Aztecsoft Limited vs Nil

B.V. Nagarathna, J.—These Company Petitions are filed seeking approval of a scheme of amalgamation. Company Petition No. 8/2009 is filed by the transferor company, while Company Petition No. 9/2009 is filed by the transferor company. Since they relate to the seeking of approval to the scheme of amalgamation of the said two companies, these petitions are heard together and disposed of by this common order.

According to the petitioner in Company Petition No. 8/2009, which is the transferor company, was incorporated on 04.10.1995 with the name and style Aztec Software & Technology Services Private Limited under the provisions of the Companies Act, 1956 and became a public company on 12.06.2000 and subsequently the name was changed to Aztec Software & Technology Services Limited with effect from 25.08.2006. The registered office of the transferor company is at No. 42, 27th Cross, II Stage, Banashankari, Bangalore 560070, Karnataka. The object with which the transferor company is incorporated is to manufacture either for its own use or for sale in India or for export outside India, computer systems, computer peripherals and accessories, computer consumable like floppy disks/ribbons, continuous and non-continuous stationery and other such allied objects. The share capital of the transferor company as on 31.12.2008 is as follows:

--------------------------------------------------------------- Aztecsoft Limited Amount in Rs. --------------------------------------------------------------- Authorised Capital- 52,500,000 Equity 157,500,000 Shares of Rs. 3/- each --------------------------------------------------------------- Issued, Subscribed and Paid up Capital - 136,822,956 45,607,652 Equity Shares of Rs. 3/- each ---------------------------------------------------------------

According to the petitioner, the transferor company is a listed company and has been carrying on its business as per the objects noted above and the audited profit and loss account and the balance sheet as on 31.03.2008 is annexed as per Annexure ''D'' to the company petition.

The transferee company was incorporated on 05.08.1999 under the name and style of MindTree Consulting Private Limited, subsequently the name was changed as MindTree Consulting Private Limited with effect from 06.11.2006 and was further changed to MindTree Limited with effect from 20.03.2008. The registered office of the transferee company is at No. 42, 27th Cross, II Stage, Banashankari, Bangalore 560 070. The main objects of the transferee company as set out in the Memorandum and Articles of Association are to carry on the business of software development, production, sub-contracting and experts; systems engineering service and training and other allied objects. The share capital of the transferee company as on 31.12.2008 is as follows:

----------------------------------------------------------------- MindTree Limited Amount in Rs. ----------------------------------------------------------------- Authorised Capital- 79,62,00,00 Equity 79,62,00,000 Shares of Rs. 10/ - each ----------------------------------------------------------------- Issued, Subscribed and Paid up Capital - 379,932,060 37,993,206 Equity Shares of Rs. 10/- each -----------------------------------------------------------------

A copy of the audited profit and loss account and balance sheet as on 31.12.2008 of the transferee company are annexed at Annexure-F.

The Directors of the transferor company and the transferee company were of the opinion that the Amalgamation of the said companies would be beneficial and cost effective in the long run which would improve the utilisation of the infrastructural facilities and accordingly proposed a scheme of Amalgamation of the said companies on 26.09.2008. The respective Boards of Directors of the two companies approved the scheme of merger, which is produced at Annexure-A to the company petition. Thereafter, Company Application No. 862/2008 was filed by the transferor company seeking permission to convene the meeting of the share holders and unsecured creditors and this Court by its order, dt. 11.11.2008 ordered the convening of separate meeting of shareholders and unsecured creditors with a direction that the notices of the meetings be published in the "Indian Express" and "Kannada Prabha" two daily newspapers on or before 25.11.2008. The meetings of the shareholders and creditors were held on 22.12.2008 and the Chairmen''s report was filed on 06.01.2009.

Thereafter the transferor company filed Company Petition No. 8/2009 seeking approval of the scheme of Amalgamation. This Court by order, dt 19.01.2009 ordered notices of the company petition on the Regional Director and the Official Liquidator with a direction to take out advertisement of the petition in Indian Express (English version) and Kannada Prabha (Kannada version) on or before 06.02.2009 fixing the date of hearing as 27.02.2009. In response to the notice issued, the Regional Director has filed the affidavit of the Registrar of Companies, stating that he has no objection to the proposed scheme of Amalgamation. The Official Liquidator also has submitted his report stating that there are no objections for the proposed merger.

The transferee company also filed CA No. 863/2008 seeking orders from this Court for convening the meetings of the shareholders, secured and unsecured creditors of the company. This Court by an order, dt. 11.11.2008 ordered that the said meetings be convened with a direction that notice of the same be taken in the "Indian Express" and "Kannada Prabha" two daily newspapers on or before 25.11.2008. On 22.12.2008, meetings were convened separately and on 06.01.2009 the report of the Chairman was filed before this Court.

Subsequently Company Petition 9/2009 was filed by the transferee company seeking sanction of the proposed scheme of Amalgamtion. In this petition also, on 19.01.2009 notice was ordered on the Regional Director with a direction to take out notice in the Indian Express (English version) and Kannada Prabha (Kannada version) on or before 06.02.2009 fixing the date of hearing as 27.02.2009.

The Regional Director in response to the notice of this Court has filed affidavit of the Registrar of Companies stating that there are no objections to the proposed scheme of Amalgamation.

I have heard the learned Counsel appearing for the petitioners and the learned Counsel for the Regional Director and the Official Liquidator.

Learned Counsel for the petitioner while taking me through the salient features of the proposed scheme of Amalgamation has submitted that the object with which the two companies are incorporated are similar and that the transferee company holds 80% shares of the transferor company. That the rational behind the merger is for better utilisation of the infrastructural facilities available with both the companies which would be beneficial and prove cost effective to the transferee company. That the appointed date of merger is 01.04.2009 and that there are no investigation proceedings pending in respect of both the companies and that there is no legal impediment for sanctioning the scheme of merger.

The learned Counsel for the Official Liquidator as well as the Regional Director have submitted that the said authorities have no objection for sanctioning the scheme of merger and that appropriate orders may be passed in respect of these petitions.

Having regard to the fact that the objects with which the two companies have been incorporated are identical and the feet that the transferor company is a subsidiary of the transferee company and the reasons for Amalgamation is to consolidate the business operations of the two companies and for bringing about more effective organisational structure and on perusal of the various Clauses of the scheme under which the assets and liabilities of the transferor company would stand vested with the transferee company on and from the appointed date and taking notice of the fact that the provision has been made with regard to the interest of the employees of transferee company and that the re-organisation of the capital and issue of shares of the transferee company as per Clause 5 of the scheme would not in any way be against public interest and the fact that in respect of both the companies there are no proceedings pending, the scheme of merger proposed as per Annexure-A is accordingly sanctioned. The petitioners are directed to file copies of the order of this Court alongwith the scheme within a period of 30 days from the date of receipt of this order before the Registrar of Companies. In view of the sanction of the scheme the transferor company stands dissolved without there being any winding up order.

Accordingly the company petitions are allowed.