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2016 Supreme(Del) 2126
IN THE HIGH COURT OF DELHI AT NEW DELHI
SUDERSHAN KUMAR MISRA, J.
Emaar MGF Land Limited – Applicant/Demerged Company
Versus
MGF Developments Limited – Applicant/Resulting Company
COMPANY APPLICATION (MAIN) NO. 77/2016
Decided On : 30-05-2016
Mr. Rajeev K. Goel, Advocate for the applicant.
The central legal point established in the judgment is the court's authority to grant dispensation of meetings for certain categories of creditors/liabilities under the Companies Act, 1956 based on precedents and the normal course of business for the companies.
Headnote:
Companies Act - Scheme of Arrangement - Sections 391(1), 394, 100-104
Fact of the Case:
The joint application was filed under Sections 391(1) and 394 read with Sections 100 to 104 of the Companies Act, 1956 by the applicant companies seeking directions to convene meetings of their shareholders, secured and unsecured creditors to consider and approve the proposed Scheme of Arrangement between two companies.
Finding of the Court:
The court allowed the application and directed the convening of meetings for approval of the proposed Scheme of Arrangement.
Issues: The main issue was to obtain approval for the proposed Scheme of Arrangement from shareholders and creditors of the demerged and resulting companies.
Ratio Decidendi: The court considered the provisions of the Companies Act, 1956 and the submissions made by the applicants, and granted dispensation of meetings for certain categories of creditors/liabilities based on precedents and the normal course of business for the companies.
Final Decision: The application was allowed in the specified terms.
SUDERSHAN KUMAR MISRA, J.
1. This joint application has been filed under Sections 391(1) and 394 read with Sections 100 to 104 of the Companies Act, 1956 by the applicant companies seeking directions of this court to convene meetings of their shareholders, secured and unsecured creditors to consider and approve, with or without modification, the proposed Scheme of Arrangement between Emaar MGF Land Limited (hereinafter referred to as the demerged company) and MGF Developments Limited (hereinafter referred to as the resulting company).
2. The registered offices of the demerged and resulting companies are situated at New Delhi, within the jurisdiction of this Court.
3. The demerged company was originally incorporated under the Companies Act, 1956 on 18th February, 2005 with the Registrar of Companies, NCT of Delhi & Haryana at New Delhi under the name and style of Emaar MGF Land Private Limited. The company changed its name to Emaar MGF Land Limited and obtained the fresh certificate of incorporation on 13th August, 2007.
4. The resulting company was incorporated under the Companies Act, 1956 on 16th September, 1996 with the Registrar of Companies, NCT of Delhi & Haryana at New Delhi.
5. The present authorized share capital of the demerged company is Rs.60,00,00,00,000/- divided into 3,00,00,00,000 equity shares of Rs.10/- each aggregating Rs.30,00,00,00,000/- and 3,00,00,00,000 preference shares of Rs.10/- each aggregating Rs.30,00,00,00,000/-. The issued, subscribed and paid-up share capital of the company is Rs.9,12,61,98,450/- divided into 91,26,19,845 equity shares of Rs.10/- each. The demerged company has also issued 2,500 compulsory convertible unsecured debentures of Rs.10,00,000/- each aggregating Rs.2,50,00,00,000/-. Further, the demerged company has also issued the following redeemable non-convertible secured debentures, viz. (i) 22,600 redeemable secured non-convertible debentures of Rs.10,00,000/- each aggregating Rs.22,60,00,00,000/-; (ii) 5,750 redeemable secured non-convertible debentures of Rs.4,32,501/- each aggregating Rs.2,48,68,80,750/-; (iii) 3,750 redeemable secured non-convertible debentures of Rs.10,00,000/- each aggregating Rs.3,75,00,00,000/-; and (iv) 2,250 redeemable secured non-convertible debentures of Rs.7,90,821/- each aggregating Rs.1,77,93,47,250/-.
6. The present authorized share capital of the resulting company is Rs.60,00,00,000/- divided into 6,00,00,000 equity shares of Rs.10/- each. The issued and subscribed share capital of the company is Rs.59,76,50,700/- divided into 5,97,65,070 equity shares of Rs.10/- each. The paid up share capital of the company Rs.32,87,07,885/- divided into 2,98,82,535 fully paid up equity shares of Rs.10/- each aggregating Rs.29,88,25,350/- and 2,98,82,535 partly paid equity shares of Rs.10/- each, paid up value of Rs.1/- per share aggregating Rs.2,98,82,535/-.
7. Copies of the Memorandum and Articles of Association of the demerged and resulting companies have been filed on record. The audited balance sheets, as on 31st March, 2015, of the demerged and resulting companies, along with the report of the auditors, have also been filed.
8. 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 application and the accompanying affidavits. It has been submitted by the applicants that demerged undertaking of the demerged company shall stand merged in the resulting company. It is claimed that the proposed demerger would lend greater focus on the operation of each of the demerged company’s business/projects and enable further growth and expansion of each business/project. It is further claimed that the proposed demerger would enable sustainable long term growth, profitability, cost reduction and efficiencies and continuous customer service through focused management attention as different set of skills and resources would be available to meet competitive, regulatory enviro
