In Re: Firepro Systems Private Limited and Ors.

Aravind Kumar, J.—Petitioner in Co.P.226/2014 is the transferor company No. 1, petitioner in Co.P.227/2014 is transferor company No. 2 and Petitioner in Co.P.225/2014 is transferee company. They are before this court seeking for approval of composite scheme of amalgamation as at Annexure-A.

Transferor company No. 1 came to be incorporated as a private company on 29.10.2008 under the name Firepro Global Infrastructure Private Limited and is having its registered office at No. 10 & 11, Service Road, HAL 2nd Stage, Indira Nagar, Bengaluru -560 008. Transferor Company No. 2 is having its registered office at Trashanthi Nilayam'', No. 279, 11th Main, 2nd Street, Indira Nagar, Bengaluru -560 038 was incorporated on 21.03.2006 under the provisions of the Companies Act, 1956. Transferee company namely petitioner in Co.P.225/2014 was incorporated on 27.12.2001 under the name and style Firepro Systems Pvt. Ltd., and is having its registered office indicated in the cause title of the petition under the provisions of Companies Act, 1956.

Transferor company No. 1 is engaged in the business of providing infrastructure in the field of Civil, Mechanical, Electrical and plumbing activities and other allied activities as indicated in paragraph 3 of the petition. Transferor company No. 2 is engaged in the business of manufacturing, trading, importing, exporting and dealing in the devices for safety including fire safety, security including electronic security and other allied services as indicated in the petition. Transferor company No. 2 is wholly owned subsidiary of the transferee company and transferee company is engaged in the business similar to the business of transferor companies. Transferors and transferee companies have evolved a scheme of amalgamation for their mutual benefit. Board of Directors of the transferee company have considered the scheme of amalgamation and approved the same. Board of Directors of transferor companies as well as transferee company have approved the composite scheme of amalgamation in their respective meetings held on 27.08.2013.

This court vide order dated 26.06.2014 passed in C.A.308/2014 has dispensed with convening of the meeting of shareholders and secured creditors of transferor company in Co.P.226/2014 and directed to hold the meeting of unsecured creditors on 18.08.2014 and Chairman for the said meeting appointed by this court has conducted the meeting and filed his report dated 21.08.2014 Annexure-J. Likewise in C.A.307/2014 by order dated 26.06.2014 this court dispensed with the meeting of shareholders and secured creditor of the transferor company in Co.P.227/2014 and directed to hold the meeting of unsecured creditors on 18.08.2014 and the Chairman appointed for conducting the said meeting has submitted a report on 21.08.2014 Annexure-J. Further in C.A.309/2014 by order dated 26.06.2014 this court dispensed with the meeting of shareholders and secured creditors of transferee company and directed to hold the meeting of unsecured creditors of the transferee company and Chairman appointed by this court has conducted the meeting on 18.08.2014 and has submitted a report dated 21.08.2014 Annexure-L. The report of Chairman would indicate that unsecured creditors have consented for the Scheme of Amalgamation.

This Court by order dated 12.11.2015 had directed the petitioners to take out notice to the Regional Director in respect of transferee company and to the Regional Director as well as Official Liquidator in respect of transferor companies and they were also directed to take out notice of advertisement of petitions in "The Hindu" English daily newspaper and "Kannada Prabha", Kannada daily newspaper in Bengaluru edition fixing the date of hearing as 18.12.2014. Official Liquidator has filed his report in COP Nos. 226/2014 and 227/2014 bearing OLR Nos. 249/2015 and 250/2015 and OLR No. 562/2014 was filed seeking permission to appoint a Chartered Accountant for scrutiny of books of accounts and records of both transferor companies. Thereafter, Chartered Account has submitted a report and based on the said report Official Liquidator has filed his report stating that Chartered Accountant appointed by this Court has examined Books of Accounts and records and he has stated that transferor companies do not appear to have conducted their business in the manner prejudicial to the interest of its members or to the public. Regional Director by his affidavit dated 06.07.2015 has made two (2) observations, which is to the following effect:

"(i) Clause 1.2 of part II of Scheme provides for appointed date as 01.4.2013. The petitioner companies have filed the Balance Sheet and Profit and Loss Account upto the financial year ended 31.03.2014. Hence, the appointed date may be postponed to 01.3.2014 in order to avoid any revision of accounts.

(ii) Registrar of Companies, Karnataka, Bengaluru vide para No. 30 of his report dated 05/07.06.2015 has observed that the petitioner transferee company has violated the provisions of Sections 211 read with Section 209(3)(b), 166, 210, 220 of the Companies Act, 1956 for the financial year 31.3.2013 and 31.3.2014 and Section 383A and 297 of the Companies Act, 1956 and petitioner transferor company No. 2 has violated the provisions of Section 217(3) of the Companies Act, 1956 for the financial year 31.03.2013. Hence, the petitioner companies may file an undertaking before this Hon'ble Court to the effect that they will file compounding applications in respect of the above said violations."

Above observations of Regional Director would indicate that under Clause 1.2 of part II of the scheme appointed date has been indicated as 01.04.2013 and the Balance Sheet and Profit & Loss account made is upto financial year ending as on 31.03.2014 and as such, Regional Director is seeking for postponement of appointed date to 01.03.2014 in order to avoid revision of accounts and he has further stated that transferee company has violated the provisions of Section 211 read with 209(3)(b), 217(3), 166, 210, 220 of the Companies Act, 1956 for the financial years ending as on 31.03.2013 and 31.03.2014 and violation of Sections 383A and 297 of the Companies Act, 1956, insofar as transferor company in COP No. 227/2014 is concerned has violated Section 217(3) of the Companies Act, 1956 for the financial year ending as on 31.03.2013.

An affidavit of undertaking has been filed by the transferor company in COP No. 225/2014, whereunder authorized signatory of the transferee company has submitted as under:

"2. I submit that in the Affidavit filed, the Registrar of Companies, Karnataka has stated that the Appointed Date for the Composite Scheme of Amalgamation of Firepro Global Infrastructure Private Limited (i.e., Transferor Company No. 1) and Saffire Devices Private Limited (i.e., Transferor Company No. 2) with the Transferee Company be postponed form 01.04.2013 to 01.04.2014 to avoid any revision of accounts. Since the accounts of Petitioner/Transferee Company have been approved by the members and the same has been filed with the Registrar of Companies and filed as Annexure-C to the COP No. 225 of 2014, we undertake and have no objections in postponing the Appointed Date in the Composite Scheme of Amalgamation from 01.04.2013 to 01.04.2014.

I submit that the Registrar of Companies, Karnataka xxxx to submit as follows:

(a) The Transferee Company had violated Sections 211 read with 166, 210, 217(3) and 220 of the Companies Act, 1956 for the financial year 31.3.2011, which were duly observed by the Auditors of the Transferee Company in their Report to the members of the Transferee Company for the financial years, 31.3.2013 and 31.3.2014. The Transferee Company/Petitioner hereby undertakes that it will file application for compounding the offences with respect to the aforementioned violations before the statutory authorities as per the provisions of the Companies Act, 1956 for the year 31.3.2011.

The Auditors Report of the Transferee Company for the financial years 31.3.2013 and 31.3.2014 wherein observations are made with respect noncompliance of Sections 211 read with 166, 210, 217(3) and 220 of the Companies Act, 1956 for the year 31.3.2011 is annexed hereto as Annexure A Series.

Further in this regard, Letter bearing No. 3(B)/Amal/451/2014/554 to 556 dated 4.6.2015 issued by the Joint Director, Office of the Regional Director, South East Region to the Transferee Company and reply provided by the Transferee Company vide its Letter dated 22.6.2015 under Section annexed hereto as Annexure B Series.

The Transferee Company has complied with Sections 211 read with 166, 210, 217(3) and 220 of the Companies Act, 1956 for the financial years 31.3.2013 and 31.4.2014. Form 23A-XBRL (Balance Sheet), 23ACA-XBRL (Profit & Loss Account) and 20B (Annual Return) filed with the Registrar of Companies, Karnataka with respect to Transferee Company for the financial years 31.3.2013 and 31.3.2014 is annexed hereto as Annexure C Series.

(b) The Transferee Company hereby undertakes to file the application for compounding of offences under Sections 383A and 297 of the Companies Act, 1956 before the statutory authorities and further undertakes comply with all the applicable provisions of the Companies Act.

(c) The Transferee Company further undertakes to comply with all applicable provisions of the Companies Act, 1956."

Undisputedly, as could be seen from the annexures appended to the affidavit of authorized signatory of transferee company it would indicate that transferee company has complied with the observations noted by the Regional Director, insofar as, financial year ending on 31.03.2013 and 31.03.2014 are concerned and in respect of financial year 2011 is concerned, it has undertaken to file an application for compounding the offences, for which learned standing counsel appearing on behalf of Regional Director/Registrar of Companies has no objection. Insofar as, postponement of appointed date is concerned authorised signatory of transferee Co., has stated that they would undertake and have no objection in postponing the appointed date from 01.04.2013 to 01.04.2014. As such, placing the undertaking on record appointed date is ordered to be postponed to 01.03.2014. That apart, to the advertisement taken out by the petitioners-companies there has been no resistance or objections lodged to the approval of Composite Scheme of Amalgamation.

Learned counsel appearing for petitioners has also brought to the notice of this Court that Regional Director has intimated the jurisdictional Income Tax Department calling for their remarks or observations and Income Tax Officer (HQ), Office of Chief Commissioner of Income Tax, Bangalore, by communication dated 15.01.2015 has given no objection for Composite Scheme of Amalgamation and as such, he has prayed for Scheme of Amalgamation being approved.

In addition to above and as already noticed hereinabove, no person interested in the affairs of company in question, has approached this Court opposing the approval of scheme. Transferor company in COP No. 227/2014 is wholly owned subsidiary of transferee company and perusal of composite scheme would also indicate that Board of Directors of petitioners - companies have taken into consideration mutual benefit that would accrue to share holders and as such, Scheme has been proposed and by taking all aspects of the matter they have approved the scheme in question. Hence, prayer made in these petitions deserves to be granted. In the result, I proceed to pass the following:

"ORDER

(i) COP Nos. 226/14, 227/14 and 225/14, are hereby allowed.

(ii) Scheme of Amalgamation at Annexure-A is sanctioned so as to bind the shareholders, members and creditors of the companies subject to postponement of appointed date to 01.04.2014.

(iii) Transferor companies No. 1 & 2 (Cop Nos. 226/2014 & 227/2014) named above shall stand dissolved without process of winding up.

(iv) Copy of this order shall be filed with the Registrar of Companies, Karnataka within thirty (30) days from the date of receipt of certified copy of this order."