Uttam Sucrotech Limited v. Uttam Sucrotech International Holdings Private Limited

1. This petition has been filed under Sections 391 and 394 of the Companies Act, 1956 by the petitioner/resulting company seeking sanction of the Scheme of Arrangement between Uttam Sucrotech Limited (hereinafter referred to as the demerged company) and Uttam Sucrotech International Holdings Private Limited (hereinafter referred to as the petitioner/resulting company). 2016:DHC:5507

2. The registered office of the petitioner/resulting company is situated at New Delhi, within the jurisdiction of this Court. However, the registered office of the demerged company is situated at Uttar Pradesh, outside the jurisdiction of this Court. Learned counsel for the petitioner has submitted that a separate petition has been moved by the demerged company in the court of competent jurisdiction seeking sanction of the Scheme of Arrangement in respect of the demerged company.

3. The petitioner/resulting company was incorporated under the Companies Act, 1956 on 14th December, 2011 with the Registrar of Companies, NCT of Delhi & Haryana at New Delhi.

4. The present authorized share capital of the petitioner/resulting company is Rs.50,00,000/- divided into 5,00,000 equity shares of Rs.10/each. The issued, subscribed and paid-up share capital of the company is Rs.3,30,000/- divided into 33,000 equity shares of Rs.10/- each.

5. Copies of the Memorandum and Articles of Association of the demerged and resulting companies have been filed on record. The audited balance sheet, as on 31st March, 2014, of the petitioner/resulting company, along with the report of the auditors, has also been filed.

6. A copy of the Scheme of Arrangement has been placed on record and the salient features of the Scheme have been incorporated and detailed in the petition and the accompanying affidavit. It is submitted by the petitioner that the Scheme, inter alia, provides for demerger of the Engineering Business Division of the demerged company and its merger into the resulting company. It is further submitted that the Demerged Undertaking has the potential of being developed into a parallel and independent profitable business segment in future and keeping in view its potential and to unlock the value of shares of all its stakeholders, the demerged company is being developed into an independent business segment by hiving-off Demerged Undertaking into the resulting company.

7. So far as the share exchange ratio is concerned, the Scheme provides that, upon coming into effect of this Scheme, the petitioner/resulting company shall issue and allot shares to the shareholders of the demerged company in the following ratio: “01 compulsory convertible preference shares of Rs.10/- each in the resulting company for every 10,000 equity share of Rs.10/- each held by them in the demerged company.”

8. It has been submitted by the petitioner that no proceedings under Sections 235 to 251 of the Companies Act, 1956 and corresponding provisions of the Companies Act, 2013 are pending against the petitioner/resulting company.

9. The Board of Directors of the demerged company and the petitioner/resulting company in their separate meetings held on 22nd May, 2015 and 18th March, 2015 respectively have unanimously approved the proposed Scheme of Arrangement. Copies of the Resolutions passed at the meetings of the Board of Directors of the demerged and resulting companies have been placed on record.

10. The petitioner/resulting company had earlier filed CA (M) NO. 166/2015 seeking directions of this court to dispense with the requirement of convening the meetings of its equity shareholders, secured and unsecured creditors, which are statutorily required for sanction of the Scheme of Arrangement. Vide order dated 16th November, 2015, this court allowed the application and dispensed with the requirement of convening and holding the meeting of the equity shareholders and unsecured creditors of the petitioner/resulting company, there being no secured creditor of the petitioner company, to consider and, if thought fit, approve, with or without modification, the proposed Scheme of Arrangement.

11. The petitioner companies have thereafter filed the present petition seeking sanction of the Scheme of Arrangement. Vide order dated 2nd December, 2015, notice in the petition was directed to be issued to the Official Liquidator and the Regional Director, Northern Region. Citations were also directed to be published in 'Business Standard’ (English) and (Hindi) editions. Affidavit of services has been filed by the petitioner showing compliance regarding service on the Official Liquidator and the Regional Director, Northern Region, and also regarding publication of citations in the aforesaid newspapers on 4th March, 2016. Copies of the newspaper clippings containing the publications have been filed along with the said affidavit.

12. Pursuant to the notices issued, the Official Liquidator sought information from the petitioner companies. Based on the information received, the Official Liquidator has filed a report dated 1st April, 2016 wherein he has stated that the present Scheme involves demerger of an undertaking of the demerged company into the resulting company only whereby no company gets dissolved.

13. In response to the notices issued in the petition, Mr. A. K. Chaturvedi, Regional Director, Northern Region, Ministry of Corporate Affairs has filed his report dated 8th April, 2016 not raising any objection to the proposed Scheme of Arrangement.

14. No objection has been received to the Scheme of Arrangement from any other party. The petitioner/resulting company, in the affidavit dated 5th April, 2016 of Mr. Anil Datta, Director of the resulting company, has submitted that the petitioner company has not received any objection pursuant to the citations published in the newspapers on 4th March, 2016.

15. Considering the approval accorded by the equity shareholders and creditors of the petitioner/resulting company to the proposed Scheme of Arrangement, and the affidavits filed by the Official Liquidator and the Regional Director, Northern Region, not raising any objection to the proposed Scheme of Arrangement, there appears to be no impediment to the grant of sanction to the Scheme of Arrangement. Consequently, subject to sanction of the Scheme of Arrangement in respect of the demerged company by the court of competent jurisdiction, sanction is hereby granted to the Scheme of Arrangement under Sections 391 and 394 of the Companies Act, 1956. The petitioner company will comply with the statutory requirements in accordance with law. Certified copy of this order be filed with the Registrar of Companies within 30 days. It is also clarified that this order will not be construed as an order granting exemption from payment of stamp duty as payable in accordance with law. Upon the sanction becoming effective from the appointed date of Arrangement, i.e. 1st July, 2014, the Engineering Business Division of the demerged company shall stand merged in the resulting company.