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2016 DIGILAW 754 (DEL)

Satyam Cineplexes Limited v. Inox Leisure Limited

2016-02-10

SUDERSHAN KUMAR MISRA

body2016
JUDGMENT : 1. This petition has been filed under Sections 391 to 394 of the Companies Act, 1956 by the petitioner/transferor company seeking sanction of the Scheme of Amalgamation of Satyam Cineplexes Limited (hereinafter referred to as the petitioner/transferor company) with Inox Leisure Limited (hereinafter referred to as the transferee company) 2. The registered office of the petitioner/transferor company is situated at New Delhi, within the jurisdiction of this Court. However, the registered office of the transferee company is situated at Gujarat, outside the jurisdiction of this Court. 3. The petitioner/transferor company was originally incorporated under the Companies Act, 1956 on 9th June, 2000 with the Registrar of Companies, NCT of Delhi & Haryana at New Delhi under the name and style of Satyam Cineplex Limited. The company changed its name to Satyam Cineplex Private Limited and obtained the fresh certificate of incorporation on 28th December, 2003. The company was again converted into a public limited company and obtained the fresh certificate of incorporation on 23rd December, 2008. Thereafter, the company changed its name to Satyam Cineplexes Limited and obtained the fresh certificate of incorporation on 15th January, 2009. 4. The present authorized share capital of the petitioner/transferor company is Rs.6,00,00,000/- divided into 60,00,000 equity shares of Rs.10/- each. The present issued, subscribed and paid-up share capital of the company is Rs.4,59,55,330/- divided into 45,95,533 equity shares of Rs.10/- each fully paid up. 5. Copies of the Memorandum and Articles of Association of the petitioner/transferor company and the transferee company have been filed on record with the application, being CA(M) 29/2015, earlier filed by the petitioner. The audited balance sheets, as on 31st March, 2014, of petitioner/transferor company and the transferee company, along with the report of the auditors, had also been filed. 6. A copy of the Scheme of Amalgamation 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 nature of business of the transferor company and the transferee company is similar to each other, and the transferor company is a wholly owned subsidiary of the transferee company. It is submitted by the petitioner that the nature of business of the transferor company and the transferee company is similar to each other, and the transferor company is a wholly owned subsidiary of the transferee company. It is claimed that the proposed amalgamation will enable better and more economic and efficient management control and running of the businesses of the companies concerned and will assist in the exploitation and realization of the potential of the common businesses of the companies to the fullest extent. It is further claimed that the proposed amalgamation would enable a focused business approach for the maximization of benefit to all stakeholders and afford the advantages of synergies of business. 7. So far as the share exchange ratio is concerned, the Scheme provides that the transferor company is a wholly owned subsidiary of the transferee company, and the entire issued, subscribed and paid-up share capital of the transferor company is held by the transferee company. Therefore, the transferee company would not be required to issue and allot any shares to the shareholders of the transferor company and the shares so held by the transferee company shall stand cancelled and extinguished pursuant to implementation of the Scheme. 8. It has been submitted by the petitioner that no proceedings under Sections 235 to 251 of the Companies Act, 1956 are pending against the petitioner/transferor company. 9. The Board of Directors of the transferor and transferee companies in their separate meetings held on 25th September, 2014 have unanimously approved the proposed Scheme of Amalgamation. Copies of the Resolutions passed at the meetings of the Board of Directors of the transferor and transferee companies have been placed on record. 10. The petitioner/transferor company had earlier filed CA (M) No. 29/2015 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 Amalgamation. Vide order dated 25th March, 2015, this court allowed the application and dispensed with the requirement of convening and holding the meetings of the equity shareholders and unsecured creditors of the petitioner 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 Amalgamation. Vide order dated 25th March, 2015, this court allowed the application and dispensed with the requirement of convening and holding the meetings of the equity shareholders and unsecured creditors of the petitioner 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 Amalgamation. Vide the said order, this Court also dispensed with the requirement of the filing a separate petition by the transferee company. 11. The petitioner/transferor company has thereafter filed the present petition seeking sanction of the Scheme of Amalgamation. Vide order dated 20th April, 2015, notice in the petition was directed to be issued to the Regional Director, Northern Region, and the Official Liquidator. Citations were also directed to be published in 'Financial Express' (English) and ‘Jansatta’ (Hindi) editions. Affidavit of service 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 10th June, 2015. 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 company. Based on the information received, the Official Liquidator has filed a report dated 7th July, 2015 wherein he has stated that he has not received any complaint against the proposed Scheme of Amalgamation from any person/party interested in the Scheme in any manner and that the affairs of the transferor company do not appear to have been conducted in a manner prejudicial to the interest of its members, creditors or public interest, as per second proviso of Section 394(1) of the Companies Act, 1956. 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 13th July, 2015. Relying on Clause 5 of Part-II the Scheme, he has stated that, upon sanction of the Scheme of Amalgamation, all the employees of the transferor company shall become the employees of the transferee company without any break or interruption in their services. Relying on Clause 5 of Part-II the Scheme, he has stated that, upon sanction of the Scheme of Amalgamation, all the employees of the transferor company shall become the employees of the transferee company without any break or interruption in their services. He has further submitted that in Clause 10(b) of Part-III of the Scheme, it has been stated that amalgamation of the transferor company shall be accounted for in accordance with ‘Pooling of Interest method’ of accounting as per Accounting Standard-14 as notified under Section 133 of the Companies Act, 2013. He further submitted that in Clause 13 of Part-III of the Scheme, it has been stated that upon this scheme becoming effective, the transferor company shall stand dissolved without the process of winding up. 14. Although no objection has been raised by the Regional Director to the proposed Scheme of Amalgamation, but he had filed his additional report dated 19th August, 2015 stating that after filing of the earlier report, he had received a letter dated 05.08.2015 from the Income Tax Office Ward-22(4) enclosing the demand outstanding report in the case of the transferor company wherein the total outstanding amount shown is Rs.11,77,190/-. In response to the aforesaid observation, the petitioner in the affidavit dated 16th September, 2015 of Mr. Upen Shah, Director of the transferor company has stated that in terms of para 3.8(a) of the Scheme, all the debts, liabilities, dues and obligations of the transferor company shall become corresponding liability, dues and obligations etc. of the transferee company and further that any outstanding dues of the transferor company to the Income Tax Department will also become debts, liabilities, dues and obligations of the transferee company. Further in para 5.3 of the said affidavit, it is also pointed out that the net worth of the transferee company as on 31st March, 2014 was Rs.39,090.12 lacs and as on 30th September, 2015 was Rs.55.657.10 lacs and, therefore, it would be in a position to pay off all the outstanding dues that may be payable by the transferor company to the Income Tax Department even after the amalgamation with the transferee company. In view of the aforesaid, the observation raised by the Regional Director stands satisfied. 15. No objection has been received to the Scheme of Amalgamation from any other party. The petitioner company in the affidavit dated 13th July, 2015 of Mr. In view of the aforesaid, the observation raised by the Regional Director stands satisfied. 15. No objection has been received to the Scheme of Amalgamation from any other party. The petitioner company in the affidavit dated 13th July, 2015 of Mr. Upen Shah, Director of the transferor company, has submitted that neither the petitioner company nor its advocates have received any objection pursuant to the citations published in the newspapers on 10th June, 2015. 16. Considering the approval accorded by the equity shareholders and creditors of the petitioner company to the proposed Scheme of Amalgamation; and the affidavits filed by the Regional Director, Northern Region, and the Official Liquidator not raising any objection to the proposed Scheme of Amalgamation, there appears to be no impediment to the grant of sanction to the Scheme of Amalgamation. Consequently, sanction is hereby granted to the Scheme of Amalgamation 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 Amalgamation, i.e. 8th August, 2014, the transferor company shall stand dissolved without undergoing the process of winding up. 17. Learned counsel for the Official Liquidator prays that costs of at least Rs.1,00,000/- should be paid by the petitioner keeping in view the fact that the matter has involved examination of extensive records and also prioritized hearings. Learned counsel for the petitioner company states that the same is acceptable to him. As already directed vide order dated 15.12.2015, the petitioner shall deposit a sum of Rs.1,00,000/- by way of costs with the Common Pool Fund of the Official Liquidator. 18. The petition is allowed in the above terms.