Allowed

M/s. Casuarina Capital and Finance Private Limited v. -

Telangana HC10 Oct 2013CP/144/2013

Case brief

AI extract

What is this about?

The court considered ten petitions seeking sanction for various schemes of amalgamation under Sections 391 and 394 of the Companies Act, 1956. Addressing objections regarding capital increases and regulatory intimation, the court held that court sanction implies compliance with Sections 94 and 97. The scheme was sanctioned.

What did the court decide?

Sanction of the scheme of amalgamation granted; directions to pay stamp duty and file certified copy with Registrar.

M/s. Casuarina Capital and Finance Private Limited… — Company and Corporate | Telangana HC (2013)

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HON’BLE SRI JUSTICE VILAS V.AFZULPURKAR COMPANY PETITION Nos.142, 143, 144, 145, 146, 147, 148, 149, 150, 151, 152 and 153 of 2013

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COMMON ORDER:

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C.P.No.142 of 2013 is filed by Blue Streak Consultants Private Limited (transferor company No.1); C.P.No.143 of 2013 is filed by Caspian Capital and Finance Private Limited (transferor company No.2); C.P.No.144 of 2013 is filed by Casuarina Capital and Finance Private Limited (transferor company No.3); C.P.No.145 of 2013 is filed by GVK Energy Holdings Private Limited (transferor company No.4); C.P.No.146 of 2013 is filed by GVK Hydel Private Limited (transferor company No.5); C.P.No.147 of 2013 is filed by Marwell Architects and Contractors Private Limited (transferor company No.6); C.P.No.148 of 2013 is filed by Metro Architects and Contractors Private Limited (transferor company No.7); C.P.No.149 of 2013 is filed by Plateau Construction and Engineering Private Limited (transferor company No.8); C.P.No.150 of 2013 is filed by Trinity Advisors Private Limited (transferor company No.9); C.P.No.151 of 2013 is filed by Vertex Infratech Private Limited (transferor company No.10); C.P.No.152 of 2013 is filed by Zinger Investments Private Limited (transferor company No.11); and C.P.No.153 of 2013 is filed by Vertex Projects Limited (transferee company) seeking sanction of this Court, under Sections 391 and 394 of the Companies Act, 1956 (the Act), to the proposed scheme of amalgamation. C.P.No.142 of 2013

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Transferor company No.1 was incorporated on 24.10.2002 in the State of Andhra Pradesh at Hyderabad. Its

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authorized share capital is Rs.1,00,000/- divided into 10,000 equity shares of Rs.10/- each. The issued, subscribed and paidup capital of transferor company No.1 was Rs.1,00,000/divided into 10,000 equity shares of Rs.10/- each fully paid up. The main objects for which transferor company No.1 was incorporated is to carry on the business of advisors and consultants to various projects, including infrastructure companies and to provide, supply very kind of technical, engineering services, feasibility reports, trading on contract or commission or turnkey basis and also to carry on the business of operating and maintaining, aiding projects of every kind and description within or outside India. C.P.No.143 of 2013

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Transferor company No.2 was incorporated on 21.09.1993 in the State of Andhra Pradesh at Hyderabad. Its authorized share capital is Rs.18,00,00,000/- divided into 1,80,00,000 equity shares of Rs.10/- each. The issued, subscribed and paid-up capital of transferor company No.2 was Rs.17,31,96,500/- divided into 1,73,19,650 equity shares of Rs.10/- each fully paid up. The main objects for which transferor company No.2 was incorporated is to purchase, sell, invest, trade or otherwise deal with equity shares, stocks, debentures, company deposits and all other securities, including government securities and investment and also to carry on and undertake the business of portfolio management and investment consultancy services in equity shares, stocks, debentures, company deposits and in all other securities, including government securities, bonds, loans, National Savings Certificates, Post Office Savings Certificates and Units of Unit Trust of India and also hire purchasing and leasing.

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C.P.No.144 of 2013

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Transferor company No.3 was incorporated on 21.08.1982 in the State of Andhra Pradesh at Hyderabad. Its authorized share capital is Rs.6,00,00,000/- divided into 60,000/- equity shares of Rs.1,000/- each. The issued, subscribed and paid-up capital of transferor company No.3 was Rs.28,88,000/- divided into 2,888/- equity shares of Rs.1000/each fully paid up. The main objects for which transferor company No.3 was incorporated is to take-over all assets and liabilities, rights, titles and interests of the partnership firm under the name and style of “GVK Petro Chemicals” carrying on the business of manufacture of amino resins, chemicals, glues and other allied products and also to carry on the business of manufacturers of, dealers in, exports and imports of all kinds of chemicals, compounds, salts, carbonates, sulphides, sulphate, alkali chemicals, hydroxides, paints, varnishes and dyes stuff from the manufacture of the above products. C.P.No.145 of 2013

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Transferor company No.4 was incorporated on 27.03.2003 in the State of Andhra Pradesh at Hyderabad. Its authorized share capital is Rs.2,00,00,000/- divided into 20,00,000 equity shares of Rs.10/- each. The issued, subscribed and paid-up capital of transferor company No.4 was Rs.50,00,000/- divided into 5,00,000 equity shares of Rs.10/each fully paid up. The main objects for which transferor company No.4 was incorporated is to generate, harness, develop, accumulate, distribute and supply electricity by setting up power plants by use of liquid, gaseous or solid fuels for the purpose of light, heat, motive power, and for all other purposes for which electric energy can be employed and also to carry on

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and generate power supply either by hydro, thermal, gas, air, diesel oil or through renewable energy sources such as solar, photo voltaic, wind mill and or any other means. C.P.No.146 of 2013

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Transferor company No.5 was incorporated on 17.06.2005 in the State of Andhra Pradesh at Hyderabad. Its authorized share capital is Rs.10,00,000/- divided into 1,00,000/- equity shares of Rs.10/- each. The issued, subscribed and paid-up capital of transferor company No.5 was Rs.1,00,000/- divided into 10,000/- equity shares of Rs.10/each fully paid up. The main objects for which transferor company No.5 was incorporated is to generate, harness, develop, accumulate, distribute and supply electricity by setting up hydro electric power projects by use of various sources of water at various places in India. C.P.No.147 of 2013

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Transferor company No.6 was incorporated on 19.09.2003 in the State of Andhra Pradesh at Hyderabad. Its authorized share capital is Rs.5,00,000/- divided into 50,000/equity shares of Rs.10/- each. The issued, subscribed and paidup capital of transferor company No.6 was Rs.1,00,000/divided into 10,000/- equity shares of Rs.10/- each fully paid up. The main objects for which transferor company No.6 was incorporated is to carry on the business of builders, engineers, architects, interior designers, contractors, sub-contractors for all kinds of civil constructions such as structures, buildings, bridges, culverts etc. C.P.No.148 of 2013

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Transferor company No.7 was incorporated on 16.02.2004 in the State of Andhra Pradesh at Hyderabad. Its

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authorized share capital is Rs.2,00,00,000/- divided into 20,00,000 equity shares of Rs.10/- each. The issued, subscribed and paid-up capital of transferor company No.7 was Rs.1,00,000/- divided into 10,000 equity shares of Rs.10/- each fully paid up. The main objects for which transferor company No.7 was incorporated is to carry on the business of builders, engineers, architects, interior designers, contractors, subcontractors for all constructions such as structures, builders, bridges, culverts etc.

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C.P.No.149 of 2013

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Transferor company No.8 was incorporated on 25.09.2003 in the State of Andhra Pradesh at Hyderabad. Its authorized share capital is Rs.1,00,000/- divided into 10,000 equity shares of Rs.10/- each. The issued, subscribed and paidup capital of transferor company No.8 was Rs.1,00,000/divided into 10,000 equity shares of Rs.10/- each fully paid up. The main objects for which transferor company No.8 was incorporated is to carry on the business of builders, engineers, architects, interior designers, contractors, sub-contractors for all kinds of civil constructions such as structures, buildings, bridges, culverts etc.

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C.P.No.150 of 2013

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Transferor company No.9 was incorporated on 22.10.2002 in the State of Andhra Pradesh at Hyderabad. Its authorized share capital is Rs.2,00,00,000/- divided into 1,00,000/- equity shares of Rs.10/- each, and 1,90,000 preference shares of Rs.100/- each. The issued, subscribed and paid-up capital of transferor company No.9 was Rs.1,00,000/- divided into 10,000 equity shares of Rs.10/- each fully paid up. The main objects for which transferor company

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No.9 was incorporated is to carry on the business of advisors and consultants to various projects including infrastructure companies and to provide, supply every kind of technical, engineering, services, feasibility reports, trading on contract or commission or turnkey basis. C.P.No.151 of 2013

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Transferor company No.10 was incorporated on 25.06.2002 in the State of Andhra Pradesh at Hyderabad. Its authorized share capital is Rs.35,00,00,000/- divided into 3,30,00,000 equity shares of Rs.10/- each and 2,00,000 preference shares of Rs.100/- each. The issued, subscribed and paid-up capital of transferor company No.10 was Rs.30,40,00,000/- divided into 3,04,00,000 equity shares of Rs.10/- each fully paid up. The main objects for which transferor company No.10 was incorporated is to carry on the business as investment company specially to invest in shares of any kind, stocks including debentures, secured and unsecured securities whether marketable or otherwise, bonds, loans, bills, hundis, company deposits etc.

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C.P.No.152 of 2013

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Transferor company No.11 was incorporated on 28.03.2003 in the State of Andhra Pradesh at Hyderabad. Its authorized share capital is Rs.6,50,00,000/- divided into 65,00,000/- equity shares of Rs.10/- each. The issued, subscribed and paid-up capital of transferor company No.11 was Rs.6,28,07,500/- divided into 62,80,750 equity shares of Rs.10/- each fully paid up. The main objects for which transferor company No.11 was incorporated is to carry on the business of establishing complex of industries for manufacturing particle boards, panels and panel products and also to carry on the

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business as an investment company specially to invest in shares of any kind, stocks including debentures, secured and unsecured securities etc.

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C.P.No.153 of 2013

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The transferee company was incorporated on 24.04.2006 in the State of Andhra Pradesh at Hyderabad. Its authorized share capital is Rs.3,00,00,000/- divided into 30,00,000 equity shares of Rs.10/- each. The issued, subscribed and paid-up capital of the transferee company was Rs.5,00,000/- divided into 50,000 equity shares of Rs.10/- each fully paid up. The main objects for which the transferee company was incorporated is to carry on the business of project developers, builders, engineers, architects, interior designers, contractors, sub contractors for all kinds of civil, electrical and mechanical constructions, including but not limited to urban and rural infrastructure facilities, industrial and commercial complexes, ports, special economic zones, structures, buildings bridges, culverts, causeways etc.

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The Board of Directors of each transferor company, in their meeting held on 06.11.2012, approved the scheme of amalgamation of all the 11 transferor companies with the transferee company, and the said scheme is annexed as Annexure-V in each of the Company Petitions. All the 11 transferor companies had approached this Court through C.A.Nos.264 to 274 of 2013 seeking to dispense with the convening and holding of the meeting of the shareholders of the respective companies in lieu of the letters of consent given by each shareholder of the respective companies. By order dated 06.06.2013, this Court dispensed with the convening and holding of the meeting of the shareholders of all the transferor

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companies as the shareholders of each of the company had consented to the proposed scheme of amalgamation. Similarly, an application in C.A.No.275 of 2013 was filed by the transferee company seeking to dispense with the convening and holding of the meeting of the shareholders on the ground that there were only seven shareholders, all of whom had consented to the proposed scheme of amalgamation, as approved by the board resolution dated 06.11.2012. This Court, by the aforesaid common order (C.A.No.264 to 274 of 2013 dated 06.11.2012), dispensed with the convening and holding of the meeting of the shareholders of the transferee company. The proposed scheme would come into effect from the appointed date i.e. 01.04.2011, as notified in the scheme.

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Transferor company Nos.1 to 11 state that there are no secured or unsecured loans to any of the companies. Similarly, with regard to transferee company, it is stated that the transferee company has not availed any secured or unsecured loans. In view of that, the question of seeking the consent of secured or unsecured creditors does not arise.

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All the Company Petitions were admitted on 03.07.2013, and the notice of hearing was published in Business Standard (English daily) and Andhra Bhoomi (Telugu daily) Hyderabad editions.

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The Regional Director (South Eastern Region), Corporate Affairs, Hyderabad, on behalf of the Central Government, has filed a common report, in all the Company Petitions, stating that, as per the report of the Registrar of Companies, Hyderabad, all the companies involved in the scheme of amalgamation are regular in filing the statutory returns, and no complaints or investigations are pending against them and, therefore, the

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Central Government has no objection to the proposed scheme of amalgamation. It is, however, pointed out that, in paragraph 3 of the report, as per clause 5.5 of the proposed scheme under Part-III, the authorized share capital of each of the transferor company shall stand transferred to and added to the transferee company, and the transferee company was required to comply with the provisions of Sections 94 and 97 of the Act, prerequisite of obtaining sanction from the Registrar of Companies for increase of authorized capital. That aspect, however, would be dealt with in the following paragraphs.

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The Official Liquidator has filed separate reports, in each of the Company Petitions, stating that he had called for the statutory books and other relevant information from all the transferor companies, and the information /documents called for were furnished. The Official Liquidator opined that the affairs of the transferor companies appeared to have not been conducted in a manner prejudicial to the interests of the members or to public interest.

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So far as short-term borrowings and trade liabilities are concerned, para 3(g) of the report, filed by the Official Liquidator in each of the Company Petitions, states that, each transferor company had obtained no objection /consent letter from the respective unsecured creditor to the extent of short-term borrowings and trade liabilities, and furnished to the office of the Official Liquidator. With regard to the current liabilities, a requisite no objection/consent letter from over 80% of such creditors is said to have been furnished to the Official Liquidator. To the extent of audit fee, no objection/consent letter from the auditor is said to have been furnished to the Official Liquidator. The Official Liquidator states that, since none of the

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short-term creditors has any objection and consented to the proposed scheme of amalgamation, there is no impediment for approval of the proposed scheme of amalgamation.

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The object and purpose of amalgamation, as mentioned in para 62 of each of the Company Petitions, is similar in all the transferor companies as well as the transferee company. Transferor companies are engaged in the business of financial investment which is similar to the line of business of the transferee company. By the proposed scheme, the infrastructure of all the companies is proposed to be utilized at the optimum level by rationalizing the activities of the respective companies and saving substantial amounts which will result in better profiteering. The said scheme, having been approved by the shareholders of each of the transferor company as well as the transferee company, appears to be in the interests of all the companies, and is not opposed to any provisions of the Act.

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So far as the objection raised, by the Regional Director (South Eastern Region), Corporate Affairs, Hyderabad, on behalf of the Central Government, with regard to the consequential increase in authorized capital of the company is concerned, the said issue is no more res integra and is, in fact, covered by the decisions of this Court in Saboo Leasing

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Private Ltd. In R e^[1] , wherein it has been held that, once the scheme of arrangement or amalgamation is sanctioned by the Court, the certified copy of the order of the Court had to be filed before the Registrar within 30 days from the date of the order under Sub-section (3) of Section 394 of the Companies Act, for the purpose of its registration. The object of intimation to the Registrar, under Sections 94 and 97 of the Act as well as under

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Section 394 of the Act, being one and the same, a separate procedure of again giving intimation to the Registrar under Sections 94 and 97 of the Act does not arise. Even otherwise, either reduction of share capital or increase of authorized share capital being part of the scheme of amalgamation, once the scheme is approved, sanction of the order of the Court automatically amounts to compliance of the Companies Act and, as such, no separate procedure, as required under Sections 94 and 97 of the Act, is required to be followed.

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In another decision of a Division Bench of this Court in Kemira Laboratories ltd., In R e^[2] , the Division Bench also confirmed the same view that once the scheme of amalgamation is approved, consequential increase of share capital of the transferee company need not be again approved under Sections 94 and 97 of the Act. In view of the said legal position, the objection raised by the Regional Director, in his report, is not sustainable.

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So far as the objection regarding compliance with the stamp duty, under Article 20(d) of Schedule 1-A of the Indian Stamp Act, is concerned, the transferee company is bound to comply with the same.

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I consider it appropriate, therefore, to sanction the scheme of amalgamation annexed as approved without any modifications. The petitioners shall file a certified copy, of the Order of this Court, with the Registrar of Companies within thirty days from the date of the order as required under Section 394(3) of the Companies Act, read with Rule 81 of the Companies (Court) Rules, 1959. The petitioners shall also pay requisite stamp duty payable in terms of allotment of shares as

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per the scheme.

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Petitioner – Transferor Company, in each of the Company Petitions, shall pay a sum of Rs.5,000/- (Rupees Five Thousand Only) each to Sri M.Anil Kumar, Learned Counsel for the Official Liquidator, and Sri Ponnam Ashok Goud, Learned Assistant Solicitor General, in receipt of the work done in examining the scheme and filing their respective reports.

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VILAS V.AFZULPURKAR,J

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Date: 10.10.2013 usd

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[1] (2006) 4 CompCas 553

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[2] (2007) 3 ALD 386

M/s. Casuarina Capital and Finance Private Limited v. -

Case brief

What is this about?

What did the court decide?

M/s. Casuarina Capital and Finance Private Limited v. -

Case brief

What is this about?

What did the court decide?

What the court decided

A compact analysis

Issues for consideration

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