U.K. Paints (India) Private Limited v. Wazft Estates Private Limited & Ors.

1. This second motion joint Petition has been filed under Sections 391 (2) & 394 of the companies Act, 1956 seeking sanction of the Composite-scheme of Arrangement between U.K. Paints (India) Private Limited (Transferor Company), Wazft Estates Private Limited (Transferee Company No. 1) and V.G. Properties Private Limited (Transferee Company No. 2). oh 2011:DHC:7145 \ z. The registered offices of the Transferor and Transferee Companies are situated at New Delhi, within the jurisdiction of this Court.

3. Details with regard to the date of incorporation of the Transferor and Transferee Companies, their authorized, issued, subscribed and paid up capital have been given in the Petition.

4. Copies of the Memorandum and Articles of Association as well as the latest audited Annual Accounts for the year ended 31't March, 2010 of the Transferor and Transferee Companies have also been enclosed with the Petition.

5. Copies of the Resolutions passed by the Board of Directors of the Transferor and Transferee Companies approving the Scheme of Amalgamation have also been placed on record.

6. It has been submitted that no proceeding under Sections 235 to 251 of the Companies Act, 1956 is pending against the Transferor and Transferee Companies.

7. So far as the share exchange ratio for amalgamation is concerned, the Scheme provides that, upon the Scheme finally coming into effect, the shares shall be issued in the following manner: Consideration of the demerger of the Real Estate Undertaking of the demerger of the neh nitotf tJndertaking in Resulting I r.,1,, ', (1 -I- ---- ^ "(Ipon the coming into ffict Vf the Scheme and in had earlier filed CA (M) No. 156 of 2010 Company I pursuant to and in acc'ordance with this Scheme, Resulting Company I shall without qny further act or deed and without any further payment, issub and allot equity shares (hereinafte, ilro,u\urria b as "Ng, Equity Shares") at par and on a proportionate basis, to each member of the Demerged Company whose name is recorded iithe register of members of the Demerged Company as holding'?quity share on the Record date, in the ratio of 5.9855:l t.d, 5.9855 equity shares of Resulting Company I to be issued for every I equity share of the Demerged Company, held by suc(t member (Jpon the coming into ffict of the il|ru*" qnd in consideration of the demerger-of the ieal Estate rJrydertaking of the demerger of the Hotel (Jndertaking in Resulnfr.S Company 2 pursuant to and in accordance with this Schefoe, Resulting Company 2 shall without any further act or dedd and without any further payment, issue and allot equity lshares (hereinafter also referred to as "New Equity ShQres") at par and on a proportionate basis, to each mdmber of the Demerged Company whose nan'te is recorded int,the register of members of the Demerged Company as holding qquity share on the Record date, in the ratio of 9. j290;1 i."i 9.3290 equity shares of Resulting Company 2 to be issued /pr every I equity share of the Demerged Company, held by suclp member"

8. The Petitioner Companies seeking directions of this Court for disperisation of meetings of the of the Transferor I and Transferee and the Transferee and the Secured "rfon*, Equity Shareholder Company and the Company No. 2. I Company No. 1 and 2 had also sought pirections for convening a I meeting of the Unsecured Creditors. Thfs Court vide order dated I September 30, 2010, allowed the prayer {f tne Transferor Company I and the Transferee Company No' 1 and firansferee Company No' 2 I and dispensed with the meeting of the Epuity Shareholder and the I Secured Creditors of the Transferor Comqany, Transferee Company I No. 1 and Transferee Company No' 2' B|' the said order this Court I also directed that the meeting of the Ul,rsecured Creditors of the I Transferor Company, Transferee ComnalV No. 1 and Transferee I Company No. 2 be held on November 1, 2q10. It may be noted that by I order dated October 2t,20IO the date of th{ meeting of the Unsecured I Creditors of the Transferor Company, Trurrlf.ree Company No. 1 and J'l Transferee Company No. 2 was changed to pecembet 16,2010. I I In terms of the orders dated Septembet ?0, 2010 and October 21, I 2OI0 the meeting of the Unsecured Crgditors of the Transferor I Company, Transferee Company No. 1 and fransferee Company No. 2 I was convened on December 16, 2010 it 19 DDA Commercial b 9. Complex, Kailash Colony Extension, N.i" Delhi-110048 and the reports of the Chairpersons of the Trans Company, Transferee Company No.1 and Transferee Company Ng. 2 have also been placed I I I on record. The result has also been tabulat[O and the same is placed I on record as Annexure M to the Petition. I

10. The Transferor Company, Transferee Comfany No. 1 and Transferee I Company No. 2 thereafter filed the nreselh Petition seeking sanction I of the composite Scheme of Arrangement. lVide order dated February I 8, 20II, notice in the Petition was direpted to be issued to'the I Regional Director, Q.trorthern Region), MiriistV of Corporate Affairs I and Mr. K.S. Pradhan, deputy Registrar o[ Comnanies accepted the I notice on behalf of the Regional Director $orthern Region). In terms I of the provisions of Rule 80 of the Comflanies (Court) Rules 1959, I citations were also directed to be published lin The Statelman (English I Edition) and Jansatta (Hindi Edition). fi.fnaavit of Service and I Publication has been filed by the Transftror Company, Transferee Company No. 1 and Transferee Company I.Io. 2 showing compliance regarding service of the Petition on the ional Director ( Northern Region), and also regarding publication o{ citations in the aforesaid newspapers on February 22, 2011 and e 15, 20IL respectively. o Jt { Copies of the newspaper cutttngs, ln filed his affidavit dated April 6,2017 wherein he has stated that: created by any of the Petitioner Companies, therefore, no charge is required to be transferred" "4.[1] It is submitted that the incredse in Authorized Share Capital and Memorandum and Article of Association of a -l Cimpany can be changed/altered bnly after following the procedure prescribed under the relevant provisions of the companies Act, 1956. It is therefore, submitted that this aspect may be kindty be considered by this Hon'ble Court and Petition company may be asked to follow ip" pro"udure prescribed under the relevant provisions of the,Companies Act, 1956 for increase in Authorized Share lCapital as well as c h ang e d/al t er ati o n in Memor an dum of A s s o c i at i on.

5. That the Deponent further craves lJave to submit that all the Petition Tranifero, & Trorsferee Cokpanies vide letter-dated 15.03.2011 has confirmed that "Sir,tce, there zs no charge original, containing the I I publications have been filed along with the Affidavit of Service. I I ll.Pursuant to the notices issued, by letter date'd February 23,2011 the I Regional Director (Northern Region) sought information from the I Transferor Company, Transferee Company No.l and Transferee I Company No. 2. Copy of which letter is also placed on record- The I I Transferor Company by its letter dated March 15,2011 had furnished I all necessary information to the Regional Director, copy of the letter I dated March 15, 20II is also placed oti record. Based on the I information received, the Regional Directol Q'{orthern Region) has.l I

6. That it is submitted that the Hon'ble Court may kindly consider the submtssions made in Para 4.I & 5 herein above and decide the case on its merits." t[2].Inresponse to the objection raised by the Regional Director (lrTorthern Region) in Paragraph 4.[1] of the affidavit dated April 6, 2011, the Transferor Company, Transferee Company No. 1 and Transferee Company No. 2 has submitted that a scheme of arrangement as per Sections 391 to 394 represents one window anangement and all issues relating to the anangement can be approved by the Company court' Once the shareholders have resolved to approve the scheme, the procedure proscribed for increasing the authorized share capital stands complied with. Learned counsel for the Transferor Company, Transferee Company No. I and Transferee Company No. 2 in this regard relied on following judgments of this Court in Alchemist Ltd. and Alchemist Food Ltd. reported in [2010] 160 Comp Case 469 and Ashim investments Co. Ltd. In te 12007[1] 138 Comp Case 89 (Delhi). He also relied upon the judgment in Hotline Holl Celdings P. Ltd. In re [2005] 127 Comp Case 165 (Delhi) wherein this Court has held that the procedure prescribed under the Act for enhancement of share capital need not be followed as Section 39I-394 are complete code in L0 themselves and a court can. sanction reduction or increase in authorized share capital as a part of the scheme itself.

13. In light of the above judgments of this Court, the issues raised by the Regional Director are untenable in law.

14. With respect to the issues raised in Para 5 of the Affidavit dated April 6, 201I, learned counsel for the Transferor Company, Transferee Company No. 1 and Transferee Company No. 2 have reiterated its stand that since there is no charge created by the Transferor Company, Transferee Company No. 1 and Transferee Company No. 2 therefore no charge is required to be transferred. In light of this, the said issue is also rejected.

15. No objection has been received to the Scheme of Amalgamation from any other party. Mr. Naveen Chaudhary, Mr. Vinod Kaushik and Mr. Subrata Dutta have filed affidavits dated August 1,2011 on behalf of the Transferor Company, Transferee Company No. 1 and Transferee Company No. 2 respectively, confirming that neither the Petitioner Companies nor their Legal Counsel has received any objection pursuant to citations published in the newspapers. Today in Court, 1l learned counsel for the petitioner companies has also filed an affidavit to this effect.

16. In view of the approval accorded by the Shareholders and Creditors of the Petitioner Companies; representation/reports filed by the Regional Director, Northern Region, to the proposed Scheme of Arrangement, there appears to be no impediment to the grant of sanction to the Scheme of Arrangement. Consequently, sanction is hereby granted to the Scheme of Arrangement under Sections 39I and 394 of the Companies Act, L956. The Transferor Company, Transferee Company No. 1 and Transferee Company No. 2 will comply with the statutory requirements in accordance with law. Certified copy of the order be filed with the Registrar of Companies within 30 days from the date of receipt of the same. In terms of the provisions of sections 391 and394 of the Companies Act, 1956, and in terms of the Scheme, the part of the undertaking, of the Real Estate Business of the Transferor Company as a going concern be transferred to and vest in the Transferee Company No.l and the part of the Undertaking of the Hotel Business of the Transferor Company as a going concern be transferred to and vest in the Transferee Company No. 2 without any further act or deed. Similarly, in terms of the Scheme, all the liabilities \t' and duties of the part of the undertaking, of the Real Estate Business of the Transferor Company be transferred to the Transferee Company No. I and all the liabilities and duties of the part of the undertaking, of the Hotel Undertaking of the Transferor Company be transferred to the Transferee Company No. 2 without any further act or deed. It is however, clarified that this order will not be construed as an order granting exemption from payment of stamp duty or taxes or any other charges, if payable in accordance with any law; or permission/compliance with any other requirement which may be specifically required under any law.

17. Learned Counsel for the Petitioners states that the Petitioner Companies would voluntarily deposit a sum of Rs. One lakh in the Common Pool fund of the Official Liguidator within three weeks from today. The statement is accePted.