Wellness And Wisdom Retreats (India) Private Limited v. -

HON'BLE SRI JUSTICE S.V.BHATT COMPANY PETITION No.54 OF 2016 ORDER:

Heard learned counsel for the petitioner.

Wellness & Wisdom Retreats (India) Private Limited filed this petition under Sections 391 and 394 of the Companies Act, 1956 (for short 'the Act') praying for sanction of scheme of amalgamation with Vay Retreats Private Limited.

These corporate entities are called, for convenience, transferor company and transferee company respectively.

Learned counsel for the petitioner has placed reliance upon MIHEER H.MAFATLAL V. MAFATLAL INDUSTRIES LIMITED[1], NEBULA MOTORS LIMITED[2] and ANDHRA BANK HOUSING FINANCE LIMITED V. M/S ANDHRA BANK[3] to explain the jurisdiction of this Court under Sections 391 and 394 of the Act. The gist of the case is as follows:

The transferor company was incorporated for carrying on the business of set up wellness centers, resorts, medical villages, which use ayurveda and purpose of providing different types of treatments for various ailments, internal or external, for improvement of physical and mental wellbeing; for improvement in the overall standards and quality of life. To carry on the business of own, lease, develop, promote, associate, collaborate, enter into joint ventures or special arrangements for setting up the wellness centers, resorts, medical villages or communities.

The transferee company has substantially same and similar business objectivities and activities. The Memorandum and Articles of

Association of the transferor company is filed as Annexure B. The audited balance sheets of transferor company for the period ended 30.11.2015 and 31.03.2015 is annexed to the petition as Annexure C. Annexure D is the Memorandum and Articles of Association of transferee company and Annexure E is the audited balance sheets of the transferee Company for the period ended 30.11.2015 and 31.03.2015. On 23.12.2015, the Board of Directors of transferor company approved the scheme of amalgamation. The Board of Directors of transferee company, having regard to the advantages perceived with the amalgamation of transferor company, approved the scheme of amalgamation. The effective date of amalgamation is 01.04.2015.

The transferor company has set out the salient features of the scheme of amalgamation and with the assistance of learned counsel appearing for the petitioner, I have perused the Annexures. The transferor company filed C.A. No.71 of 2016 under Sections 391 and 394 of the Act read with Rules 9 and 34 of the Companies (Court) Rules,1959 to dispense with the requirement of convening the meetings of shareholders and unsecured creditors of the transferor company. On 27.01.2016, the application was allowed and the requirement of convening the meetings of shareholders and unsecured creditors was dispensed with. On 18.02.2016, this Court, in the instant company petition, ordered notice to the Regional Director, South East Region, Ministry of Corporate Affairs, Hyderabad and the official liquidator.

The petitioner was directed to cause publication of notice of scheme of amalgamation in 'Business Standard' (English Daily) and 'Andhra Bhoomi' (Telugu Daily), Hyderabad editions. The petitioner submits that notices on the statutory authorities were served and the advertisement was published in the newspapers on 12.03.2016. On 19.04.2016 and 27.04.

Deputy Official Liquidator filed their respective reports. Learned counsel for the petitioner submits that the transferor and transferee companies are wholly subsidiary and holding companies respectively. The transferor company has no secured creditors. The shareholders and unsecured creditors of the transferor company have given their consent for the proposed scheme of amalgamation. The jurisdiction of this Court, while approving the scheme of amalgamation, according to Miheer H.Mafatlal's (1 supra) case, is as follows:

"(1) The sanctioning Court has to see to it that all the requisite statutory procedure for supporting such a scheme has been complied with and that the requisite meetings as contemplated by Section 391(1)(a) have been held.

(2) That the scheme put up for sanction of the Court is backed up by the requisite majority vote as required by Section 391(2).

(3) That the concerned meetings of the creditors or members or any class of them had the relevant material to enable the voters to arrive at an informed decision for approving the scheme in question. That the majority decision of the concerned class of voters is just and fair to the class as a whole so as to legitimately bind even the dissenting members of the class.

(4) That all necessary material indicated by Section 393(1)(a) is placed before the voters at the concerned meetings as contemplated by Section 391(1).

(5) That all the requisite material contemplated by the proviso to sub-section (2) of Section 391 of the Act is placed before the Court by the concerned applicant seeking sanction for such a scheme and the Court gets satisfied about the same.

(6) That the proposed scheme of compromise and arrangement is not found to be violative of any provision of law and is not contrary to public policy. For ascertaining the real purpose underlying the scheme

with a view to be satisfied on this aspect, the Court, if necessary, can pierce the veil of apparent corporate purpose underlying the scheme and can judiciously xray the same.

(7) That the Company Court has also to satisfy itself that members or class of members or creditors or class of creditors, as the case may be, were acting bona fide and in good faith and were not coercing the minority in order to promote any interest adverse to that of the latter compromising the same class whom they purported to represent.

(8) That the scheme as a whole is also found to be just, fair and reasonable from the point of view of prudent men of business taking a commercial decision beneficial to the class represented by them for whom the scheme is meant.

(9) Once the aforesaid broad parameters about the requirements of a scheme for getting sanction of the Court are found to have been met, the Court will have no further jurisdiction to sit in appeal over the commercial wisdom of the majority of the class of persons who with their open eyes have given their approval to the scheme even if in the view of the Court there could be a better scheme for the company and its members or creditors for whom the scheme is framed. The Court cannot refuse to sanction such a scheme on that ground as it would otherwise amount to the Court exercising appellate jurisdiction over the scheme rather than its supervisory jurisdiction."

Learned counsel appearing for the statutory authorities have reported no objection for the proposed scheme of amalgamation. I have considered the material available on record, the principles of law enunciated by the Apex Court in Miheer H.Mafatlal's case (1 supra) and the conclusions/ recommendations of the statutory authorities through their reports dated 19.04.2016 and 27.04.2016

Having regard to the above material/reports, this Court is of the opinion that the proposed scheme of amalgamation is in conformity with the provisions of the Act. The scheme does not affect the interest of stakeholders and the public or public interest and is intended to further the business interests of transferor and transferee companies for more profit and maximum utilization of available resources. Therefore, the scheme of amalgamation approved in the meeting of Board of Directors of transferor company on 23.12.2015 is sanctioned with effect from the date appointed i.e., 01.04.2015.

The transferor company viz., Wellness & Wisdom Retreats (India) Private Limited is ordered to be dissolved without going through the process of winding up. The transferor and the transferee companies are directed to communicate certified copy of this order to the Registrar of Companies for the State of Telangana and the State of Andhra Pradesh, Hyderabad within 30 days from the date of receipt of a copy of this order. They are further directed to take all consequential and statutory steps required in pursuance of the approved scheme of amalgamation and the Act.

Company petition is ordered accordingly.

____________ S.V.BHATT, J Date:11.07.2016 Stp [1] 1996(87) Company Cases 792, [2] 2003(5) ALD 327 [3] 2002(3) ALD 654