SAFAL INFRA REALTY PVT LTD - Petitioner(s) Versus .
- Respondent(s) ========================================================= Appearance :
MR SUDHIR M MEHTA for Petitioner(s) : 1,MS SHAILEE S MEHTA for Petitioner(s) : 1, MR PS CHAMPANERI for Respondent(s) : 1 in COMPANY PETITION NOS.
OF 2012 TO 8 OF 2012, MR Y.V. VAGHELA in COMPANY PETITION NOS. 9 OF 2012 & 10 OF 2012, MR M. IQBAL A. SHAIKH in COMPANY PETITION NOS. 11 OF 2012 & 12 OF 2012.
========================================================= CORAM :
HONOURABLE MR.JUSTICE R.M.CHHAYA Date : 10/05/2012 ORAL COMMON ORDER
1. These are the petitions filed by the seven petitioner companies for sanction of the Scheme of Arrangement embodied in the Scheme of Amalgamation of Heemanshu Horns Private Limited, Sonu Cars Private Limited, Raj Kamal Motor (India) Private Limited, Radheshyam Infracon Private Limited, Jewel Palladio Hotel Private Limited and Aspect Developers Private Limited. [hereinafter referred to as "the Transferor Companies"] with Safal Infra-Realty Private Limited [hereinafter referred to as "the Transferee Company"].
2. The petitioner of Company Petition No. 6/2012 is Safal Infra-Realty Private Limited.
It was originally incorporated on 31st December, 2009, as a Private Limited company in the office of the Registrar of Companies, Gujarat under the provisions of the Companies Act, 1956. The Registered Office of the Transferee Company is currently situated at 11th Floor, Safal Profitaire, Corporate Road, Opp: Auda Garden, Prahladnagar, Ahmedabad - 380015 in the State of Gujarat.
The shares of the Petitioner Company are not listed on any Stock Exchange and is therefore an unlisted company.
3. The petitioner of Company Petition No. 7/2012 is Heemanshu Horns Private Limited. The Petitioner Company was originally incorporated on 22nd May, 1992, in the name and style of Heemanshu Horns Private Limited as a Private Limited Company in the office of the Registrar of Companies, Gujarat under the provisions of the Companies Act, 1956. The Registered Office of the Transferor Company is currently situated at 211, Loha Bhavan, 2nd Floor, Nr. Gujarat High Court, Navrangpura, Ahmedabad - 380009. The share of the Transferor Company are not listed on any Stock Exchange and is an unlisted company.
4. The petitioner of Company Petition No. 8/2012 is Sonu Cars Private Limited. The Petitioner Company was originally incorporated on 12th December, 2003, in the name and style of Sonu Cars Private Limited as a Private Limited Company in the office of the Registrar of Companies, Gujarat under the provisions of the Companies Act, 1956. The Registered Office of the Transferor Company is currently situated at 216/217, Loha Bhavan, 2nd Floor, Nr. Old High Court, Navrangpura, Ahmedabad - 380009. The share of the Transferor Company are not listed on any Stock Exchange and is an unlisted company.
5. The petitioner of Company Petition No. 9/2012 is Raj Kamal Motor (India) Private Limited. The Petitioner Company was originally incorporated on 14th July, 2003, in the name and style of Raj Kamal Motor (India) Private Limited as a Private Limited Company in the office of the Registrar of Companies, Gujarat under the provisions of the Companies Act, 1956. The Registered Office of the Transferor Company is currently situated at 211, 2nd Floor, Loha Bhavan, Near Old High Court, Navrangpura, Ahmedabad - 380009. The share of the Transferor Company are not listed on any Stock Exchange and is an unlisted company.
6. The petitioner of Company Petition No. 10/2012 is Radheshyam Infracon Private Limited. The Petitioner Company was originally incorporated on 20th May, 2010, in the name and style of Radheshyam Infracon Private Limited as a Private Limited Company in the office of the Registrar of Companies, Gujarat under the provisions of the Companies Act, 1956. The Registered Office of the Transferor Company is currently situated at 211, Loha Bhavan, 2nd Floor, Nr. Gujarat High Court, Navrangpura, Ahmedabad - 380009. The share of the Transferor Company are not listed on any Stock Exchange and is an unlisted company.
7. The petitioner of Company Petition No. 11/2012 is Jewel Palladio Hotel Private Limited. The Petitioner Company was originally incorporated on 22nd December, 2004, in the name and style of Jewel Palladio Hotel Private Limited as a Private Limited Company in the office of the Registrar of Companies, Gujarat under the provisions of the Companies Act, 1956. The Registered Office of the Transferor Company is currently situated at 211, Loha Bhavan, 2nd Floor, Nr. Gujarat High Court, Navrangpura, Ahmedabad - 380009. The share of the Transferor Company are not listed on any Stock Exchange and is an unlisted company.
8. The petitioner of Company Petition No. 12/2012 is Aspect Developers Private Limited. The Petitioner Company was originally incorporated on 14th December, 1995 as a Private Limited Company in the office of the Registrar of Companies, Gujarat under the provisions of the Companies Act, 1956. The Registered Office of the Transferor Company is currently situated at 211, Loha Bhavan, 2nd Floor, Nr. Gujarat High Court, Navrangpura, Ahmedabad - 380 009. The shares of the Transferor Company are not listed on any Stock Exchange and is therefore an unlisted company.
9. Circumstances and/or reasons and/or grounds have necessitated and/or justified the Scheme and the advantages thereof are inter-alia as under:-
It is appropriate to merge the six companies to achieve a sustained growth, development and for the purpose of the future growth strategies. Accordingly it has been proposed to merge the seven companies Registered in the state of Gujarat. The management envisages the following reasons/advantages of Merger:
It is considered advantageous to amalgamate the Transferor Companies with the Transferee Company. The amalgamation would result in optimum utilization of management and other resources and would reduce the administrative costs. The resources of the Companies will be conveniently merged and pooled together leading to a more effective and centralized management and reduction in administrative expenses and overheads which are presently being multiplicated because of separate entities. The amalgamation will result in the larger pool of financial and other resources, which will enable the Amalgamated Company to broaden its asset base and in long run improve financial gearing. Besides that, amalgamation would reflect the new economic value of the businesses. On account of amalgamation, operations would be streamlined through new management initiatives. After amalgamation, merged entity could install and implement adequate and suitable measure for corporate governance.
10. The petitioner of Company Petition No. 6,7,8,9,10,11 & 12/2012 accordingly i.e. Safal Infra-Realty Private Limited ["Transferee Company"], Heemanshu Horns Private Limited, Sonu Cars Private Limited, Raj Kamal Motor (India) Private Limited, Radheshyam Infracon Private Limited, Jewel Palladio Hotel Private Limited and Aspect Developers Private Limited.
["the Transferor Companies"] had filed an Application in this Court being Company Application No. 551, 550, 549, 548, 547, 546 & 545 of 2011 accordingly was preferred by the Petitioner Companies. This Court vide order dated 15/12/2011 has dispensed with the meetings of Equity Shareholders and Unsecured Creditors of the Petitioner Companies in relation to the proposed scheme of amalgamation as required under Section 391(2) of the Companies Act is not necessary to be held.
11. The petitioners thereafter filed Company Petitions namely Company Petition Nos. 6,7,8,9,10,11 & 12/2012 accordingly seeking sanction of the Scheme of Arrangement in the nature of amalgamation. This Court vide its order dated 31.1.2012 admitted all the seven petitions and directed issuance of notice to the Regional Director, in case of all the seven companies and notice to the Official Liquidator in case of the Transferor Companies. This Court also directed the publication of notice of petition in 'Indian Express', English daily in Ahmedabad edition and 'Divya Bhaskar', Gujarati daily in Ahmedabad Edition.
12. Pursuant to the orders dated 31.1.2012, the petitioners have published a notice of admission in 'Indian Express', English daily in Ahmedabad edition and 'Divya Bhaskar', Gujarati daily in Ahmedabad edition on 10.2.2012, 11.2.2012, 12.2.2012, 13.2.2012 & 14.2.2012 accordingly. Similarly notice of hearing of petitions was served upon the Official Liquidator and the Regional Director on 13.2.2012. Mr. Paresh R. Patel, the Director of the Company filed an Affidavit of service indicating the service of notice published in the newspapers and also the notice of hearing of the petition served upon the Regional Director as well as the Official Liquidator.
13. Pursuant to the advertisement published in the newspapers as per orders in company application, no objections have been received.
14. In response to the notice to the Official Liquidator, in respect of the Transferor Companies, Mr. A K Chaturvedi, Official Liquidator has filed reports dated 26.4.2012, 3.5.2012 & 7.5.2012 in Company Petition No. 7,8,9,10,11 & 12/2012 and enclosing therewith the report / letter dated 30.03.2012 submitted by the Chartered Accountants. A perusal of this report discloses observations made by Official Liquidator based on the report of the Chartered Accountant in the Company Petition No. 7,8,9,10,11 & 12/2012. It is submitted that the copy of the observations from the Official Liquidator [para 14,15,16 & 17] has been received narrating observations in case of Heemanshu Horns Private Limited, Sonu Cars Private Limited, Raj Kamal Motor (India) Private Limited, Radheshyam Infracon Private Limited, Jewel Palladio Hotel Private Limited and Aspect Developers Private Limited.
15. Mr. Sudhir Mehta, Learned Counsel appearing for the petitioner companies in support of his submissions, while dealing with the observations made by the official liquidator as well as the Chartered Accountants, has submitted that with reference to para 14,15 & 16, It is stated that the discretion to fix the premium and to allot shares on premium is within the domain of the Board of Directors of the company. There is no prohibition under the Act restraining a company for issuing shares on premium. The Scheme of Amalgamation is proposed by the shareholders and these actions on the part of the Board of Directors of the Company are in the interest of its shareholders. It is the discretion of the company/Board to fix premium and it is purely commercial decision whether to issue shares at a premium or at par. In case of issue of shares at a premium, there is no need to increase authorized capital of the company. The company has followed provisions of the Act in this regard.
16. It is further submitted that the Companies now proposing to engage in to the Business of Infrastructure and Real Estate Development by acquiring of land, land development, plotting of lands, or even by joining in any existing infrastructure or real estate development project such as any existing scheme of construction of Residential Flats, Towers, Colonies, Bunglows, Raw Houses, Commercial Complexes, Shopping Complex, Malls, Office Complexes etc. by joining with the existing developers as Finance Partner by making investment in the existing capital of any Firm or Company, Construction Partner by joining in construction activities of some part of the buildings, or even as Marketing Partner by acquiring marketing rights of any particular developed buildings etc or by any other mode. This business, by any means and looking to the future development and globalization of the country appears to be promising and fast developing. In this sector, the profit margin is very high and by joining hands with the existing project developers the company will have good opportunities to earn good return in short time as almost all the infrastructure projects are of long duration. Considering the future growth prospects and bright future of this industry as well the company's plans to venture in to this industry by joining with various project developers, there are possibilities of earning handsome return in short time of investments. Further due to issue and allotment of shares at Premium the overall long term net worth of the company and the financial statements become sound which will enable it to undertake big size infrastructure projects independently or to bid for such projects by way of tenders. In view of the above the Companies had issued and allotted shares at premium. The Shareholders had made investment in shares of the companies considering above facts. Accordingly it was a well informed investment decision by every investors/ shareholders to make investment in shares at premium. Further while approving the proposed scheme of Amalgamation, all the shareholders of the companies who were allotted shares at premium have also given their written consent to the proposed scheme of amalgamation. Accordingly, it is well informed investment decision and also within the well knowledge and information of all the shareholders of the Companies.
Therefore, the observation does not survive.
17. Mr. Sudhir Mehta, the Learned Counsel appearing for the petitioner companies in support of his submissions, has submitted that with reference to para 17, it is stated that petitioner companies will preserve its books of accounts, papers and records and not to dispose of the records without prior permission of the Central Government under section 396A of the Companies Act, 1956 and Petitioner Companies [Heemanshu Horns Private Limited, Sonu Cars Private Limited, Raj Kamal Motor (India) Private Limited, Radheshyam Infracon Private Limited, Jewel Paladio Hotel Private Limited and Aspect Developers Private Limited.] will pay such cost of Rs. 7,500/- each or as may be considered appropriate by this Court to the office of Official Liquidator.
18. In response to the notice to the Regional Director, Western Region, Department of Company Affairs, Mr. P. S. Champaneri, the Learned Assistant Solicitor General of India and Mr.Y.V.Vaghela and Mr. M.Iqbal A. Shaikh, learned Central Government Standing Counsel have appeared in respective petitions and filed an affidavit dated 30.3.2012 of Mr. Kashmir Lal Kamboj, the Regional Director. A perusal of this Affidavit discloses that there are four observations made by the office of the Regional Director.
a. The observation No. 1 is as under :
That, Clause No. 8.4 of the scheme inter alia provides that upon the scheme becoming finally effective, the Authorized Share Capital of all the Transferor companies would be merged with the Authorized Shares capital of the Transferee Company without any further act and deed and without the requirement of payment of any Roc fees/stamp duty/registration charges as, such charges have already been paid in past by the respective companies. The Deponent however, respectfully submits that, the scheme does not provide for automatic amendment in the capital clause of the Memorandum of Association and the Articles of Association of the Transferee company. The Deponent further respectfully submits that Memorandum of Association and the Articles of Association of a company can be amended only after complying with the provisions of section 17, 31, r.w. section 192 of the Companies Act, 1956 and on payment of requisite filing fees required to be paid on the prescribed forms to be filed with the Registrar of Companies. This Court may therefore, be pleased to direct the petitioner Transferee company to amend the capital clause of the Memorandum of Association and the Articles of Association, as the case may be, after complying with the aforesaid provisions of the Companies Act, 1956 and on payment of requisite filing fees thereon.
It is submitted that petitioner Transferee company will amend the Memorandum of Association and the Articles of Association after complying with the provisions of section 17, 31, r.w. section 192 of the Companies Act, 1956 and on payment of requisite filing fees required to be paid on the prescribed forms to be filed with the Registrar of Companies. It is further submitted that petitioner Transferee company will amend the capital clause of the Memorandum of association and the Articles of Association, as the case may be, after complying with the aforesaid provisions of the Companies Act, 1956 and on payment of requisite filing fees thereon.
Such an amendment shall be carried out within a period of four weeks from the date of the receipt of this order.
Therefore, the observation does not survive.
b. The observation No. 2 is as under :
It is submitted that the accounting entries/adjustments to be made in the books of accounts of the petitioner Transferee company are stated at Clause No. 10 of the Scheme. It is further submitted that the accounting entries/adjustments, as a consequence of the scheme of Amalgamation, are to be made as per Accounting Standard-14 notified by the Central Government u/s 211(3A)of the Companies Act, 1956.
The Deponent respectfully submits that clause no. 10.2, provides as under : "Upon the Scheme coming into effect, the excess of the value of the net assets of the Transferor Company as appearing in the books of accounts of the Transferor Company over the paid-up value of the shares to be issued and allotted pursuant to the terms of Clause 8 above shall be credited in the books of the Transferee Company to a separate account to be named and styled as "General Reserve Account". The said account shall be considered as free reserve and shall form part of the Net Worth of the Transferee Company for all purposes."
The Deponent respectfully submits that, the aforesaid clause of the scheme inter alia seeks sanction of this Court, through this scheme, for giving effect of and adjustment of the amalgamation in the General reserve indirectly treating the "Amalgamation Reserve Account" as free/general reserve, which is not in accordance with the requirements of Accounting Standard-14 [AS-14] notified by the Central Government under section 211[3A]/[3C] of the Companies Act, 1956.
Further, the subsequent sub-clause No. 10.7 of the said clause, indirectly empowers the Board of Directors of the Transferee company to account any of the balances in its books of accounts, in any manner as it may deem fit, and indirectly enables the Transferee company to escape from the exact compliance of requirements of AS-14. This Court may therefore, be pleased to direct the petitioner Transferee Company to comply with the requirements of AS - 14 r.w. Section 211(3A) of the Companies Act, 1956 strictly. "
It is submitted that petitioner Transferee Company will make adjustments in their Books of accounts as per the Accounting Standard - 14 notified by the Central Government under Section 211(3A) of the Companies Act, 1956.
Therefore, the observation does not survive.
c. The observation No. 3 is as under:
"That the Registrar of Companies, Gujarat has submitted his report vide his letter No. ROC/[Guj]/Safal & others/(K)/2011-12/2449 dated 28-3-2012 and as per the said report, no complaint and/or representation has been received against the petitioner companies including any complaint/representation in respect of the proposed Scheme of amalgamation."
The above said observation is formal observation.
d.
The observation No. 4 is as under :
"That, the Deponent further submits that, there appears no other objection to the proposed scheme of amalgamation of Transferor companies namely M/s Aspect developers Private Limited, M/s Jewel Palladio Hotel Private Limited, M/s Radheshyam Infracon Private Limited, M/s Raj Kamal Motor [India] Private Limited, M/s Sonu Cards Private Limited and M/s Heemanshu Horns Private Limited with the Transferee company namely safal Infra-Realty Private Limited and, the scheme does not, prima facie appear to be prejudicial to the interest of the shareholders of the petitioner Companies and the public at large. "
The above said observation is formal observation.
19. In view of the Report of the Regional Director and Official Liquidator, the scheme is not prejudicial to the interest of shareholders and public and the petitioner companies have not been conducted in a manner prejudicial to the interest of its members or the public interest.
20. It is further submitted that section 391 of the Companies Act is a complete code in itself. A Scheme of arrangement/amalgamation falls squarely within the four corners of the Section. The scheme of arrangement / amalgamation can be sanctioned even if it involves doing acts for which the procedure is specified in other Sections of the Act.
21. Having heard Mr. Sudhir Mehta, the Learned Counsel appearing for the petitioner companies and Mr. P. S. Champaneri, the Learned Assistant Solicitor General of India and Mr. Y.V.Vaghela and Mr. M.Iqbal A. Shaikh, learned Central Government Standing Counsel in respective petitions and having considered the observations made by the Regional Director as well as the reply affidavit filed on behalf of the petitioner companies, the Court is of the view that none of these observations have any bearing in the eye of law.
22. Considering the entire facts and circumstances of the case, the Court is of the view that the Scheme of Arrangement as proposed is in the interest of the companies and they are duly approved by the shareholders and all concerned. No one has raised any objection. It is also not contrary to the public interest. In view of the Report of the Regional Director and Official Liquidator, the scheme is not prejudicial to the interest of shareholders and public and the petitioner companies have not been conducted in a manner prejudicial to the interest of its members or the public interest. Hence prayers made in the respective Company Petitions are hereby granted.
23. The petitions are disposed of accordingly. So far as cost to be paid to learned Assistant Solicitor General of India and the Central Government Standing Counsel is concerned, the same is quantified at an amount of Rs.10,000/= (Rupees Ten Thousand Only) per petition. The same may be paid to Mr. P. S. Champaneri, the Learned Assistant Solicitor General of India and Mr.Y.V. Vaghela and Mr. M. Iqbal A. Shaikh, learned Central Government Standing Counsel appearing in respective petitions.
So far as cost to be paid to the Official Liquidator is concerned, the same is quantified at an amount of Rs.7,500/= each (Rupees Seven Thousand Five Hundred Only) for transferor companies.
Sd/-
(R.M. Chhaya, J.) M.M.BHATT Top