Emmbros Autocomp Limited vs Emmbros Automotives Private Limited

Rajiv Sharma, J.�This petition has been preferred under Sections 391 and 394 read with section 101 of the Companies Act, 1956 (hereinafter referred to as the ''Act'') for sanctioning of the scheme of arrangement of demerger of an undertaking ''Emmbros Autocomp Limited'' and transfer of the same to ''Emmbros Automotives Private Limited''.

Demerged-Petitioner company was incorporated under the provisions of the Act on 18.1.1991 as a private limited company with the erstwhile name ''Emmbros Metal Private Limited'' with Registrar of Companies, Punjab, Himachal Pradesh and Chandigarh at Jallandhar. Status of the company was changed to a public limited and name of the company was also changed to its present name, i.e. ''Emmbros Autocomp Limited''. The company is registered with the Registrar of Companies, Himachal Pradesh under registration No. U34300HP1991PLC011005. The registered office of the demerged-petitioner company is situated at village Katha, Baddi, Tehsil Nalagarh, District Solan, Himachal Pradesh. The present authorized share capital of the demerged-petitioner company is Rs. 12.00 crores divided into 1,20,00,000 equity shares of Rs. 10/- each. The account of the demerged-petitioner company have been prepared and audited for the years ended on 31.3.2012 and 31.3.2013. The copy of the audited balance sheets as on 31.3.2012 and 31.3.2013 are Annexures P-4 and P-5. The Board of Directors of the demerged-petitioner company in the meeting held on 12.7.2013 has approved and adopted the scheme of arrangement vide Annexure P-2. The demerged-petitioner company is a closely held company having only 9 equity shareholders. 8 out of 9 shareholders of the company have 99.48% of the total values of shares of the demerged-petitioner company. They have given their written consents/no objections for the proposed scheme of arrangement. The demerged-petitioner company has 127 unsecured creditors and the total value of unsecured debt of the company as on 5.4.2013 is Rs. 5,76,02,455/-. Out of total unsecured creditors, 81 unsecured creditors with the total value of unsecured debt of Rs. 5,22,22,838/- constituting 90.70% unsecured debt have given their written consents/no objections for the proposed scheme of arrangement. The demerged-petitioner company has only 3 secured creditors and the total value of their secured debt due from the company as on 5.4.2013 is Rs. 14,72,76,489/-. No proceedings under sections 235 to 251 of the Act or under the provisions of Monopolies and Restrictive Trade Practices Act, 1969 have been initiated or are pending against the demerged-petitioner company.

The resulting company, i.e. Emmbros Automotives Private Limited was incorporated under the provisions of the Act on 5.5.2000 as a private limited company with the Registrar of Companies, Punjab, Himachal and Chandigarh at Jallandhar. The registered office of the resulting company is situated at SCO 60, 1st Floor, Madhya Marg, Sector-26, Chandigarh. The authorized share capital of the resulting company is Rs. 2,76,00,000/- divided into 27,60,000 equity shares of Rs. 10/- each. The issued, subscribed and paid up share capital of the company is Rs. 1.00 lac divided into 10,000/- equity shares of Rs. 10/- each fully paid up. The account of the resulting company have been prepared and audited for the financial year ended on 31.3.2012. The copies of the same are Annexures P-12 and P-13. The Board of Directors of the resulting company in the meeting held on 12.7.2013 have unanimously approved and adopted the scheme of arrangement. The copy of resolution is Annexure P-14. The resulting company is a closely held company having only 2 equity shareholders. The resulting companying has no secured/unsecured creditors as on date. No proceedings under sections 235 to 251 of the Act or under the provisions of Monopolies and Restrictive Trade Practices Act, 1969 have been initiated or are pending against the resulting company. The Board of Directors of the demerged/petitioner company in the meeting held on 12.7.2013 has unanimously approved and adopted the scheme of arrangement by virtue of which demerged undertaking as defined in the scheme of arrangement shall be demerged from the demerged-petitioner company and shall be transferred to the resulting company with all assets and properties as well as debts and liabilities relatable to the undertaking as a going concern at their respective book values as per audited balance sheet of the demerged undertaking as on 30.6.2012.

The Court has gone through the scheme of arrangement and settlement agreement. The scheme of arrangement is beneficial to both the companies, their share holder, other stakeholders and all the concerned.

The demerged-petitioner company filed Company Petition No. 4009 of 2013 before this Court under sections 391 to 394 read with section 101 of the Act seeking dispensation from holding of the meetings of equity shareholders and unsecured creditors of the demerged-petitioner company. The Court vide order dated 9.9.2013 has not directed holding of the meetings of shareholders and unsecured creditors of the company. The holding of meeting of the secured creditors of the demerged petitioner company was directed to be held on 26.10.2013. The meeting of the secured creditors of the demerged-petitioner company was convened on 26.10.2103. 2 secured creditors voted in favour of the scheme and the third creditor sought time to file its consent. The Chairman appointed for the meeting submitted his report on 31.10.2013. The third secured creditor also gave his consent to the scheme on 31.1.2014. Consequently, the scheme has consent of all the three secured creditors. One of the shareholders had objected to the scheme by way of CMP No. 11019/2013, which was ultimately dismissed by the Court vide order dated 9.1.2014. The demerged-petitioner company was allowed to file second motion petition. Notices were published in Hindustan Times and Divya Himachal on 4.6.2014 and E-Gazette of Government of Himachal Pradesh on 2.6.2014. In sequel to order dated 27.5.2014, the Regional Director, Northern Region, Ministry of Corporate Affairs, Noida was directed to file affidavit. The Regional Director has given no objection to the scheme. The Court has gone through the pleadings carefully. There is no legal hindrance for approving the scheme of arrangement. The scheme does not defeat the provisions of any law and it is not prejudicial to the interest of the creditors or shareholders of the company and is not against public policy. The scheme appears to be bona fide and genuine.

Accordingly, in view of the above position, the petition is allowed and the scheme of arrangement of demerged-petitioner company with the resulting company is sanctioned. It is directed that all the properties, assets and liabilities of the demerged undertaking as defined in the scheme shall vest with the resulting company with effect from the appointed date, i.e. 1.7.2012. The demerged-petitioner company and the resulting company are directed to comply with all statutory requirements in accordance with law. This judgment shall not exempt the payment of stamp duty or tax or any other charges, if payable in accordance with law, nor this judgment shall exempt any permission/compliance or any other requirement which may be specifically required under law. The scheme of arrangement shall be binding on the demerged-petitioner company and resulting company, their shareholders, creditors and all concerned. The parties to the scheme of arrangement, other persons interested shall be at liberty to apply to this Court for directions that may be necessary in regard to the working of the scheme of arrangement. The certified copy of this judgment shall be filed with the Registrar of Companies within four weeks from the date of judgment. Pending application(s), if any, also stands disposed of.