IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH Date of Decision : 16.07.2010 C.P.No.50 of 2010 IN THE MATTER OF : Sections 391 to 394 of the Companies Act, 1956 M/s Deepak Oils Private Limited, having its registered office at 193, Shahpurjat, New Delhi. ...Transferor Company No.1 AND M/s ICL Sales & Services Private Limited, having its registered office at 193, Shahpurjat, New Delhi. …Transferor Company No.2 AND M/s Satroj Enterprises Private Limited, having its registered office at 574/13, Vikas Nagar, Sonepat Road, Rohtak, Haryana. …Petitioner/Transferor Company No.3 AND M/s Upkar Credit & Portfolio Private Limited, having its registered office at Flat No.4040, Sector ‘C’, Pocket 4, Vasant Kunj, New Delhi. …Transferor Company No.4 WITH M/s Rama Packing & Wire Industries Private Limited, having its registered office at H.No.20, ICL Managers Colony, Rajpura, District Patiala, Punjab. …Transferee Company C.P.No.50 of 2009 C.P.No.51 of 2010 M/s Deepak Oils Private Limited, having its registered office at 193, Shahpurjat, New Delhi. ...Transferor Company No.1 AND M/s ICL Sales & Services Private Limited, having its registered office at 193, Shahpurjat, New Delhi. …Transferor Company No.2 AND M/s Satroj Enterprises Private Limited, having its registered office at 574/13, Vikas Nagar, Sonepat Road, Rohtak, Haryana. …Transferor Company No.3 AND M/s Upkar Credit & Portfolio Private Limited, having its registered office at Flat No.4040, Sector ‘C’, Pocket 4, Vasant Kunj, New Delhi. …Applicant/Transferor Company No.4 WITH M/s Rama Packing & Wire Industries Private Limited, having its registered office at H.No.20, ICL Managers Colony, Rajpura, District Patiala, Punjab. …Transferee Company CORAM:HON'BLE MR. JUSTICE HEMANT GUPTA Present :Mr. Atul V. Sood, Advocate, for the petitioner(s). Mr. D.P.Ojha, Official Liquidator. HEMANT GUPTA, J. 2 C.P.No.50 of 2009 This order shall dispose of C.P.No.50 of 2009 preferred by M/s Satroj Enterprises Private Limited-Transferor Company and C.P.No.51 of 2009 preferred by M/s Rama Packing & Wire Industries Private Limited- Transferee Company. Since both the petitions seek sanction/approval of the Scheme of Amalgamation (Annexure P-1) between M/s Deepak Oils Private Limited-Transferor Company No.1, M/s ICL Sales & Services Private Limited-Transferor Company No.2, M/s Satroj Enterprises Private Limited- Transferor Company No.3 and M/s Upkar Credit & Portfolio Private Limited-Transferor Company No.4 with M/s Rama Packing & Wire Industries Private Limited-Transferee Company, the same are disposed of by a common order. Petitioner/Transferor Company No.3 was incorporated as a private company limited with shares on 12.07.1977 with the following main objects: “(a) To manufacture, design, develop, engineer, process, repair, sell, exchange, alter, improve, manipulate, prepare, market, export and otherwise deal in all kinds of machinery, equipments, implements, apparatuses, components, instruments, machine tools and spare. (b) To carry on the business of all or any kind of iron and steel founders, steel melters, steel makers, steel shapers and as manufacturers, mechanical, civil, electrical and general engineers and fabricators, contractors, tool makers, brass founders, metallurgists, metal makers, plate makers, wire drawers, tube manufacturers, galvanizers, japanners, re-rollers, annealors, enamellors and elector-platers.” The Transferee Company was incorporated as a Public Company Limited with shares on 27.7.1971, thereafter converted into private company limited on 25.2.2008 with the following main objects : 3 C.P.No.50 of 2009 “1. To purchase or otherwise acquire all the assets and liabilities including premises goodwill, plant and machinery, stock-in-trade, licences and quota right of or connected with the business of manufacturing or wooden drums, now being carried on under the name and style of M/s Rama Industries in Rajpura in Punjab and to carry on the said business. 2. To carry on business as manufacturers of or dealers in, or as stockiest, importers and exporters of packing materials, cartons, containers, boxes and cases made of paper, boards, wood, glass, plastic, pulp, cellulose films, polyethylene, rubber metals, metal foils, gelatine tin, flexible, treated laminated or other materials. 3. To carry on business as manufacturers of or dealers in, or as stockiest, importers and exporters of bottles, jars, fibrolite, boxes, corrugated containers, aluminum foils of all types, wooden drums, packing cases, non ferrous metals, rods, wire, ropes, strips, conductors, equipment required for generation, distribution and transmission of electric energy cables, motors, fans lamps, furnaces, batteries accumulators. 4. To carry on business as manufactures of or dealers in or as stockiest, importers and exporters of timber, lumber, hardwood, plywood boxes, windows, doors wood pulp, sleepers, furniture and articles of all descriptions made wholly or partly from wood and other materials.” The authorized share capital of the Transferee Company is Rs.15,00,000/- divided into 14500 equity shares of Rs.100/- each, 250 equity ‘A’ shares of Rs.100/- each and 250, 10% non-cumulative redeemable preference shares of Rs.100/- each. Its subscribed and paid-up capital is Rs.8,51,300/- divided into 8465 equity shares of Rs.100/- each fully paid-up and 48 equity ‘A’ shares of Rs.100/- each fully paid-up. The Board of Directors of the Transferor Companies and the Transferee Company in their respective 4 C.P.No.50 of 2009 meetings held on 23.07.2008 have duly approved the Scheme of Amalgamation of the Transferor Companies with the Transferee Company. The Board Resolutions have been placed on record as Annexure P-12 colly. This Court in C.P.No.2 of 2009 and C.P.No.154 of 2008 dispensed with the meetings of the Equity Shareholders and Creditors. The valuation report prepared by the Chartered Accountants for the purposes of calculation of exchange ratio of shares has been appended as Annexure P-8. The circumstances and reasons to justifying the Scheme of Amalgamation are as under : (i) The Transferor Company No.3 and the Transferee Company are managed by same group of management. As part of restructuring and re-organization within the Group, it is proposed to amalgamate the said companies as provided in the said Scheme of Amalgamation. (ii) The proposed amalgamation will provide a stronger and consolidated financial structure to the business of the company besides synergy of operations and making a more profitable organization with a greater potential for growth. (iii) The proposed amalgamation will result in reduction in overheads and other expenses, economies of scale, reduction in administrative and procedural work, eliminate duplication of work, better and more effective utilization of various available resources and will enable the undertakings concerned to effect internal economies and optimize productivity. (iv) The amalgamation would result in the creation of a company with much larger assets base and net worth with strong financials enabling further growth and development of the businesses of the said companies. (v) The proposed amalgamation will strengthen and consolidate the position of the resultant Transferee Company to participate more vigorously and profitably in competent market. 5 C.P.No.50 of 2009 (vi) The said Scheme will enable the Transferor Company and the Transferee Company to rationalize and streamline their management, business and finances and lead to the better and more economic control, running and management of the business and undertakings of the said Companies. (vii) The business of the Transferor Company and the Transferee Company can be combined conveniently and advantageously and in general, the said business will be carried on more economically and profitably under the Scheme. (viii) The said Scheme will thus have beneficial results for the said companies, their shareholders, employees and all concerned. (ix) On the basis of circumstances mentioned above, it is considered desirable and expedient to amalgamate the Transferor Company with the Transferee Company in the manner and on the terms and conditions stated in the said Scheme of Amalgamation. In these second motion petitions, notices were ordered to be published in the daily newspapers i.e. the Indian Express, Punjabi Tribune and the official Gazette of Punjab Government. The notices were also ordered to be issued to the Regional Director, Northern Region, Ministry of Corporate Affairs, Noida as well as the Official Liquidator. Pursuajnt to the said orders, notice was duly published in the said newspapers as well as in the Official Gazettee of Government of Punjab. Dr. Navrang Saini, Regional Director, Ministry of Corporate Affairs, Noida in its report by way of an affidavit dated 11.11.2009 has pointed out that petitioner companies may be asked to furnish an undertaking that they shall comply with the accounting treatment as prescribed under Accounting Standard 14 i.e. ‘Accounting for Amalgamation’ governed by the Companies (Accounting Standards) Rules, 6 C.P.No.50 of 2009 2006 issued under the Act. It was also pointed out that the Scheme for Amalgamation provides that if the Scheme cannot be made effective on or before 31.3.2009, the Scheme shall become null & void and be of no effect, but all the Transferor & Transferee Companies at their Board’s Meetings held on 12.3.2009, passed the necessary Resolution and extended the validity date from 31.3.2009 to 31.3.2010. An affidavit dated 6.4.2010 has been filed by the petitioner company that the petitioner company will comply with the Accounting Standard 14 (AS-14) pertaining to accounting for mergers on sanction of the Scheme of Arrangement and Amalgamation and that a resolution has been passed by the Board of Directors of the Transferor and Transferee Companies on 29.3.2010 extending the validity date of the Scheme to 30.9.2010. The Official Liquidator has also filed his report dated 17.07.2009 after examining the books of accounts/records of the petitioner companies from M/s Anand Sabharwal & Associates, Chartered Accountants. Chartered Accountant has concluded that the affairs of the Transferor Company namely M/s Satroj Enterprises Pvt. Limited have been conducted in such a way, not prejudicial to the interest of members and general public at large. Thus, it is concluded that in view of the observations made by the Chartered Accountant, the matter may be decided on merits. The petitioner companies have further confirmed that there are no investigations or proceedings pending against the transferor or transferee companies under Sections 235 and 251 of the Companies Act and the Scheme of Amalgamation in no way runs contrary to the public policy nor it affects the interest of the share-holders, secured/unsecured creditors of the transferee/transferor companies and there is no reservation from the Central Government and by the Official Liquidator. Therefore, the Scheme of 7 C.P.No.50 of 2009 Arrangement/Amalgamation (Annexure P-1) is approved subject to the approval of the competent Court in respect of other Transferor Companies, which are not subject to jurisdiction of this Court. The Scheme shall be binding on the petitioner companies, their respective share-holders, secured & un-secured creditors and all concerned. The Transferor Companies shall be dissolved without being wound up. A certified copy of the order shall be filed with the Registrar of Companies within 14 days from the date of receipt of certified copy of this order, in Form No.41. A notice of the orders be published in the newspapers i.e. The Indian Express, Dainik Bhaskar (Punjabi edition) and the official Gazette of Punjab Government. Any person interested shall be at liberty to apply to the Court for any direction as per law. Disposed of accordingly. 16.07.2010 (HEMANT GUPTA) Vimal JUDGE 8