Allowed

M/s. Ecoren Energy India Private Limited, v. -

Telangana HC6 Nov 2014CP/124/2014

Case brief

AI extract

What is this about?

The Court sanctioned the proposed scheme of amalgamation between Ecoren Energy India Private Limited and Ecoren Renewables Private Limited. It addressed objections regarding cash holdings and share application money, upholding the transferee company's undertaking to assume liabilities. regarding the name change, the Court held that Section 391 procedure supersedes the need for separate Section 21

What did the court decide?

The proposed scheme of amalgamation was sanctioned with effect from 01.06.2013; the transferor company to be dissolved without winding up.

M/s. Ecoren Energy India Private Limited, Vs - — Specific Performance | Telangana HC (2014)

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HON’BLE SRI JUSTICE A.RAJASHEKER REDDY COMPANY PETITION Nos.124 and 125 of 2014

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COMMON ORDER:

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Company Petition No.124 of 2014 is filed by M/s.Ecoren Energy India Private Limited (Transferor Company) and CP.No.125 of 2014 is filed by M/s.Ecoren Renewables Private Limited (Transferee Company), for sanction of this Court to the proposed scheme of amalgamation of transferor company with the transferee company. In CP.No.124 of 2014, the transferor company has pleaded that it was incorporated on 13.01.2010, that its authorized share capital is Rs.21,00,00,000/- divided into 45,00,000 equity shares of Rs.10/each, 6,00,000, 0.01% Compulsory Convertible Cumulative Preference shares of Rs.100/- each and 1,05,00,000, 0.001% Optionally Convertible Redeemable Preference Shares of Rs.10/- each. That its main objects are to generate, accumulate, transmit, distribute, purchase, sell and supply electricity power or any other energy from conventional/non conventional energy sources on a commercial basis and to construct, lay down, establish, operate and maintain power/energy generating stations, including buildings, structures, works, machineries, equipments, cables and to undertake or to carry on the business of managing, owing, controlling, erecting, commissioning, operating, running, designing or transferring to third persons, power plants and plants on shore/off-shore and plants based on conventional or nonconventional energy sources, solar energy plants, wind energy plants, mechanical, electrical, hydel, civil engineering works, biomass, gasifiers, Biogas power plants, fuel cells and similar projects including Biomass Projects. That its Board of Directors in

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the meeting held on 15.11.2013 has approved the proposed scheme of arrangement by fixing 01.06.2013 as the appointed date.

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In CP.No.125 of 2014, the transferee company has pleaded that it was incorporated on 16.05.2013, that its authorized share capital is Rs.1,00,000/- divided into 10,000 Equity Shares of Rs.10/- each and that the issued, subscribed and paid-up capital is Rs.1,00,000/- divided into 10,000 Equity shares of Rs.10/- each. That its main objects are to generate, accumulate, transmit, distribute, purchase, sell and supply electricity power or anyother energy from conventional/non conventional energy sources on a commercial basis and to construct, lay down, establish, operate and maintain power/energy generating stations, including buildings, structures, works, machineries, equipments, cables and to undertake or to carry on the business of managing, owing, controlling, erecting, commissioning, operating, running, designing or transferring to third persons, power plants and plants on shore/off-shore and plants based on, wind energy. That its Board of Directors in the meeting held on 15.11.2013 has approved the proposed scheme of arrangement by fixing 01.06.2013 as the appointed date.

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The transferor company has filed Company Application No.419 of 2014 to dispense with the meeting of the Equity shareholders, secured and unsecured creditors and to appoint Chairperson for convening the meeting of the Optionally Convertible Redeemable Preference Shareholders, Compulsory Convertible Cumulative Preference Shareholders and Subscribers to the shares of the shares of the Applicant Company for the purpose of considering the proposed scheme of amalgamation and this Court, by Order dated 19.03.2014, appointed Mr.N.Pramod,

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Advocate as Chairperson to hold the meetings of the shareholders of the Compulsory Convertible Cumulative Preference shareholders, Optionally Convertible Redeemable Preference shareholders and share subscribers of the transferor company and fixed the quorum as 6, 5 and 2 respectively. This Court further directed the applicant to cause publication of notices of the meetings in Business Standard (English) and Andhra Bhoomi (Telugu) of Hyderabad Editions as per the statutory provisions. Accordingly, the transferor company got published the notices of the meeting of the Optionally Convertible Redeemable Preference Shareholders, Compulsory Convertible Cumulative Preference Shareholders and Subscribers to the shares, in the said newspapers on 04-04-2014.

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The Chairperson, appointed to conduct meeting of the above mentioned Shareholders, submitted a report on 06-05-2014, stating that the Compulsory convertible Cumulative Preference shareholders, Optionally Convertible Redeemable Preference shareholders and Subscribers to Shares have unanimously approved the scheme.

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The transferee company has filed Company Application No.420 of 2014 to dispense with the requirement of holding the meeting of its equity shareholders and this Court by Order, dated 19.07.2014, allowed the same by dispensing with the requirement of holding of the meeting of equity shareholders. The transferee company further pleaded that it has no secured or unsecured creditors.

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In CP.No.124 of 2014, this Court on 18.06.2014, ordered

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notices to the Regional Director, South East Region, Ministry of Corporate Affairs, Hyderabad, and to the Official Liquidator, High Court of A.P., and in CP.No.125 of 2014 on 18.06.2014, this Court ordered notice to the Regional director only, besides publication of notices in Business Standard (English Daily) and Andhra Bhoomi (Telugu Daily) of Hyderabad editions. Learned counsel for the petitioner has filed copies of proof of publication in the newspapers and stated that he has not received any claims or objections to the proposed scheme.

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In pursuance of the notices issued, the Regional Director, South East Region, Ministry of Corporate Affairs and the Official Liquidator have filed their respective reports.

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The Official Liquidator filed report dated 12.08.2014 stating that except for the observations at para 3(c) of his report which is with regard Share application money, the affairs of the company appears to have not been conducted in a manner prejudicial to the interests of the members or to public interest.

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For the above said objection raised by the Official Liquidator at para-3(c) of his report, the transferee company submitted affidavit along with memo of undertaking dated 23.09.2014 vide USR No.3223/2014, stating that as per Clause 5.4 (a) of the Scheme, any and all liabilities, of the Transferor Company shall be transferred to and vest in the Transferee Company, from the Appointed Date i.e. 01.06.2013 and therefore in consonance with such aforementioned clause, the Transferee Company undertakes to assume the liabilities, if any, in relation to the share application money pending allotment of the Transferor Company amounting to Rs.65,23,252/- and thereon, allot necessary shares or return the

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entire share application money pending allotment to the respective subscriber of shares, or allot shares for part of the share allotment money pending allotment and return the remaining funds to the respective subscriber of shares, while complying with applicable laws and regulations in that regard on the instant scheme of Amalgamation.

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The Regional Director in his report dated 11.11.2014, stated that in pursuance to the General Circular No.1/2014, dated 15.01.2014 issued by the Ministry of Corporate Affairs, New Delhi, comments of the Income Tax Department were sought vide letter dated 10.07.2014 for submitting their comments/objections, if any, within 15 days. He further stated that the petitioner company has served the copy of petition/scheme on the concerned Assessing officer of the Income-Tax Department on 21.07.2014, but, no objections were received till date. The objections made by the Regional Direction for consideration of the Court and the replies given by the learned counsel for the petitioner Companies are as follows;

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a) The Regional Director made an observation stating that the Transferor Company is having huge amount of cash in hand i.e. Rs.15,10,715/- at the registered office/work place and the petitioner transferor company may justify keeping such huge cash in hand.

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For the above observation made by the Regional Director the learned counsel for the petitioner Companies replied that the Transferor Company is into the business of identifying and development of wind power and it requires huge labour. As such, it is maintaining cash amounting to Rs.15,10,715/- at the registered office to make wage payment to labour, transport charges at the project site.

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b) He also made another observation stating that as per the balance sheet of the transferor company as at 31.03.2013, an amount of Rs.65,23,252/- is lying towards share application money. Transferor company has either allot the shares or refund the said share application money before giving effect of the scheme if the scheme is approved by this Court.

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For the above observation made by the Regional Direction the learned counsel for the petitioner Companies replied that as per Clause 5.4 (a) of the Scheme any liabilities of the transferor company shall be transferred to and vest in the Transferee Company from the appointed date i.e. 01.06.2013. Therefore, in consonance with such aforementioned clause, the transferee company undertakes to assume the liabilities, if any, in relation to the share application money pending allotment of the Transferor Company amounting to Rs.65,23,252/- and there on allot necessary shares or return the entire share application money pending allotment to the respective subscribers of shares or allot shares for part of the share allotment money pending allotment and return the remaining funds to the respective subscribers of shares, while complying with applicable laws and regulations.

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c) He also stated that as per Clause-8 of part II of the Scheme the name of transferee company shall be changed to Ecoren Energy India Private Limited and that Transferee company has to follow the procedure laid down in the companies Act, 2013 before changing its name.

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With regard to the above said objection regarding change of name is concerned, learned counsel for the petitioner Companies cited judgment in Eye Foundation Limited v. Lasik Centre (India) P.Ltd.^[1] wherein it is held as follows;

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“It may be noted that as per clause 15 of the scheme, upon

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the scheme becoming effective, the name of the transferee company shall be changed to Mehala Machines India P.Ltd. Normally but for the scheme presented under section 391 of the companies Act to effect such a change in the name of a company, the procedure, under section 21 of the Companies Act has to be complied with. So too the provisions of section 44 of the Companies Act. However, in terms of the scheme passed by the requisite majority as laid down under section 391 of the Act complying with the procedure, laid down thereon, I do not find that there exists any necessity to have a repeated exercise of the same in terms of section 21 of the Act. It maybe noted that Chapter V is a complete code by itself on the subject of arrangement/compromise and reconstruction comprehensive enough to include a change in the name consequent on the amalgamation or arrangement. Similar view was taken by this court in CP.Nos.133 to 135 of 2006, dated August, 19, 2006, in the matter of K.P.R.Mill P. Ltd. Thus, the objection raised by the Regional Director is satisfactorily explained.”

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In view of the above decision, the objection of Regional Director cannot be sustained.

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It is stated that Amalgamation of the Transferor Company with the Transferee Company would result in the following benefits;

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i) The respective Boards of M/s.Ecoren Energy India Private Limited (Transferor Company) and M/s.Ecoren Renewables Private Limited (Transferee Company) believe that, toprovide better synergies in the business of wind energy farms, including pursuit of investment in wind farm assets and undertaking projects in a focused manner, both the above companies have decided to amalgamate their operations.

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ii) The proposed scheme of Amalgamation would strengthen transferee company’s position in the industry, in terms of the asset base. The amalgamated entity will have the ability to

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leverage and optimize on its large asset base and vast pool of human capital, which would facilitate enhancement of the shareholder value.

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iii) The scheme will further result in greater efficiency in cash management and easier access to cash flow generated by the combined businesses which can be deployed more efficiently to fund organic and inorganic growth opportunities, to further improve shareholder value.

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In view of above facts and circumstances and in view of the replies given by the learned counsel for the petitioner Companies to the objections raised by the learned Official Liquidator and Regional Director, I do not find any legally sustainable objection for not approving the proposed scheme of amalgamation. Accordingly, the proposed scheme of amalgamation is sanctioned with effect from the appointed date i.e., 01.06.2013. The petitioner/Transferor Company shall stand dissolved with the Transferee Company without going through the process of winding up. The petitioner in CP.No.125 of 2014 (Transferee Company) within thirty (30) days from the date of receipt of a copy of this order, cause a certified copy of the same to be delivered to the Registrar of Companies for the State of Telangana and the State of Andhra Pradesh at Hyderabad and take all other consequential steps in pursuance of the approval of the scheme of amalgamation.

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Accordingly, Company Petitions are allowed.

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The petitioner company in CP.No.124 of 2014 shall also pay a sum of Rs.5,000/- each to the learned Assistant Solicitor General appearing for the Regional Director and to Sri M.Anil Kumar, learned counsel for the Official Liquidator each; and the petitioner in Company Petition No.125 of 2014 is to pay Rs.5,000/-

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to the learned Assistant Solicitor General towards fee in these petitions.

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____________________________ A.RAJASHEKER REDDY, J 06.11.2014 tk

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[1] (2013) 113 CLA 93(Mad.) = (2013) 176 CompCas 345(Mad)

M/s. Ecoren Energy India Private Limited, v. -

Case brief

What is this about?

What did the court decide?

M/s. Ecoren Energy India Private Limited, v. -

Case brief

What is this about?

What did the court decide?

What the court decided

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