESH SHIMLA Company Petition No.9 of 2010. Date of decision:02.11.2010. Mahen Boutiques Limited … …Transferor Company Versus Kamla Retail Limited … …Transferee Company Coram The Hon’ble Mr.Justice Dev Darshan Sud,J. Whether approved for reporting ?1 No. For the Petitioner: Ms.Shilpa Sood, Advocate. For Official Liquidator: Mr.Sanjeev Kuthiala, Advocate. For the Union of India: Mr.Sandeep Sharma, Assistant Solicitor General of India. Dev Darshan Sud, J. This petition has been instituted by the petitioner-Transferee Company, namely, Kamla Retail Limited, under Sections 391/394 of the Companies Act, 1956 (hereinafter referred to as the `Act’) praying for an order to sanction the Scheme of Amalgamation (Annexure P-1). 2. It is undisputed before me that Company Petition No.6 of 2010 was instituted by the petitioner herein praying that meeting etc. of the Preference Shareholders, Equity Shareholders, Secured Creditors and Unsecured Creditors etc. be convened for the 1 Whether the reporters of Local Papers may be allowed to see the judgement? Yes. 2 purposes of sanctioning of the amalgamation scheme. By an order dated 1.6.2010, this Court granted the prayers:- “Heard. I have gone through the petition and the documents filed with it. Prayer for convening four meetings, as referred to in clauses (A), (B), (C) and (D) of Para-30 regarding prayer clause, is allowed. Meeting of Preference Shareholders of the Company, i.e. Kamla Retail Limited, be held on 17th July, 2010 at 12 p.m. at Hotel Timber Trail, near Parwanoo. Meeting of Equity Shareholders of the aforesaid company be held on the aforesaid date at 12.30 p.m. at the same venue. Meeting of Secured Creditors of the aforesaid company be held on the same date at 1 p.m. Meeting of Unsecured Creditors of the said company be held on the same date at 2.30 p.m. In all the four meetings, the participants shall deliberate and consider the proposed scheme of amalgamation and will vote for or against the proposed scheme. For all the four meetings, Shri K.D. Sood, Advocate, will be the Chairman and Mrs.Devyani Sharma, Advocate, will be the Co-Chairman. Fees of the Chairman shall be Rs.50,000/- plus traveling expenses and fees of the Co-Chairman shall be Rs.35,000/- plus traveling expenses. 3 Notice of all the four meetings shall be published in two newspapers, i.e. The Tribune (English) and Amar Ujala (Hindi), and also in the official Gazette of Himachal Pradesh. Chairman shall submit his reports, within a fortnight of the date of meetings. Matter be listed on 2nd August, 2010. Copy dasti.” 3. Subsequently on 2.8.2010, the report of the Chairman was received which was taken on the record and the petition disposed of. It is after this that the present petition has been instituted by the Transferee Company for sanctioning of the Scheme of Amalgamation. Notices of this petition were issued to the Official Liquidator as also the Regional Director, Northern Region, Ministry of Corporate Affairs, Noida. Replies have been filed and no opposition has been expressed to the amalgamation. 4. The petitioner prays for amalgamation with the respondent Mahen Boutiques Limited. The averments made in the petition are that the Board of Directors of the Transferor Company at its meeting held on 26th April, 2010 approved the Scheme of Amalgamation which was also accepted by the Board of Directors of the Transferee Company on 15th May, 2010. Their consent Annexures P-2 and P-3 are already filed on the record. The Scheme in detail has been filed as Annexure P-1. 4 5. The objects of amalgamation have been mentioned as under:- (a) The Transferor Company was incorporated to set up high end mono brand boutiques/retail stores for retailing watches, jewellery, crystal wares, articles made of precious and semiprecious metals and stones. Only one such retail boutique has been set up which is operating in Bangalore, which deals in the retail of Rolex Watches. However, the entire operations, staff and all related procedures of this boutique are controlled by the Transferee Company itself. (b) The Transferee Company was also incorporated for the same purposes as the Transferor Company, and provides essentially the same services through various multi brand retail stores located in different cities. (c) Under the proposed Scheme, the Transferor Company would be merged into the Transferee Company. After the amalgamation the amalgamated company will be in a better position to operate on a larger scale resulting in larger resources and lower debts. The Transferee Company would thus, get an immediate access to the existing and well-developed business and a well-established customer network of the Transferor Company. In the present economic context and scenario, 5 there is a need to consolidate these companies under one management and administrative control in order to achieve the optimum size of business which is essential forfacing the emerging global challenges. The amalgamated company with a sound financial position having more net- works, higher turnover, diversified business activities, operations synergies, better utilization of manpower can meet the market and customers needs with greater flexibility and further strengthen its position in the market. The enlarged enterprise will enabled the company to expand its operations in both the domestic and overseas market. (d) Reduction of overheads and multiple organizational costs would benefit the share holders through increased profitability. By virtue of the amalgamation, the operations of both the companies shall be ideally brought under single control thereby leading to considerable savings by eliminating duplication of administration and legal expenses, overheads and other service charges. (e) The proposed amalgamation will enable the amalgamated Company to achieve optimum size of business which is essential for better utilization of the available resources thereby ensuring long term economic and financial benefits of the company, 6 their shareholders and employees. The amalgamated company with a wider capital base and improved financial ratios like profits, assets etc. will be in a stronger position to mobilize the required funds for expansion by way of availing credit facilities from banks, public issue of shares, debentures, acceptance of public deposits etc. The amalgamated Company will have greater flexibility to meet the market and customer needs and will be able to compete more effectively, thus further strengthening its market position in the domestic and international markets. (f) Both, the Transferor Company and the Transferee Company are part of the same promoter group. The objective of the Scheme is to consolidate the group entitles of the promoters in India. This would help the promoter group to streamline its operations in India.” 6. It is also pleaded that no investigation proceedings against the Transferee Company or the Transferor Company under Sections 235 to 251 of the Act are pending. 7. Notice of this petition was issued to the general public by publication in the newspaper as also in the official gazette and to the Official Liquidator as also the Regional Director. No objections have been filed. The Official Liquidator in his reply states 7 that the statutory records including the Annual Returns and Balance Sheets etc. of the Transferee Company, M/s.Kamla Retail Limited, were examined and M/s.Mahen Boutiques Limited which is the Transferor Company is wholly owned subsidiary of Transferee Company. Regional Director also states in his affidavit that there is no objection. However, one condition imposed is:- “3. That the Deponent craves leave to submit that as per Clause 10.1 of Part-b OF THE Scheme of Amalgamation, all the employees of the Transferor Company shall become the employees of the Transferee Company without an break or interruption in their services upon sanctioning of the Scheme of amalgamation by the Hon’ble Court”. 8. In this view of the matter, this petition is allowed sanctioning the grant for amalgamation of the Scheme Annexure P-1 annexed with this petition in accordance with law and the condition reproduced above. This will be subject to any order passed by any other Court of law of Company jurisdiction in India. This petition is disposed of. November 2, 2010 (Dev Darshan Sud) (aks) Judge.