Nishraj Traders (P) Ltd. vs Madhu Viniyog (P) Ltd.

S.N. Aggarwal, J.—Nishraj Traders (P) Ltd. (hereinafter to be referred as the transferor company) and ''Madhu Viniyog (P) Ltd.'' (hereinafter to be referred as the transferee company) have jointly filed this petition under sections 391 (2) and 394 of the Companies Act, 1956 seeking sanction of the proposed scheme of amalgamation for amalgamation of the transferor company with the transferee company.

The proposed scheme of amalgamation has been filed along with the present petition and the same has been perused by this court.

The transferor company was incorporated under the Companies Act, 1956 as a Private Limited Company vide Certificate of Incorporation No. 21-64771 dated 29.8.1994 issued by the Registrar of Companies, West Bengal at Kolkata. The registered office of the company was shifted from the state of West Bengal to the NCT of Delhi as approved by the Company Law Board, Eastern Region Bench, Kolkata vide its order dated 28.11.2007. The transferor company is engaged in the business of investments and is dealing in shares and other securities, provide loans and advances and carry on other related activities.

The authorized share capital of the transferor company is Rs. 1,60,00,000 divided into 16,00,000 equity shares of Rs. 10 each out of which issued, subscribed and paid-up capital of the said company is stated to be Rs. 1,59,57,000/- divided into 15,95,700 equity shares of Rs. 10 each.

The transferee company ''Madhu Viniyog (P) Ltd.'' was originally incorporated under the provisions of the Companies Act, 1956 as Private Limited Company under the name and style of ''Manu Viniyog Pvt. Ltd.'' vide certificate of incorporation No. 21-78968 dated 29.3.1996 issued by the Registrar of Companies, West Bengal at Kolkatta, The name of the company was changed to its present name ''Madnu Viniyog (P) Ltd.'' and a fresh certificate of incorporation was issued by the Registrar of Companies on 18.12.1998. The registered office of the transferee company was shifted from the State of West Bengal to the NCT of Delhi as approved by the Company Law Board, Eastern Region Bench, Kolkatta vide its order dated 7.12.1998. A new registration No 55-8949 was issued to the transferee company by the Registrar of Companies, Delhi and Maryana at New Delhi on 23.3.1999.

The registered office of the transferor company as well as that of the transferee company is situated at Delhi, within the territorial jurisdiction of this Court.

The transferor company and the transferee company had .earlier filed a Company Application being CA (M) No. 18/2008 which was allowed vide order passed by this court on 4.2.2008. While allowing the said application, the requirement of conducting the statutory meeting by the equity shareholders of the transferor company and the transferee company was dispensed with on the ground that they had already consented to the proposed scheme of amalgamation and their consent in this regard was filed along with the abovementioned application. The convening and holding of meeting by the secured and unsecured creditors of the transferor company and the transferee company was also dispensed with vide order passed on 4.2.2008 in CA (M) No. 18/2008 as there are no secured or unsecured creditors in these companies.

After the present petition was filed, this court vide its order passed oh 15.2.2008 had directed issuance of notices of the present petition to the official liquidator and also to the Regional Director (Northern Region). Citation of the present petition was got published in ''Statesman'' (English Edition) and ''Veer Arjuri (Hindi Edition) both dated 24.3.2008. The copies of the newspapers'' clippings showing publication of the citation and the proof of service of notices on the official liquidator and the Regional Director (Northern Region) have been placed on record-.

Pursuant to the service of notices, a report dated 03.05.2008 has been filed by the official liquidator. The official liquidator has stated in his report that he has not received any complaint against the proposed scheme of amalgamation from any person/party interested in the scheme in any'' manner. He has further stated in his report that in his view the affairs of the transferor company do not appear to have been conducted in the manner which is prejudicial to the interest of its members, creditors or public interest as enshrined in the second proviso to section 394(1) of the Companies Act, 1956.

Pursuant to the service of notice on the Regional Director (Northern Region), he too has filed his report in the form of his affidavit sworn on 02.05.2008 at Noida, wherein he has stated that the Central Government has no objection for granting sanction to the proposed scheme of amalgamation.

During arguments, Ms. Manisha Tyagi, appearing on behalf of the official liquidator and Mr. R.D. Kashyap, Dy. Registrar of Companies, appearing as representative of the Regional Director (Northern Region) have submitted that they have no objection in case the proposed scheme of amalgamation, which provide for amalgamation of the transferor company with, the transferee company, is approved by this court.

Paragraph 7 of the proposed scheme of amalgamation contains a provision for protecting the employees of the transferor company on its roll by providing that all the employees of the transferor company on its roll on the effective date would become the employees of the transferee company with all benefits including benefit of continuity of service on same terms applicable to them on such date. This court is of the opinion that no prejudice is likely to be caused to the employees of the transferor company by approving the proposed scheme of amalgamation which provides for amalgamation of the transferor company with the transferee company.

Paragraph 11(a) of the proposed scheme of amalgamation deals with the accounting upon the amalgamation scheme becoming effective. It provides that the amalgamation of the transferor company with the transferee company shall be accounted for under the ''Pooling of interest'' method in accordance with Accounting Standard (AS) 14 prescribed under the Companies (Accounting Standard) Rules, 2006.

The share exchange ratio between the members of the transferor company and the transferee company is stated to have been fixed at a fair and reasonable basis on the basis of the valuation report of the chartered accountant, according to which one fully paid up share of Rs. 10 each in the transferee company shall be issued against 28 equity shares of Rs. 10 each held in the transferor company.

The scheme of amalgamation is aimed at to consolidate the transferor company and the transferee company into one large company with a strong assets base and the same would enable pooling of physical, financial and human resources of these companies for the most beneficial utilization of these factors in the combined entity. The arrangement mentioned in the proposed scheme of amalgamation will unlock the operational efficiencies and derive synergies in the combined business. The amalgamation of the transferor company with the transferee company would further create economies in administrative and managerial costs by consolidating operations and is likely to reduce substantial duplication of administrative responsibility and multiplicity of records and legal arid regulatory compliances and thereby provide effective management and unified control of operations. The scheme of amalgamation also provides that on approval of the said scheme and its becoming effective, the transferor company shall stands dissolved without winding up.

In view of the above and having regard to the facts and circumstances of the case there does not appear to be any legal impediment in sanctioning the proposed scheme of amalgamation. Consequently, sanction is hereby granted to the proposed scheme of amalgamation u/s 391 and 394 of the Companies Act, 1956 for amalgamation of the transferor company with the transferee company. The certified copy of this order shall be filed with the Registrar of Companies within ''five weeks. It is clarified that'' this order should not be construed as an order granting exemption from payment of stamp duty if payable in accordance with law in regard to increase in the share capital of the transferee company. Upon sanction becoming effective and from the appointed date, the transferor company shall stands dissolved without its formal winding up.

The transferee company is directed to deposit Rs. 20,000 towards costs in the common pool fund of the official liquidator within a period of three weeks from today.

In view of the above, this petition stands disposed of.