In the Matter of Jyoti Knits Private Limited & Ors

IN THE HIGH COURT OF DELHI COMPANY APPLICATION (MAIN) NO. 179/2015

Reserved on 1st December, 2015 Date of pronouncement: 23rd December, 2015 In the matter of The Companies Act, 1956 & the Companies Act, 2013 (to the extent applicable):

And

Application under Sections 391(1) & 394 of the Companies Act, 1956

Scheme of Arrangement between:

Jyoti Knits Private Limited Applicant/Transferor Company No. 1

Mayur Knits Private Limited Applicant/Transferor Company No. 2

Essay Marketing Company Limited Applicant/Transferor Company No. 3

Raghav Knits and Textiles Private Limited Applicant/Transferor Company No. 4

Arshia Trade Mart Private Limited Applicant/Transferor Company No. 5 AND

Agarwal Finestate Private Limited Applicant/Transferee Company

Through Mr. Amit Goel, Advocate for the applicants

SUDERSHAN KUMAR MISRA, J.

¶1This joint application has been filed under Sections 391(1) & 394 of the Companies Act, 1956 by the applicant companies seeking directions of this court to dispense with the requirement of convening the meetings of their equity shareholders, secured and unsecured creditors to consider and approve, with or without modification, the proposed Scheme of Arrangement between Jyoti Knits Private Limited (hereinafter referred to

as the transferor company no. 1); Mayur Knits Private Limited (hereinafter referred to as the transferor company no. 2); Essay Marketing Company Limited (hereinafter referred to as the transferor company no. 3); Raghav Knits and Textiles Private Limited (hereinafter referred to as the transferor company no. 4); Arshia Trade Mart Private Limited (hereinafter referred to as the transferor company no. 5) and Agarwal Finestate Private Limited (hereinafter referred to as the transferee company).

¶2The registered offices of the transferor and transferee companies are situated at New Delhi, within the jurisdiction of this Court.

¶3The transferor company no. 1 was incorporated under the Companies Act, 1956 on 16th January, 1991 with the Registrar of Companies, NCT of Delhi & Haryana at New Delhi.

¶4The transferor company no. 2 was incorporated under the Companies Act, 1956 on 28th December, 1990 with the Registrar of Companies, NCT of Delhi & Haryana at New Delhi.

¶5The transferor company no. 3 was incorporated under the Companies Act, 1956 on 20th February, 1991 with the Registrar of Companies, NCT of Delhi & Haryana at New Delhi.

¶6The transferor company no. 4 was incorporated under the Companies Act, 1956 on 31st December, 1990 with the Registrar of Companies, NCT of Delhi & Haryana at New Delhi.

¶7The transferor company no. 5 was incorporated under the Companies Act, 1956 on 17th November, 2008 with the Registrar of Companies, NCT of Delhi & Haryana at New Delhi.

¶8The transferee company was incorporated under the Companies Act, 1956 on 21st August, 1995 with the Registrar of Companies, NCT of Delhi & Haryana at New Delhi.

¶9The present authorized share capital of the transferor company no.1 is Rs.25,00,000/- divided into 2,50,000 equity shares of Rs.10/- each. The issued, subscribed and paid-up share capital of the company is Rs.24,50,200/- divided into 2,45,020 equity shares of Rs.10/- each.

¶10The present authorized share capital of the transferor company no.2 is Rs.1,00,00,000/- divided into 10,00,000 equity shares of Rs.10/- each. The issued, subscribed and paid-up share capital of the company is Rs.99,95,200/- divided into 9,99,520 equity shares of Rs.10/- each.

¶11The present authorized share capital of the transferor company no.3 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.48,00,700/- divided into 4,80,070 equity shares of Rs.10/- each.

¶12The present authorized share capital of the transferor company no.4 is Rs.25,00,000/- divided into 2,50,000 equity shares of Rs.10/- each. The issued, subscribed and paid-up share capital of the company is Rs.24,50,200/- divided into 2,45,020 equity shares of Rs.10/- each.

¶13The present authorized share capital of the transferor company no.5 is Rs.5,00,000/- divided into 50,000 equity shares of Rs.10/- each. The issued, subscribed and paid-up share capital of the company is Rs.1,00,000/- divided into 10,000 equity shares of Rs.10/- each.

¶14The present authorized share capital of the transferee company is Rs.1,00,00,000/- divided into 10,00,000 equity shares of Rs.10/- each. The issued, subscribed and paid-up share capital of the company is Rs.80,30,200/- divided into 8,03,020 equity shares of Rs.10/- each.

¶15Copies of the Memorandum and Articles of Association of the transferor and transferee companies have been filed on record. The audited balance sheets, as on 31st March, 2015, of the transferor and transferee companies, along with the reports of the auditors, have also been filed.

¶16A 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 application and the accompanying affidavit. It is claimed that the proposed amalgamation will result in formation of a larger company enabling further growth and development of the businesses of the transferor companies thus enabling the undertakings and businesses of the transferor companies to obtain greater facilities possessed and enjoyed by one large company compared to various small companies for raising capital, securing and conducting trade and business on favourable terms and other related benefits. It is further claimed that the proposed scheme will result in reduction of overheads and other expenses, reduction in administrative and procedural work, eliminate duplication of work, transaction cost, better and more productive utilization of various resources and will enable the undertakings concerned to effect internal economies and optimize productivity.

¶17So far as the share exchange ratio is concerned, the Scheme provides that, upon coming into effect of this Scheme, the transferee company shall issue and allot equity shares to the shareholders of the transferor companies in the following ratio: "313 equity shares of Rs.10/- each of the transferee company, credited as fully paid up, for every 100 fully paid up equity shares of Rs.10/- each held in transferor company no. 1."

"48 equity shares of Rs.10/- each of the transferee company, credited as fully paid up, for every 100 fully paid up equity shares of Rs.10/- each held in transferor company no. 2."

"286 equity shares of Rs.10/- each of the transferee company, credited as fully paid up, for every 100 fully paid up equity shares of Rs.10/- each held in transferor company no. 3."

"132 equity shares of Rs.10/- each of the transferee company, credited as fully paid up, for every 100 fully paid up equity shares of Rs.10/- each held in transferor company no. 4."

"58 equity shares of Rs.10/- each of the transferee company, credited as fully paid up, for every 100 fully paid up equity shares of Rs.10/- each held in transferor company no. 5."

¶18It has been submitted by the applicants that no proceedings under Sections 235 to 251 of the Companies Act, 1956 are pending against the applicant companies.

¶19The Board of Directors of the transferor companies no. 1, 2, 3, 4, 5 and the transferee company in their separate meetings held on 6th October, 2015, 6th October, 2015, 7th October, 2015, 5th October, 2015, 5th October, 2015 and 7th October, 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 transferor and transferee companies have been placed on record.

¶20The transferor company no. 1 has 10 equity shareholders and 01 unsecured creditor. All the equity shareholders and the sole unsecured creditor have given their consents/no objections in writing to the proposed Scheme of Arrangement. Their consents/no objections have

been placed on record. They have been examined and found in order. In view thereof, the requirement of convening the meetings of the equity shareholders and unsecured creditor of the transferor company no. 1 to consider and, if thought fit, approve, with or without modification, the proposed Scheme of Arrangement is dispensed with. There is no secured creditor of the transferor company no. 1, as on 30.09.2015.

¶21The transferor company no. 2 has 08 equity shareholders and 01 unsecured creditor. All the equity shareholders and the sole unsecured creditor have given their consents/no objections in writing to the proposed Scheme of Arrangement. Their consents/no objections have been placed on record. They have been examined and found in order. In view thereof, the requirement of convening the meetings of the equity shareholders and unsecured creditor of the transferor company no. 2 to consider and, if thought fit, approve, with or without modification, the proposed Scheme of Arrangement is dispensed with. There is no secured creditor of the transferor company no. 2, as on 30.09.2015.

¶22The transferor company no. 3 has 07 equity shareholders and 01 unsecured creditor. All the equity shareholders and the sole unsecured creditor have given their consents/no objections in writing to the proposed Scheme of Arrangement. Their consents/no objections have been placed on record. They have been examined and found in order. In view thereof, the requirement of convening the meetings of the equity

shareholders and unsecured creditor of the transferor company no. 3 to consider and, if thought fit, approve, with or without modification, the proposed Scheme of Arrangement is dispensed with. There is no secured creditor of the transferor company no. 3, as on 30.09.2015.

¶23The transferor company no. 4 has 05 equity shareholders and 02 unsecured creditors. All the equity shareholders and both the unsecured creditors have given their consents/no objections in writing to the proposed Scheme of Arrangement. Their consents/no objections have been placed on record. They have been examined and found in order. In view thereof, the requirement of convening the meetings of the equity shareholders and unsecured creditors of the transferor company no. 4 to consider and, if thought fit, approve, with or without modification, the proposed Scheme of Arrangement is dispensed with. There is no secured creditor of the transferor company no. 4, as on 30.09.2015.

¶24The transferor company no. 5 has 06 equity shareholders and 05 unsecured creditors. All the equity shareholders and all the unsecured creditors have given their consents/no objections in writing to the proposed Scheme of Arrangement. Their consents/no objections have been placed on record. They have been examined and found in order. In view thereof, the requirement of convening the meetings of the equity shareholders and unsecured creditors of the transferor company no. 5 to consider and, if thought fit, approve, with or without modification, the

proposed Scheme of Arrangement is dispensed with. There is no secured creditor of the transferor company no. 5, as on 30.09.2015.

¶25The transferee company has 11 equity shareholders and 02 unsecured creditors. All the equity shareholders and both the unsecured creditors have given their consents/no objections in writing to the proposed Scheme of Arrangement. Their consents/no objections have been placed on record. They have been examined and found in order. In view thereof, the requirement of convening the meetings of the equity shareholders and unsecured creditors of the transferee company to consider and, if thought fit, approve, with or without modification, the proposed Scheme of Arrangement is dispensed with. There is no secured creditor of the transferee company, as on 30.09.2015.

¶26The application stands allowed in the aforesaid terms. Dasti

SUDERSHAN KUMAR MISRA, J.

December 23, 2015