THE HON’BLE Ms. JUSTICE G. ROHINI COMPANY PETITION No.222 of 2010 Dated: 21.03.2011 Between : M/s. TTM Institute of Information Technology Private Limited …… Petitioner/Transferor Company The Court made the following:- THE HON’BLE Ms. JUSTICE G. ROHINI COMPANY PETITION No.222 of 2010 O R D E R : The petitioner herein is M/s. TTM Institute of Information Technology Private Limited (hereinafter referred to as the ‘Transferor Company). This petition is filed under Sections 391 and 394 of the Companies Act, 1956 (for short, ‘the Act’) with a prayer to sanction the scheme of amalgamation of M/s. TTM Institute of Information Technology Private Limited with M/s. Infotech Enterprises Limited (hereinafter referred to as the ‘Transferee Company’). The Transferor Company was originally incorporated as a private limited company under the name and style of M/s. TTM Institute of Information Technology Private Limited on 15.06.2006 in the State of Andhra Pradesh under the certificate of incorporation No.01-050342 of 2006-2007 issued by the Registrar of Companies, Andhra Pradesh, Hyderabad. The registered office of the Transferor Company is situated at 4th floor, ‘A’ Wing, Plot No.11, Software Units Layout, Infocity, Madhapur, Hyderabad-500 081. The present authorised share capital of the Transferor Company is Rs.1,00,000/- divided into 10,000 equity shares of Rs.10/- each and the entire share capital has been issued, subscribed and fully paid-up which is held by the Transferee Company and its nominees. Apart from the above there is share application money to the extent of Rs.9,01,700/- The objects for which the Transferor Company was incorporated as set out in its memorandum of association have been enumerated in Para No.5 of this company petition. The Transferee Company was originally incorporated as a private limited company under the name and style of M/s. Infotech Enterprises Private Limited on 28.08.1991 in the State of Andhra Pradesh under the certificate of incorporation No.01-13134 of 1991-92 issued by the Registrar of Companies, Andhra Pradesh, Hyderabad. Later on it was converted into a public limited company having duly passed the necessary special resolution on 21.04.1995 and obtained fresh certificate of incorporation consequent on the conversion under Section 31/44 of the Act from Registrar of Companies, Andhra Pradesh, Hyderabad on 07.09.1995. The registered office of the Transferee Company is situated at 4th floor, ‘A’ Wing, Plot No.11, Software Units Layout, Infocity, Madhapur, Hyderabad- 500 081. The present authorised share capital of the Transferee Company is Rs.1,35,00,00,000/- divided into 7,38,72,000 equity shares of Rs.5/- each and divided into 27,24,000 compulsorily convertible preference shares of Rs.360/- each. The issued, subscribed and paid-up capital of the Transferee Company is Rs.27,61,48,980/- divided into 5,52,29,796 equity shares of Rs.5/- each fully paid-up. The objects for which the Transferee Company was incorporated as set out in its memorandum of association have been enumerated in Para No.10 of this Company Petition. It is stated that the Transferee Company closes its financial year every year on 31st March. The audited Balance Sheet as at March 31st, 2010 of the Transferee Company is annexed as Annexure-A4. It is stated that the Transferor Company was incorporated for carrying on the business of develop Integrated Circuit (IC) and Application Specific Integrated Circuit (ASIC) layout designs for educational and commercial purposes and to develop software related there to and to carry on the business of imparting training in the field of Integrated Circuits (IC) layout Engineering and Very Large Scale Integrated Design (VLSI) using Computer Aided Design (CAD) Tools and to offer consultancy services in related areas etc. The Transferor Company is a 100% subsidiary of the Transferee Company. The Transferee Company is also engaged in the business of similar activities. There will be synergy of operations for both the Transferor and Transferee Companies and the proposed scheme of amalgamation will give more thrust and integrate their business facilities and infrastructure under one single unit. Further there will be financial code, which would enable it to withstand the competition and also strengthen in pooling the resources. The proposed scheme of amalgamation would also ultimately contribute to the future business and profitability of the amalgamated company. Therefore, the proposed scheme of amalgamation by restructuring will be beneficial and advantages in the long-term interest of both the Transferor and the Transferee Companies and its shareholders. In view of the advantages of the amalgamation, the Board of Directors of the Transferor Company at their meeting held on 12.10.2010 and the Transferee Company at their respective meeting held on 14.10.2010 approved the scheme of amalgamation of the Transferor Company with the Transferee Company with effect from 1st April, 2011, subject to the approval/consent of the shareholders of the Transferor Company and the confirmation by this Court. The salient features of the scheme of amalgamation have been enumerated in para No.14 of this company petition and a copy of the scheme has also been annexed as Annexure-A5. It is stated that the Transferor Company is a wholly owned subsidiary of the Transferee Company. After the scheme being sanctioned no new shares are required to be issued to the members of the Transferor Company by the Transferee Company, as the entire share capital of the Transferor Company is being held by the Transferee Company. Accordingly, the Transferor Company submits that the present scheme of amalgamation by way of transfer of undertaking of the Transferor Company does not affect the rights and interests of the members of the Transferee Company. The shareholding and other rights of the members of the Transferee Company will remain unaffected as no new shares are being issued and there is no change in the capital structure. Further, the scheme of amalgamation also does not affect the rights and interest of the creditors of the Transferee Company. The scheme of amalgamation is a contract between the two companies, which will not affect the creditors of the Transferee Company as the Transferee Company has share capital and reserves and surplus to an extent of Rs.803.83 crores and net current assets of Rs.265.15 crores as on 31st March, 2010. The interest of the creditors of the Transferee Company will not at all be affected. It is further stated that the Transferor Company has not availed any secured or unsecured loans and that it is an unlisted private limited company. Though the Transferee Company is a listed company, the concerned stock exchanges have given the no objection. It is explained that so far as the shareholders of the Transferor Company are concerned, by order dated 23.11.2010 made in Company Application No.1343 of 2010, this Court had dispensed with the convening of the meeting of the shareholders of the Transferor Company as the Transferee Company and its nominee being shareholders had given their no objection by means of affidavits. Accordingly, the present petition has been filed for sanction of Scheme of Amalgamation. I have heard the learned counsel for the petitioner and perused the material available on record. By order dated 20.12.2010 this Court directed notice to the Regional Director, Ministry of Corporate Affairs, Chennai; the Registrar of Companies, Andhra Pradesh at Hyderabad and the Official Liquidator, High Court of Andhra Pradesh. Pursuant thereto, the Official Liquidator filed a report dated 04.02.2011 stating that the affairs of the Transferor Company appear to have not been conducted in a manner prejudicial to the interest of the members or to public interest. In the common affidavit filed by the Registrar of Companies dated 01.02.2011, the following objections have been raised: “a) It is seen from Balance sheet as at 31.03.2010, the transferee company has share application money of Rs.9,01,700/-. But the scheme does not make any averments on the same. b) The transferee company should pay the Stamp Duty wherever applicable as per the Regulations of Andhra Pradesh Stamp Act. c) Clause 1(b) of the scheme of amalgamation and para1 of the petition stipulates Appointed date as 1.4.2011 which may cause technical and procedural inconsistence as the effective date may fall prior to appointed date if the orders are passed by the Hon’ble High Court and requisite form 21 is filed before 1.4.2011. Moreover, the transferor company has to file its Balance Sheet as on 31.3.2011 if the appointed date is fixed as 1.4.2011.” The petitioner filed an affidavit dated 04.03.2011 explaining the objections so raised by the Registrar of Companies. It is stated that the share application money has been advanced to the petitioner by the Transferee Company and as per clause 8 of the scheme, on vesting of the undertaking, the investments made by the Transferee Company shall stand cancelled. It is also explained that the Transferor Company is a 100% wholly owned subsidiary company of the Transferee Company and therefore, no further shares would be issued by the Transferee Company. The explanation offered by the petitioner is in accordance with clause 8 of the proposed scheme of amalgamation. Similarly, with regard to the 3rd objection raised by the Registrar of Companies with regard to the appointed date, it is submitted by the learned counsel for the petitioner that though the appointed date is 01.04.2011, the scheme would be effective only after filing the certified copy of the amalgamation order passed by this Court. On a reading of the definitions of the appointed date and the effective date as defined in clause-1 (b) and (d) of the proposed scheme of amalgamation, it is clear that the scheme comes into effect only on the date of the filing of the certified copy of the order before the Registrar of Companies. In the circumstances, the objections ‘a’ and ‘c’ raised by the Registrar of Companies is untenable. With regard to the stamp duty is concerned, it is clear that as per clause 20(d) of Schedule 1A of the Indian Stamp Act, the Transferee Company is not liable to pay any stamp duty. Hence, the objections are overruled. Having regard to the facts and circumstances noticed above and taking into consideration the fact that the scheme of amalgamation is not opposed to any provision of law or public interest, and despite notice of the admission of the company petition by paper publication, no objection whatsoever have been received from any quarter, I am of the opinion that it is a fit case for granting sanction of the scheme of amalgamation as sought by the petitioner. Accordingly, the Company Petition is allowed and the scheme of amalgamation is approved. A copy of this order shall be filed before the Registrar of Companies within 30 days from the date of receipt of this order. No costs. __________ G. ROHINI, J Date: 21.03.2011 Ivd