Allowed

M/s Gowri Ventures Private Limited v. -

Telangana HC4 Oct 2013CP/128/2013

Case brief

AI extract

What is this about?

The court allowed a petition under Sections 391 and 394 of the Companies Act, 1956 for amalgamation of a subsidiary with its holding company. Relying on settled law, the court held that since the transferee is the holding company, a separate application by the transferee is unnecessary when the subsidiary is profitable.

What did the court decide?

Scheme of Amalgamation approved to come into effect on 01.04.2013; petitioner to file certified copy with Registrar within 30 days.

M/s Gowri Ventures Private Limited Vs - — Company and Corporate | Telangana HC (2013)

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THE HON’BLE SRI JUSTICE VILAS V.AFZULPURKAR COMPANY PETITION No.128 of 2013

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ORDER:

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This is a petition under Sections 391 and 394 of the Companies Act, 1956, filed by the transferor company. It is stated that the said transferor company proposes amalgamation with its holding company M/s. Indo-US MIM Tec Private Limited. It is stated that the said transferee company is the holding company of the petitioner’s company, which is a 100% subsidiary of the transferee company.

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While the petitioner’s company is incorporated on 11.11.1998 as a private limited company with the main objects, which are as follows:

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“i) To purchase, sell, develop, take in exchange or on lease hire or otherwise acquire whether for investment or for sale or for working or developing or disposing or maintaining the same, any real or personal estate including lands, mines, business, buildings, factories, mills, houses, cottages, shops, depots, warehouses, machinery, plant, stock in trade, mineral rights, concessions, privileges, licences, easements or interest in or with respect to any property or interest in with respect to any property whatsoever for the purpose of the company in consideration and to build townships, markets or buildings, residential and commercial or conveniences, drainage and other facilities and to carry on business as proprietors of flats and buildings and to let on lease or otherwise apartments therein and to provide for the conveniences commonly provided in flats, suites and residential and business quarters and by advancing money to and entering into contracts and arrangements of all kinds with builders, tenants, and others, to purchase or otherwise acquire any land, building or premises and to turn into account, develop,

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improve, alter, demolish or let out.

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ii) To construct, erect, build, repair, remodel, demolish, develop, improve, grade, curve, pave, macadamize, cement and maintain buildings, structures, houses, apartments, hospitals, schools, health clubs, fitness centers, launderettes, places of worship, highways, roads, paths, streets, sideways, courts, alleys pavements and to do similar such constructions, leveling or paving work and for these purposes to take on lease or otherwise acquire and hold any lands and prepare layouts thereon and prepare lands for building purposes and prepare building sites by consolidating or connecting or sub-dividing properties or buildings of any tenure or description wherever situate or rights or interests therein or connected therewith and to carry on all the business of builders, contractors, subcontractors, dealers, and by advancing money to and enter into contracts and arrangements of all kinds with builders, tenants, occupiers and others.

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iii) To construct, let out, furnish and carry on all or any of the functions of proprietors of flats, maisonettes, dwellinghouses, shops, offices and clubs and for these purposes to purchase, take on lease, or otherwise acquire land, hold any lands and prepare layouts thereon or buildings of any tenure or description wherever situate or rights or interests therein or connected therewith; to lay-out and prepare building sites and to construct, reconstruct, repair, pull down, alter, improve, decorate, furnish and maintain flats, maisonettes, dwelling-houses, shops, offices, clubs, buildings, works and sanitary conveniences of all kinds, lay-out roads, drainage pipes, water pipes and electric installations and to set apart land for pleasure gardens and recreation ground or otherwise improve the land or any part thereof.”

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The reasons mentioned in support of the proposed Scheme of Amalgamation vide para 12 of the petition are as follows:

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“It is respectfully submitted that the transferor company is presently carrying on the business of manufacturing metal parts for different product groups. The transferor company is a 100% subsidiary of the transferee

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company. The transferee company is also engaged in the business of manufacturing metal parts for different product groups. By amalgamating two companies, there will be synergy of operations for both the transferor company and the transferee company and the proposed scheme of amalgamation will give more thrust and integrate their business facilities and infrastructure under one single unit. Further there will be a reduction in administrative cost and overheads and redundancies would be also eliminated. Further the proposed amalgamation would also bring in cost savings in the marketing, selling and distribution expenses of the transferee company. Further there will be financial edge, which would enable it to withstand the competition and also strengthen in pooling the resources. The proposed scheme of amalgamation would also ultimately contribute to the future business and profitability of the amalgamated company. Therefore the proposed scheme of amalgamation will be beneficial and advantageous in the long-term interest of both the transferor company and the transferee company and its shareholders and creditors.”

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It is also stated that the entire share capital of the transferor company is held by the transferee company and its nominees and the present Scheme of Amalgamation does not, in any way, affect the interest of the transferee company and does not involve a reorganization of the share capital of the transferee company. The shareholders as well as the creditors of the transferee company, therefore, remain unaffected by the proposed Scheme of Amalgamation. It is also stated that as on 01.03.2013, the transferor company has a positive net worth and as such, the amalgamation with the holding company would be advantageous as net worth of the holding company would substantially improve. The Scheme of Amalgamation is annexed as Annexure-A5, which is consented to by the Board of the holding company vide resolution of the Board vide Annexure-A10. The Scheme of Amalgamation was also consented to by all the shareholders of the petitioner’s company. Hence, the meeting of shareholders was

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dispensed with. However, meeting of the secured and unsecured creditors of the petitioner company were directed to be held vide orders in Company Application No.473 of 2013, dated 02.04.2013. Accordingly, a Chairman, appointed for the said meeting, has conducted the meeting of the secured creditors, two of whom i.e., Vysya Bank and State Bank of India have voted in favour of the resolution approving the scheme. Similarly, the meeting of unsecured creditors was also held and all the unsecured creditors have voted in favour of the Scheme of Amalgamation. In view of the said reports, therefore, it is noted that none of the secured or unsecured creditors have any objection for the said Scheme.

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The notice of this petition was served on the Official Liquidator as well as the Central Government, who have filed their reports. According to the report filed by the Regional Director, South East Region, Ministry of Corporate Affairs, Hyderabad, on behalf of the Central Government, both the companies are regular in filing statutory returns and no complaints, no investigations and no inspection are pending against them and the Scheme of Amalgamation, as proposed, is not found objectionable on any ground. The Official Liquidator has also examined the records of the company and has analysed the Scheme of Amalgamation proposed and has given a report that the affairs of the company have not been conducted in any manner prejudicial to the interest of the members or public interest.

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In view of the said reports also, there is no impediment for approval of the Scheme of Amalgamation of the transferor company with the transferee company in the present case.

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Sofar as the transferee company, which is the holding

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company of the transferor company, no application under Sections 391 and 394 of the Companies Act, 1956, is filed by them in view of the legal position settled by decisions of this Court in Company Petition No.132 of 2007, dated 19.06.2008, wherein similar issue was considered by this Court noticing two other decisions on the same point i.e., In re Nebula Motors Limite d^[1] and Magnaquest Solutions Pvt. Ltd.^[2] .

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Since the present case clearly establishes that the transferor company, i.e., subsidiary of the holding company, is a profit making company, on the principle of law, as is clear from the decisions referred above that there is no impediment for the approval of the Scheme of Amalgamation as it is not necessary on the facts of this case for the transferee company to seek relief by a separate application under Sections 391 and 394 of the Companies Act, 1956.

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Accordingly, the Company Petition is allowed. The Scheme of Amalgamation is hereby approved as consented to by the members as well as the secured and unsecured creditors without any modification. The Scheme shall come into effect on appointed date as per the Scheme i.e., 01.04.2013. The petitioner’s company shall take appropriate steps by filing the certified copy of this order before the Registrar of Companies within 30 days and shall pay the requisite stamp duty, if any, as per law. The petitioner’s company shall also pay a sum of Rs.5,000/- (Rupees five thousand only) each to the learned Assistant Solicitor General as well as to Mr. Anil Kumar, learned counsel for the Official Liquidator. There shall be no order as to costs. Miscellaneous applications pending in this company petition, if any, shall stand

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closed.

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JUSTICE VILAS V.AFZULPURKAR

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4^th October, 2013

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THE HON’BLE SRI JUSTICE VILAS V.AFZULPURKAR

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COMPANY PETITION No.128 of 2013

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