Allowed

M/s. Axis Rail India Limited v. -

Telangana HC30 Oct 2014CP/143/2014

Case brief

AI extract

What is this about?

The court sanctioned the scheme of amalgamation for two railway infrastructure companies upon finding no objections from the Regional Director or Official Liquidator. The court directed adherence to SEBI and BSE conditions and noted the shifting of the appointed date due to account filing requirements.

What did the court decide?

Sanction of the scheme of amalgamation allowed with effect from 01.04.2014, subject to SEBI and BSE conditions.

M/s. Axis Rail India Limited Vs - — Company and Corporate | Telangana HC (2014)

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HON’BLE SRI JUSTICE A. RAJASHEKER REDDY COMPANY PETITION NOs.142 and 143 of 2014

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COMMON ORDER:

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C.P.No.142 of 2014 is filed by M/s.K.V.R. Rail Infra Projects Private Limited (transferor company) and C.P.143 of 2014 is filed by M/s. Axis Rail India Limited (transferee company), for sanction of this Court to the proposed scheme of amalgamation of transferor company with the transferee company.

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In C.P.No.142 of 2014, the transferor company has pleaded that it was incorporated on 15.09.1998, that its authorized share capital is Rs.15,00,00,000/- divided into 1,50,00,000 equity shares of Rs.10/each and that the entire share capital has been issued, subscribed and fully paid up. That its main objects are to carry on the business and to survey works for laying of New Railway Tracks and to render project management consultancy services by preparing detailed project reports, tenders, supervise implementation of the project, to provide turnkey jobs for laying of railway sidings for Government, Public Sector and private industries etc. That its Board of Directors , by resolution dated 07.04.2014, has approved the proposed scheme of amalgamation, by fixing 01.04.2012 as appointed date.

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It has further pleaded that it has seven equity shareholders, that they have submitted their consent affidavits for the proposed scheme of amalgamation in Company Application 621 of 2014, wherein this Court has dispensed with the requirement of holding their meeting vide its order dated 28.04.2014, and appointed Sri R. Radha Krishna Reddy, Advocate as the Chairperson for convening the meeting of its unsecured creditors and fixed the quoram as 5 (five). This Court further directed the notices for the meeting be published in two daily newspapers; namely, Business Standard(English) and Andhra Bhoomi (Telugu) of Hyderabad Editions as per the statutory provisions.

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Accordingly, the transferor company got published the notices of the meeting of unsecured creditors in the said newspapers on 14.07.2014. The Chairperson appointed to conduct meeting for unsecured creditors submitted a report on 12.06.2014 wherein he has stated that meeting of the unsecured creditors of the transferee company was attended by six unsecured creditors and that all the unsecured creditors who attended the meeting voted in favour of the proposed scheme of arrangement and amalgamation.

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It is the pleaded case of the transferee company, petitioner in C.P.No.143 of 2014, that it was incorporated on 30.08.1983, that its authorized share capital as on is Rs.10,10,00,000/- divided into 1,09,00,000 equity shares of Rs.10/- each and that the entire share capital has been issued, subscribed and fully paid up. That its main objects are to carry on the business and to survey works for laying of New Railway Tracks and to render project management consultancy services by preparing detailed project reports, tenders, supervise implementation of the project, to provide turnkey jobs for laying of railway sidings for Government, Public Sector and private industries etc. That its Board of Directors, by resolution dated 11.03.2013 has approved the proposed scheme of amalgamation, by fixing 01.04.2012 as the appointed date.

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The transferee company has filed Company Application No.622 of 2014 and this Court by order dated 28.04.2014 appointed Sri J.Basava Raju, Advocate as the Chairperson for convening the meeting of its equity shareholders and fixed the quoram as 20 (twenty). This Court further directed the notices for the meeting be published in two daily newspapers; namely 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 equity shareholders in the said newspapers on 14.07.2014. It is further stated that its lone unsecured creditor has

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given his consent letter to the proposed scheme of amalgamation. The Chairperson appointed to conduct meeting for equity shareholders submitted a report on 13.06.2014, wherein he has stated that meeting of the equity shareholders was attended by 1 shareholder in person and 20 shareholders through proxies and equity shareholders, who attended the meeting voted in favour of the proposed scheme of amalgamation.

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In both these petitions, this Court on 07.07.2014 directed the petitioners to issue notices regarding admission of Company Petitions to the Regional Director, South Eastern Region, Ministry of Corporate Affairs, Hyderabad, besides publication of notices in Business Standard, Indian Express (English) and Andhra Bhoomi (Telugu) of Hyderabad Editions.

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Learned counsel for the petitioners 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 of amalgamation.

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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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Learned counsel for the Official Liquidator stated that the Official Liquidator filed a report stating that basing on the information made available by the petitioner company, he is of the opinion that 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 and there is no objection for approval of the scheme.

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The Regional Director, in his common report dated 26.09.2014, 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 under Section 391 and 394 of Companies Act, 1956, but no comments/objections were received from the Income tax Department. Therefore, vide letter dated 06.08.2014, petitioner companies were requested to serve copy of

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petition along with scheme on the concerned Assessing Officer of the Income Tax Department along with PAN details. But the petitioner companies have not served the copy of petition along with the scheme to the concerned Assessing Officer of the Income Tax Department along with PAN details.

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In respect of the same, the learned counsel for the petitioner filed copy of the notice sent to the Assessing Officer of the Income Tax Department along with PAN details.

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The Regional Director vide letter dated 06.08.2014 requested the petitioner companies to submit copies of statements sent to the creditors or shareholders of petitioner/transferee company and petitioner/transferor company under Section 393(1) of the Companies Act, 1956. But the petitioner companies instead of sending those statements have only sent copies of orders of this Court directing to convene the meetings of the unsecured creditors/shareholders.

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In respect of the same, learned counsel for the petitioner filed a memo stating that in pursuance to the order passed by this Court, the Chairperson was appointed and he issued notices under Section 393(1) of the Companies Act, 1956 to all the unsecured creditors and filed his report on 16.06.2014 and said notices are filed before this Court.

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The Regional Director also submits that Bombay Stock Exchange (BSE) had addressed a letter dated 19.12.2013 to the transferee company where in it has made the following observations.: “The exchange has noted the conformation given by the company stating that the scheme does not in any way violate or override or circumscribe the provisions of SEBI act, 1992, the Securities Contracts (Regulations) Act, 1956, the Companies Act, 1956, the rules, regulations and guidelines made under these Acts, and the provisions of the Listing Agreement or the requirements of BSE limited”

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The SEBI vide its letter dated 18.12.2013 has given the following

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comments on the draft scheme of arrangement.

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(a) Company to ensure that as undertaken by the existing promoter on behalf of the all the other proposed promoters (as per the draft scheme), 75% of the total promote shareholding post the scheme of arrangement shall be locked in for a period of one year from the date of the listing of the shares.

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(b) Company to ensure that the objections raised by the Delhi Stock Exchange are suitably rectified before filling the scheme with the High Court.

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(c) Company shall duly comply with various provisions of the aforesaid SEBI circular”

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The learned counsel for the petitioner stated that the transferee company will abide by the circular issued by SEBI dated 04.02.2013 and 21.05.2013.

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The Regional Director in his report further stated that the petitioner companies involved in the scheme of amalgamation are regular in filing the statutory returns and no complaints, no investigations and no inspection are pending against the transferee company. It is also stated that Registrar of Companies, Hyderabad has observed that NOC’s from secured creditors of petitioner companies and compliance of SEBI Circular dated 21.05.2013 may be insisted for. As per Registrar of Companies record, the three charges created by transferor company are not yet satisfied i.e, Axis Bank Limited Rs.11,50,00,000/created on 10.10.2007, Axis Bank Limited Rs.6,06,392/- created on 26.02.2013 and State Bank of India Rs.33,00,00,000/- created on 20.03.2013.

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In respect of the same, learned counsel for the petitioner submits that NOC’s were obtained from the secured creditors and the same were also filed and the scheme may be approved subject to SEBI circular dated 21.05.2013. He further submits that no objection is taken from Axis Bank as far as creation of charge is concerned.

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The Regional Director in his report also states that as per clause 1.3 of part I of the Scheme appointed date is 01.04.2012. the petitioner companies have already filed audited and adopted accounts for the financial year ended 31.03.2013 and accounts for the financial year ending 31.03.2014 are due by October, 2014. therefore the appointed date may be shifted to 01.04.2014 to avoid any revision of audited and adopted accounts and tax returns etc.

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For that the learned counsel for the petitioner submits that the companies are in the scheme of amalgamation and the same is pending and that the companies have to still file audited accounts. With regard to same, he mentioned the Letter No.2/17/64-PR, dated 29.01.1964 which states that even though the companies are in amalgamation, the companies have to file final accounts for due compliance with the law.

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It is also stated that No Objections from Bombay Stock Exchange and Ludhiana Stock Exchange are also filed and the amalgamation of the companies would provide better resources for business growth and expansion and shall provide a running and profitable business to the transferee company. Further it would result in reduction of overheads, administrative, efficiency and optimum utilization of various resources. The combined entity will enhance its financial and growth prospects for the people and organization connected therewith, and will be in public interest. The amalgamation will be conducive for better and more efficient and economical control over the business and financial conduct of the companies.

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In view of the above, I do not see any ground for rejecting the approval for the scheme of amalgamation. Accordingly, the scheme of amalgamation is sanctioned with effect from appointed dated i.e.,01.04.2012 but however, the transferee company shall comply with circular of SEBI dated 21.05.2013 and also to the conditions imposed by the BSE in its letter dated 19.12.2013. The petitioner in C.P.No.142 of 2014 is ordered to be dissolved without going through the process of

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winding up. The petitioner in C.P.No.143 of 2014 shall, within thirty days from the date of receipt 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. The company petitions are accordingly allowed.

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The petitioner companies in both petitions shall pay a sum of Rs.5,000/- each to the learned Assistant Solicitor General appearing for Regional Director and petitioner in C.P.No.142 of 2014 shall pay Rs.5,000/to Sri M.Anil Kumar, learned counsel for Official Liquidator.

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_____________________________ A. RAJASHEKER REDDY, J

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Date: 30-10-2014 dv

M/s. Axis Rail India Limited v. -

Case brief

What is this about?

What did the court decide?

M/s. Axis Rail India Limited v. -

Case brief

What is this about?

What did the court decide?

What the court decided

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