Xansa (India) Ltd. vs Xansa Visionworks Ltd.

S.P. Mehrotra, J.—The present Company Petition has been filed under Sections 391(2), 392 and 394 of the Companies Act, 1956 by Xansa (India) Limited having its registered office at C-2, Sector-1, NOIDA-201301, Uttar Pradesh (hereafter also referred to as "the Transferee Company" or "the Transferee Company/ petitioner").

It appears that a Scheme of Amalgamation has been proposed for the amalgamation of Xanxa Visionworks Ltd. having its registered office at L.G. 11, Thapar Chamber-II, Kilokri, New Delhi-110014 (hereinafter referred to as "the Transferor Company") with the Transferee Company.

Copy of the proposed Scheme of Amalgamation has been filed as Annexure-E to the Company Petition at page 66 of the Paper Book of the Company Petition.

It is, interalia, stated in the Company Petition that the Transferee Company (i.e., Xanxa (India) Ltd.) was originally incorporated under the provisions of the Companies Act, 1956 as ISCT Information Technology Ltd. on 9.1.1992; arid that the name was later changed to IIS Infotech Ltd. on 8.11.1995; and that the name was again changed to Xansa (India) Ltd., and a fresh Certificate of Incorporation was given by the Registrar of Companies, National Capital Territory of Delhi and Haryana on 8.5.2001.

It further appears from a perusal of the Memorandum and Articles of Association of the Transferee Company annexed as Annexure-A to the Company Petition that the registered office of the Transferee Company was subsequently shifted from National Capital Territory of Delhi to the State of Uttar Pradesh, and the alteration made in this regard in the Memorandum of Association was confirmed by the order of the Company Law Board, N.R. Bench, New Delhi dated 5.12.2002 in C.P. No. 107/17/2002-CLB. Thereupon, Certificate of Registration of the Order of the Company Law Board Bench confirming transfer of the registered office from one State to another was issued on 15.1,2003 by the Registrar of Companies, National Capital Territory of Delhi and Haryana u/s 18(3) of the Companies Act, 1956. Similar Certificate was issued by the Registrar of Companies, Uttar Pradesh & Uttaranchal, Kanpur. The said Certificates are part of the Memorandum and Articles of Association (Annexure-A to the Company Petition).

It is, interalia, further stated in the Company Petition that the registered office of the Transferee Company is situated at C-2, Sector-1, NOIDA-201301, Uttar Pradesh, which is within the jurisdiction of this Court.

It is, interalia, further stated that the authorized share capital of the Transferee Company as on 31.10.2003 is Rs. 28,00,00,000/- (Rupees Twenty Eight Crores only) comprising of 1,80,00,000 (One Crore Eighty Lakhs) equity shares of Rs. 10/~ (Rupees Ten only) each and 10,00,000 Cumulative Redeemable Preference Shares of Rs. 100/- each; and that the current issued and subscribed share capital of the Transferee Company is Rs. 14,40,00,000/- (Rupees Fourteen Crore Forty Lakhs only) comprising of 1,44,00,000 (One Crore Forty Four Lakhs) equity shares of Rs. 10/-( Rupees Ten only) each; and that the current paid-up share capital of the Transferee Company is Rs. 14,40,00,000/- (Rupees Fourteen Crore Forty Lakhs only) less Rs. 29,000/- (Rupees Twenty Nine Thousand only) as allotment money in arrears, comprising of 1,44,00,000 (One Crore Forty Four Lakhs) equity shares of Rs. 10/- (Rupees Ten only) each.

Copy of the Memorandum and Articles of Association of the Transferee Company, as noted above, has been filed as Annexure-A to the Company Petition.

The three main objects of the Transferee Company are mentioned in paragraph 6 of the Company Petition.

It is, interalia, further stated in paragraph 7 of the Company Petition that the Object Clause-37 of the Objects ancillary or incidental to the attainment of the Main Objects, interalia, provides for the amalgamation of the Transferee Company with any other such company whose objects are similar to those of the Transferee Company.

It is, interalia, further stated in the Company Petition that the Transferor Company (i.e., Xanxa Visionworks Ltd.) is a Company originally incorporated on 9.8.1995 under the provisions of the Companies Act, 1956 as Interactive Simulations Pvt. Ltd., as a Company limited by shares; and that the name was later changed to IIS Visionworks Ltd. on 8.5.1996; and that the Transferor Company became a public limited Company by virtue of the special resolution passed u/s 21/31 of the Companies Act, 1956; and that a fresh Certificate of Incorporation was issued by the Registrar of Companies, National Capital Territory of Delhi and Haryana on 9.1.2002; and that the name was later on changed to Xansa Visionworks Ltd., and a fresh Certificate of Incorporation dated 16.1.2002 was given by the Registrar of Companies, National Capital Territory of Delhi and Haryana. The said Certificate of Incorporation is part of the Memorandum and Articles of Association of Xansa Visionworks Ltd. (Transferor Company) filed as Annexure-B to the Company Petition.

It is, interalia, further stated in the Company Petition that the registered office of the Transferor Company is situated at L.G.I 1, Thapar Chamber-II, Kilokri, New Delhi-110014, which is outside the jurisdiction of this Court.

It is, interalia, further stated in the Company Petition that the authorized share capital of the Transferor Company as on 30.4.2003 is Rs. 1,00,00,000/- (Rupees One Crore only) divided into 10,00,000 (Ten lakhs) equity shares of Rs. 10/- (Rupees Ten only) each; and that, the current issued, subscribed and paid-up share capital of the Transferor Company as on 31.10.2003 is Rs. 5,00,000/- (Rupees Five Lakhs only) comprising of 50,000 (fifty Thousand) equity shares of Rs. 10/-(Rupees Ten only) each, fully paid-up; and that the entire paid-up share capital of the Transferor Company is held by the Transferee Company and its nominees; and that the Transferor Company is, therefore, a 100% subsidiary of the Transferee Company.

Copy of the Memorandum and Articles of Association of the Transferor Company, as noted above, has been filed as Annexure-B to the Company Petition.

Three main objects of the Transferor Company are mentioned in paragraph 11 of the Company Petition.

It is, interalia, further stated in paragraph 12 of the Company Petition that Clause-32 under the Objects incidental or ancillary to the attainment of Main Objects, interalia, provides that the Transferor Company may amalgamate with any other company whose objects are similar to those of the Transferor Company.

It is, interalia, further stated in paragraph 15 of the Company Petition that the Board of Directors of the Transferor Company and the Transferee Company considered the proposed Scheme of Amalgamation at the meetings of the Board of Directors of the Transferor Company and the Transferee Company held on 6.3.2003 respectively; and that the proposed Scheme of Amalgamation was approved and recommended by the respective Board of Directors of both the Companies at the said meetings.

Copies of the minutes of the said meetings of the Board of Directors of the Transferor Company and the Transferee Company have been tiled and collectively numbered as Annexure-F to the Company Petition.

The principal factors based on which the Scheme of Amalgamation has been proposed and recommended by the Board of Directors of the Transferor Company as well as the Transferee Company are stated in paragraph 16 of the Company Petition.

It further appears that narrating the aforesaid facts and circumstances, the Transferee Company filed a Company Application being Company Application No. 16 of 2003 before this Court, interalia, praying for directions being given as to the method of convening, holding and conducting the meeting of the shareholders/members and creditors of the Transferee Company and as to the notices and advertisements to be issued.

This Court by its order dated 15.7.2003, interalia, opined that it was not necessary to hold the meetings of the creditors of the Transferee Company for consideration of the proposed Scheme of Amalgamation, as required u/s 391(1) read with Section 393 of the Companies Act, 1956, and as such, the requirement of holding the meeting of the creditors of the Transferee Company for consideration of the proposed Scheme of Amalgamation was dispensed with.

The said order dated 15.7.2003 passed by this Court on the said Company Application No. 16 of 2003, interalia, further opined that it was necessary to hold the meeting of the shareholders/members of the Transferee Company as per the requirements of Section 391(1) read with Section 393 of the Companies Act, 1956. Accordingly, directions were issued for holding the meeting of the shareholders/members of the Transferee Company on 30.8.2003 at 11.00 O''clock in the forenoon at the place mentioned in the said order dated 15.7.2003.

Subsequently, an application being Company Application No. 140306 of 2003 was filed on behalf of the Transferee Company, interalia, praying for modification of the said order dated 15.7.2003 passed by this Court on the said Company Application No. 16 of 2003 by changing the date of the meeting of the shareholders/members of the Transferee Company from 30.8.2003 to 20.9.2003. On the said Company Application No. 140306 of 2003, this Court passed an order dated 21.8.2003 modifying the said order dated 15.7.2003, and, interalia, directing that the meeting of the shareholders/members of the Transferee Company, as per the said order dated 15.7.2003 would be held on 27.9.2003 at 11.00 O''clock in the forenoon at the same place, as mentioned in the said order dated 15.7.2003.

Averments in regard to the aforesaid Company Application No. 16 of 2003 have been made in paragraph 19 of the Company Petition.

It may be noted at this stage that in paragraph 14 of the affidavit filed in support of the aforesaid Company Application No. 16 of 2003, it was, interalia, stated that the Transferee Company had 568 shareholders, while the Transferor Company had 7 shareholders. The lists of the current shareholders of the Transferor Company and the Transferee Company were annexed as Exhibit-C(collectively) to the said Company Application.

The said statement made in the said affidavit filed in support of the aforesaid Company Application No. 16 of 2003 was noted in the said order dated 15.7.2003 passed on the said Company Application.

Pursuant to the said order dated 15.7.2003 read with the said order dated 21.8.2003, it appears that the meeting of the shareholders/members of the Transferee Company was held on 27.9.2003 at the time and place mentioned in the said orders.

Shri Ashok Mehta, Advocate, who was appointed as the Chairman of the said meeting by the said order dated 15.7.2003, has submitted his Report (Paper No. A-6) dated 13.10.2003 as per the requirements of Rule 78 of the Companies (Court) Rules, 1959. The said Report is supported by an affidavit of Shri Ashok Mehta, sworn on 13.10.2003. The minutes of the meeting of the shareholders/members held on 27.9.2003 at 11.00 a.m. at C 2, Sector-1, NOIDA 201301 alongwith the copy of the Resolution passed in the said meeting as well as the list of shareholders/members, who attended (he said meeting have also been filed alongwith the said Report of Shri Ashok Mehta.

It is, interalia, stated in the said Report of Shri Ashok Mehta that the said meeting was attended by 32 shareholders present either personally or by proxy; and that the said 32 shareholders, who were present either personally or through proxy, were entitled together with to Rs. 14,29,84,9()0/- value of the shares of the Transferee Company, out of the total Issued and Paid-up capital of the Transferee Company of Rs. 14,39,71,000/-; and that to ascertain the view of the shareholders, the poll was conducted; and that the result of the poll was that all the 32 shareholders, who attended the meeting either personally or through proxy, were unanimously of the opinion that the Scheme of Amalgamation of Xanxa Visionsworks Ltd. (i.e., Transferor Company) with the Transferee Company should be approved without any modification; and that the total value of the shares of the shareholders who approved the Scheme of Amalgamation was Rs. 14,29,84,900/~ out of the total Issued and Paid-up capital of Rs. 14,39,71,000/- of the Transferee Company; and that the Scheme of Amalgamation was, therefore, approved unanimously by the shareholders who were present at the meeting either personally or by proxy entitling to more than 99% in value of the total paid capital of the Transferee Company.

The Resolution passed at the said meeting, true copy whereof has been filed alongwith the said Report of Shri Ashok Mehta, was to the following effect:

"RESOLVED THAT the scheme of amalgamation of Xansa Visionworks Limited and the Company as approved by the Board of Directors of the Company and tabled before the meeting and initiated by the Chairman for the purpose of identification hereby approved and agreed to by the equity shareholders of the Company without modifications, subject to such modifications as may be made in the Scheme by the High Court of Allahabad and Delhi while sanctioning the same."

"RESOLVED FURTHER THAT the Directors and Company Secretary of the Company be and are jointly and severally authorized to do all such acts, deeds, matters and things as may be necessary, proper and expedient to give effect to this resolution."

The averments in regard to the said meeting of the shareholders of the Transferee Company held on 27.9.2003 have been made in paragraphs 20 and 21 of the Company Petition.

Coming back to the averments made in the Company Petition, it is interalia, stated in paragraph 22 of the Company Petition that the Transferee Company is filing the annual reports containing the audited balance sheet and profit and loss account as well as other particulars of the Transferee Company and the Transferor Company for the years 2000-2001, 2001-2002 and 2002-2003 alongwith the Company Petition as Annexure-I (collectively).

A summary of statement of the assets and liabilities of the Transferee Company and the Transferor Company, as per the latest audited accounts, has been given in paragraph 23 of the Company Petition.

It is, interalia, further stated in paragraph 25 of the Company Petition that, the transfer of the undertakings of the Transferor Company to the Transferee Company will not adversely affect the shareholders or creditors or employees, if any, of the Transferee Company.

It is, interalia, further stated in paragraph 26 of the Company Petition that the Directors of the Transferor Company and the Transferee Company arid also their relatives do not have any material interests in the proposed Scheme of Amalgamation.

In paragraph 27 of the Company Petition, it is, interalia, averred that the Transferor Company and the Transferee Company have neither issued nor agreed to issue any debentures.

In paragraph 28 of the Company Petition, it is, interalia, averred that there are no proceedings pending in respect of the Transferor Company as well as the Transferee Company under Sections 235 to 251 of the Companies Act, 1956.

By the order dated 24.11.2003 passed on the Company Petition, this Court, as per the requirements of Rule 80 of the Companies (Court) Rules, 1959, directed for issuance of notice fixing 12.1.2004 for hearing, and further directed that the notices be published in Times of India (English), Lucknow Edition, and Amar Ujala (Hindi), Meerut Edition, i.e., the same newspapers in which the notice of meeting was directed to be published by the said order dated 15.7.2003. Notice was further directed to be issued to the Central Government through Regional Director, Department of Company Affairs, Kanpur.

Pursuant to the said order dated 24.11.2003, it appears that the notices were published on 19.12.2003 in the newspapers mentioned in the said order dated 24.11.2003.

An affidavit of Rajiv Sahai, stated to be the Company Secretary and Authorized Representative of the Transferee Company, sworn on 6.1.2004 (Paper No. A-5) has been filed annexing thereto as Annexure-R-2 copies of the relevant extracts of the said newspapers.

Pursuant to the publication of notice as directed by the order dated 24.11.2003, no objections have been received against the proposed Scheme of Amalgamation.

It is, interalia, further stated in the said affidavit of Rajiv Sahai sworn on 6.1.2004 (Paper No. A-5) that a copy of the Company Petition alongwith annexures was served on the Regional Director, Company Law Board, Kanpur and the Registrar of Companies, Kanpur.

In response to the notice served on the Regional Director, Northern Region, Department of Company Affairs, Kanpur pursuant to the said order dated 24.1 1.2003, the said Regional Director has submitted his representation/ affidavit sworn on 20.1.2004 as per the requirements of Section 394A of the Companies Act, 1956.

It is, interalia, stated in the said representation / affidavit of the Regional Director that the copy of the Company Petition has been examined by him; and that as per Clause-8 of the Scheme of Amalgamation, all the employees of the Transferor Company shall become the employees of the Transferee Company without any break or interruption in their services upon sanction of the Scheme of Amalgamation by this Court; and that the Central Government has no objection to the proposed Scheme of Amalgamation.

I have heard Shri P. Nagesh, learned counsel for the petitioner at length.

During the course of hearing, a question arose regarding the number of shareholders of the Transferee Company. As noted above, in paragraph 14 of the affidavit filed in support of the aforesaid Company Application No. 16 of 2003, the number of shareholders of the Transferee Company was mentioned as 568 shareholders. However, in paragraph 13 of the Company Petition, the number of shareholders has been shown to be 577 shareholders.

In order to explain the change in the number of shareholders, Supplementary Affidavit (Paper No. A-7) sworn on 16.3.2004 and another Supplementary Affidavit (Paper No. A-9) sworn on 12.7.2004 have been filed on behalf of the Transferee Company/petitioner.

It is, interalia, stated in the said Supplementary Affidavit (Paper No. A-7) sworn on 16.3.2004 that the provisions of Section 154 of the Companies Act, 1956, which deal with closure of Register of Members, are enabling provisions; and that the said provisions are not mandatory; and that the condition for closure of the transfer books pertaining to the registration of transfers is only mandatory in the case the shares of the Company are listed with a Stock Exchange in terms of an Agreement called a Listing Agreement; arid that the aforesaid requirements of the Listing Agreement are not attracted in the case of the Transferee Company/petitioner, as the Transferee Company/petitioner is an Unlisted Company and is not required in law to close its Register of Members; and that the transfers, which have taken place in the case of the Transferee Company/petitioner, are made in the normal course of business and are, therefore, not illegal under the Companies Act, 1956 or any other law for the time being in force.

It is, interalia, stated in the said Supplementary Affidavit {Paper No, A-9) sworn on 12.7.2004 that the details of the share transfers of the Transferee Company for the period from 22.4.2003 to 15.7,2003 (on which date order was passed by this Court on the aforesaid Company Application No. 16 of 2003) are mentioned in paragraph 3 of the said Supplementary Affidavit. A perusal of the chart given in the said paragraph 3 of the said Supplementary Affidavit shows that the transfer in favour of one Sunaina Gupta, mentioned at Sl.No. 1, was made on 22.4.2003. Transfer in favour of the transferees mentioned at: SI. Nos. 2 to 11 in the said chart given in the said paragraph 3 of the Supplementary Affidavit was made on 4.6.2003. Transfer in favour of the transferee mentioned at SI.No. 12 in the said chart given in the said paragraph 3 of the Supplementary Affidavit was made on 9.7.2003.

Certified true copies of the Board Resolutions passed by the Board of Directors of the Transferee Company / petitioner approving the said transfers have been filed as Exhibit-A to the said Supplementary Affidavit (Paper No. A-9).

It is, interalia, further stated in paragraph 5 of the said Supplementary Affidavit (Paper No. A-9) that the said transfers have taken place in the normal course of business in accordance with Section 108 of the Companies Act, 1956 and the said transfers have taken place much prior to the Order dated 15.7.2003, as modified by the said Order dated 21.8.2003 convening the general meeting of the shareholders of the Transferee Company / petitioner for the purposes of approving the proposed Scheme of Amalgamation between the Transferor Company and the Transferee Company.

It is submitted by Shri Nagesh; learned counsel for the Transferee Company/petitioner that the transferees mentioned in the said paragraph 3 of the Supplementary Affidavit (Paper No. A-9) were given notice of the said meeting to be held pursuant to the aforesaid order dated 15.7.2003, as modified by the said order dated 21.8.2003 as per the directions of this Court.

Having regard to the averments made in the said Supplementary Affidavit sworn on 16.3.2004 (Paper No. A-7) and in the said Supplementary Affidavit sworn on 12.7.2004 (Paper No. A-9), and having considered the submissions made by Shri P. Nagesh, learned counsel for the Transferee Company/petitioner, the Court is satisfied that the difference in the number of the shareholders indicated in paragraph 14 of the affidavit filed in support of the aforementioned Company Application No. 16 of 2003 and as indicated in paragraph 13 of the Company Petition has been duly explained by the Transferee Company /petitioner.

It is further relevant to note that in paragraph 24 of the Company Petition, it is, interalia, stated that the Transferor Company filed a Petition u/s 391(2) and 394 of the Companies Act, 1956 before the Delhi High Court for sanction of the proposed Scheme of Amalgamation.

A Supplementary Affidavit sworn on 25.5.2004 (Paper No, A-8) has been filed on behalf of the Transferee Company/petitioner, interalia, stating that by the order dated 18.5.2004 passed in Company Petition No. 404 of 2003 filed by the Transferor Company, the Delhi High Court approved the proposed Scheme of Amalgamation of the Transferor Company with the Transferee Company/petitioner. Photostat copy of the certified copy of the said order dated 18.5.2004 passed by the Delhi High Court in the said Company Petition No. 404 of 2003 filed by the Transferor Company, has been filed as annexure to the said Supplementary Affidavit (Paper No. A-8).

From the narration of the facts above, it is evident that the requirement for holding the meeting of the creditors of the Transferee Company/petitioner, as per the requirements of Section 391(1) read with Section 393 of the Companies Act, 1956, was dispensed with by this Court by its order dated 15.7.2003 passed on the aforesaid Company Application No. 16 of 2003.

Further, the meeting of the shareholders, as per the directions given in the said order dated 15.7.2003 read with the said order dated 21.8.2003, was held on 27.9.2003 at the time and place mentioned in the said orders.

Quorum of the said meeting of the shareholders, as fixed by this Court in its order dated 15.7.2003, was 25 by number of the shareholders/members of the Transferee Company present either personally or by proxy.

As is evident from a perusal of the Report submitted by Shri Ashok Mehta, Chairman of the said meeting, the said meeting held on 27.9.2003 was attended by 32 shareholders (either personally or by proxy) having total shareholding to the extent of Rs. 14,29,84,900/~. Further, the Resolution, as reproduced above, approving the proposed Scheme of Amalgamation was passed unanimously by the shareholders, who are present either personally or through proxy at the said meeting.

It is further evident from a perusal of the Company Petition and Annexure-I (collectively) thereto, that the Transferee Company/petitioner has brought on record the annual reports containing the audited balance sheet and profit and loss account as well as other particulars of the Transferee Company/petitioner and the Transferor Company for the years 2000-2001, 2001-2002 and 2002-2003. Further, summary of statement of the assets and liabilities of the Transferee Company and the Transferor Company, as per the latest audited accounts, has been given in paragraph 23 of the Company Petition. Thus, the Transferee Company/petitioner has disclosed all material facts regarding the latest financial position of the Transferee Company/petitioner and the latest Auditor''s Report on the accounts of the Transferee Company/petitioner.

As noted above, it is, interalia, stated in paragraph 28 of the Company Petition that, there are no proceedings pending in respect of the Transferor Company as well as the Transferee Company under Sections 235 to 251 of the Companies Act, 1956.

Further, as noted earlier, in paragraph 25 of the Company Petition, it is averred that the transfer of the undertakings of the Transferor Company to the Transferee Company will not adversely affect the shareholders or creditors or employees, if any, of the Transferee Company.

As mentioned above, the Regional Director, Northern Region, Department of Company Affairs has filed his representation/affidavit as per the requirements of Section 394A of the Companies Act, 1956, interalia, stating that the Central Government has no objection to the proposed Scheme of Amalgamation.

Having regard to the aforesaid, the Court is satisfied that the Transferee Company/petitioner has disclosed to the Court all material facts relating to the Transferee Company/petitioner as per the requirements of the Proviso to Sub-section (2) of Section 391 of the Companies Act, 1956. Nothing adverse has been brought to the notice of the Court dissuading it from giving its approval to the proposed Scheme of Amalgamation.

In view of the aforesaid discussion, the proposed Scheme of Amalgamation, annexed as Annexure-E to the Company Petition at page 66 of the Paper Book, is hereby sanctioned.

In view of the sanction of the proposed Scheme of Amalgamation, it is directed, as per the provisions of Section 394(2) of the Companies Act, 1956, that all the properties, rights, interests and powers of the Transferor Company and all the liabilities, obligations, duties and engagements of the Transferor Company shall be transferred to and vested in the Transferee Company as per the terms of the Scheme of Amalgamation.

Let the order be issued in Form No. 41 of the Companies (Court) Rules, 1959.

Certified copy of the order will be filed by the Transferee Company/petitioner with the Registrar of Companies, Kanpur within 30 days of the issuance of certified copy of the order, as per the requirements of Section 394(3) of the Companies Act, 1956.

The Company Petition stands disposed of accordingly.