Allowed

Shri Siya Ram Buildwell Private Limited v. Anand Steels and Wires Private Limited

Punjab & Haryana HC25 Jan 2013CP/51/2012

Case brief

AI extract

What is this about?

The High Court sanctioned the Scheme of Amalgamation between Shri Siya Ram Buildwell Private Limited and Anand Steels and Wires Private Limited under Sections 391 and 394 of the Companies Act, 1956, addressing objections regarding share trust creation and undisclosed investments via undertakings.

What did the court decide?

Sanctioned the Scheme of Amalgamation of the Transferor Company with the Transferee Company, vesting assets and liabilities in the Transferee Company and dissolving the Transferor Company.

Shri Siya Ram Buildwell Private Limited Vs… — Company and Corporate | Punjab & Haryana HC (2013)

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C.P. No.51 OF 2012 (O&M) ::1::

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IN THE HIGH COURT FOR THE STATES OF PUNJAB AND HARYANA AT CHANDIGARH. C.P. No. 51 of 2012 (O&M) Connected with C.P. NO. 42 OF 2012(O & M) Date of Decision: 25^th January,2013.

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IN THE MATTER OF:

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SECTIONS 391 and 394 OF THE COMPANIES ACT, 1956

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AND IN THE MATTER OF :

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Scheme of Amalgamation of

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SHRI SIYA RAM BUILDWELL PRIVATE LIMITED

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...Petitioner Company/Transferor Company

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WITH

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ANAND STEELS AND WIRES PRIVATE LIMITED

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...Petitioner Company/Transferee Company

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Present: Mr. Anand Chhibbar,Sr. Advocate with Mr.Lalit Thakur, Advocate for the petitioner companies.

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Mr. D.P. Ojha, Official Liquidator.

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CORAM:

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HON’BLE MR. JUSTICE SURYA KANT.

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1. Whether Reporters of local papers may be allowed to see the judgment?

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2. To be referred to the Reporters or not?

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3. Whether the judgment should be reported in the Digest?

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SURYA KANT, J. [ORAL]

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In this petition under Section 391 to 394 of the Companies Act, 1956, duly supported by affidavits, the petitioner-companies seek sanctioning of the Scheme of Amalgamation (Annexure P/1) of the Transferor-Company with Transferee-Company.

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[2]. The main objects of the Transferor-Company and the Transferee-Company are detailed in their respective Memorandum and Articles of Association annexed with the Ist Motion Petition i.e.

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C.P. No.51 OF 2012 (O&M) ::2::

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Company Petition No.42 of 2012 at Annexure P-2, and P-7 , respectively. The Board of Directors' resolutions approving the Scheme of Amalgamation in their respective meetings held on 09.03.2012 are also annexed with Ist Motion Petition at AnnexuresP/4 & P/9 , respectively.

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[3]. The Authorised Share Capital of Transferee-Company mentioned in the Scheme as on March 31, 2011 is Rs.5,00,000/divided into 500 Equity Shares of Rs.1000/-each. Its Issued, subscribed and paid-up capital is Rs.4,00,000/- divided into 400 Equity Shares of Rs.1000/- each.

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[4] The Authorised Share Capital of Transferor Company as is evident from the Scheme as on March 31, 2011 is Rs.1,00,00,000/divided into 1,00,000 Equity Shares of Rs.10/- each. Its Issued, subscribed and paid-up share capital is Rs.44,39,000/- divided into 4,43,900 Equity Shares of Rs.10/- each.

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[6] The petitioner companies had earlier approached this Court by way of Company Petition No.42 of 2012 and vide orders dated 20.04.2012 passed therein the convening of meetings of the Shareholders and Creditors of the Transferor and Transferee Companies were dispensed with and the Ist Motion was disposed of accordingly.

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[7] In this Second Motion Petition, notice was issued to the Regional Director, Northern Regional Ministry of Corporate Affairs, Noida as well as the Official Liquidator and the same was also ordered to be published in the daily 'The Indian Express' and 'Dainik Bhaskar' and in the official Gazette of the Government of Haryana.

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C.P. No.51 OF 2012 (O&M) ::3::

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The compliance affidavit of the said order has been placed on record.

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[8] The Official Liquidator has brought on record the affidavitcum-report dated 23.08.2012 of Mr. Rakesh Chandra, Regional Director, Northern Region, Ministry of Corporate Affairs, Noida. Observation. Paras 5 & 6 of the said report containing the following observations being relevant are reproduced below:-

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“5. That the Deponent further craves leave to submit that Para 7 of the Scheme provides as under:

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“Upon the Scheme becoming effective, 392 equity shares held by the Transferor Company in the Transferee Company shall be deemed to have been transferred by virtue of the scheme, with effect from the date of order of the Hon'ble Court sanctioning the scheme, to an individual trustee or a board of trustee ( including survivors of any of the trustees comprising such board of trustee) or a corporate trustee, as the case may be, to have & to hold the shares of the Transferee Company in trust together with all additions or accretions thereto upon trust exclusively for the benefit of the Transferee Company subject to power, discretions, rights & agreements contained in the instrument (the Trust Deed) establishing the aforesaid trust. It has been further mentioned that the trustee shall, subject, however, to the prevailing market conditions, sell transfer or dispose of investment in the properties at such times & in such manner as may be Deed & shall remit the proceeds thereof to the Transferee Company & consequent thereto all obligations of the Trustees shall stand discharged & the Trust shall stand terminated in accordance with the Provisions of the Trust Deed. “.

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5.1 It is submitted that as per normal practice, the shares held by the Transferee Company in the Transferor Company are to be cancelled but Scheme provides creation of trust . This against the normal practice adopted by most of the Companies.

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6. That the Deponent further craves leave to submit that on perusal of the Valuation Report as well as Balance Sheet as at 31.03.2011 of the Transferor Company, it has been observed that there is a Investment of Rs, 4.9 crores and the details of such Investment as required under section 211 of the Companies Act, 1956 has not been given in the Balance Sheet as at 31.03.2011. this matter was taken-up with the Petitioner Transferor Company and the Petitioner Transferor Company vide letterdated 12.08.2012 has intimated that the Company has made the investment of Rs. 4.9 crores in M/s Anand Steels & Wires Pvt. Ltd. i.e Transferee Company and also stated that the same

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C.P. No.51 OF 2012 (O&M) ::4::

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was missed out to be stated din the Balance Sheet as at 31.03.2011. Further, they have also given undertaking that they will get the said lapse compounded under section 621-A of the Companies Act, 1956.”

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[9]. The Official Liquidator has also taken almost similar objections, in para 4 of his report maintaining that the Petitioner/ Transferee-Company be directed to follow the procedure prescribed under the Companies Act, 1956.Lastly, he has stated that the affairs of the Transferor Company have not been conducted in a manner prejudicial to the interest of its members, their creditors or the public at large though subject to his observations made in para 4 of the report.

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[10]. Adverting to the two objections raised by the Regional Director in his report-cum-affidavit dated 23.08.2013, first one pertains to the normal practice according to which the shares held by the Transferee-Company in the Transferor-Company are to be cancelled but the Scheme provides creation of Trust. The 2nd objection relates to the details of investment of Rs. 4.9 crore which are required to be furnished under Section 211 of the Companies Act,1956 but have not been mentioned in the balance sheet as on 31.03.2011. The petitioner, in Para No. 6 of the affidavit dated 19^th January, 2013 have acknowledged their lapse and undertaken to initiate the process of preparing compounding in respect thereof.

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[11]. Mr. Rattan Lal Sharma, authorised representative of the petitioner-companies has responded to the above-stated queries by way of his affidavit dated January 19,2013 asserting that though creation and transfer of the shares to an individual Trust may not be

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C.P. No.51 OF 2012 (O&M) ::5::

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the normal practice,nonetheless it, the same is permissible in law and has been followed with the approval of Company Courts. Reliance in this regard is placed on the following decisions referred to in para 4 of the affidavit:

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i) Company Application No. 606 of 2001, in the matter of Scheme of Amalgamation of ICICI limited, ICICI Capital Services Limited and ICICI Personal Financial Services Limited with ICICI Bank Limited , sanctioned by High court of Judicature at Bombay.

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ii) Company Application No. 03 of 2009, in the matter of Scheme of Amalgamation of Jaypee Hotels Limited, Jaypee Cement Limited, Jaiprakash Enterprises Limited and Gujarat Anjan Cement with Jaiprakash Associates Limited, sanctioned by High Court of Allahabad.

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iii) In the matter of Scheme of Amalgamation of R.R. Ispat Limited and Hira Industries Limited with Godawari Power & Ispat Limited sanctioned by High Court of Chhattisgarh.

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[12] . As regards the details of investment of Rs.4.9 crore to be given in the balance sheet, the petitioners while acknowledging in said affidavit their lapse, have undertaken to initiate the process of preparing to seek compounding thereof. Learned counsel undertakes that the petitioner shall apply for the compounding of lapse pointed out by the Regional Director without any waste of time.

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[13]. The petitioner-Companies have confirmed that there are no investigations or proceedings pending against them under Sections 235 and 251 of the Companies Act.

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[14]. For the reasons afore-stated and keeping in view the procedural requirements as contemplated under Sections 391 to 394 of the Companies Act as well as the relevant facts and Rules, and on due consideration of the reports of Regional Director, Northern

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C.P. No.51 OF 2012 (O&M) ::6::

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Region, Ministry of Corporate Affairs, Noida and that of Official Liquidator, coupled with the undertaking given by way of affidavit (s) of the authorised representative of the petitioner companies, the Scheme of Amalgamation of the Transferor-Company with the Transferee-Company is hereby sanctioned and as a result thereto, the assets and liabilities of the Transferor-Company shall stand vested in the Transferee-Company and the Transferor-Company shall stand dissolved without being wound up.

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[15] The Scheme shall be binding on the Transferor and the Transferee Companies, their respective shareholders, creditors and all concerned.

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[16] Let formal order of sanction of the Scheme of Amalgamation be drawn in accordance with law and the certified copy of the same be filed with the Registrar of Companies within 30 days from the date of receipt of certified copy of the same.

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[17] A notice of this order be published in the daily 'Indian Express' and 'Dainik Bhaskar' both Delhi Edition and in the official Gazette of the Government of Haryana.

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[18] Any interested person shall be at liberty to apply to the Court for any direction(s) as per law.

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[19] Disposed of accordingly.

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25.01.2013 ( SURYA KANT ) dinesh JUDGE

Shri Siya Ram Buildwell Private Limited v. Anand Steels and Wires Private Limited

Case brief

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Shri Siya Ram Buildwell Private Limited v. Anand Steels and Wires Private Limited

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