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1 IN THE HIGH COURT OF KARNATAKA AT BANGALORE
DATED THIS THE 4TH DAY OF SEPTEMBER, 2014
BEFORE
THE HON’BLE Mr. JUSTICE A.S. BOPANNA
CO. P. No. 301/2013 A/W. C.A. No. 767/2014 CO. P. No. 294/2013 A/W. C.A. No. 760/2014 CO. P. No. 295/2013 A/W. C.A. No. 761/2014 CO. P. No. 296/2013 A/W. C.A. No. 762/2014 CO. P. No. 297/2013 A/W. C.A. No. 763/2014 CO. P. No. 298/2013 A/W. C.A. No. 764/2014 CO. P. No. 299/2013 A/W. C.A. No. 765/2014 AND CO. P. No. 300/2013 A/W. C.A. No. 766/2014
CO.P. No. 301/2013 A/W. C.A. No.767/2014
BETWEEN :
DELL INTERNATIONAL SERVICES INDIA PRIVATE LIMITED A COMPANY INCORPORATED UNDER THE PROVISIONS OF THE COMPANIES ACT, 1956, AND HAVING ITS REGD. OFFICE AT PLOT No. 123, EPIP PHASE II WHITEFIELD INDUSTRIAL AREA BENGALURU – 560 066.
... PETITIONER/APPLICANT
(COMMON)
(By Sri. DHYAN CHINNAPPA Sr. ADV., FOR Sri. ARUN KUMAR FOR M/S. CREST LAW PARTNERS)
AND :
NIL.
... RESPONDENT (COMMON) (By Smt. SOWBHAGYA N A, CGC, FOR ROC)
2 CO.P. No. 294/2013 A/W. C.A. No. 760/2014
BETWEEN :
FORCE 10 NETWORKS INDIA PRIVATE LIMITED A COMPANY INCORPORATED UNDER THE PROVISIONS OF THE COMPANIES ACT, 1956, AND HAVING ITS REGD. OFFICE AT DIVYASREE GREENS 3RD FLOOR, SURVEY NOS. 12/1 12/2A AND 13/1A, CHALLAGHATTA VILLAGE, VARTHUR HOBLI BANGALORE – 560 071.
... PETITIONER/APPLICANT
(COMMON)
(By Sri. DHYAN CHINNAPPA Sr. ADV., FOR Sri. ARUN KUMAR FOR M/S. CREST LAW PARTNERS)
AND :
NIL.
... RESPONDENT (COMMON)
(By Smt. PREMA HATTI, CGC, FOR ROC Sri. K S MAHADEVAN & SRI V JAYARAM, ADVs. FOR OL)
CO. P. No. 295/2013 A/W. C.A. No. 761/2014
BETWEEN :
WYSE TECHNOLOGY SOFTWARE DEVELOPMENT INDIA PRIVATE LIMITED A COMPANY INCORPORATED UNDER THE PROVISIONS OF THE COMPANIES ACT, 1956, AND HAVING ITS REGD. OFFICE AT GAMMA TOWER, 8TH FLOOR SIGMA SOFTWARE PARK NO.7 WHITEFIELD MAIN ROAD BANGALORE – 560 006.
... PETITIONER/APPLICANT
(COMMON)
(By Sri. DHYAN CHINNAPPA Sr. ADV., FOR Sri. ARUN KUMAR FOR M/S. CREST LAW PARTNERS)
3 AND :
NIL.
... RESPONDENT (COMMON)
(By Smt. SOWBHAGYA N A, CGC, FOR ROC Sri. K S MAHADEVAN & SRI V JAYARAM, ADVs. FOR OL)
CO. P. No. 296/2013 A/W. C.A. No. 762/2014
BETWEEN :
WYSE TECHNOLOGY SALES & MARKETING INDIA PRIVATE LIMITED A COMPANY INCORPORATED UNDER THE PROVISIONS OF THE COMPANIES ACT, 1956, AND HAVING ITS REGD. OFFICE AT GAMMA TOWER, 8TH FLOOR SIGMA SOFTWARE PARK NO.7 WHITEFIELD MAIN ROAD BANGALORE – 560 006.
... PETITIONER/APPLICANT
(COMMON)
(By Sri. DHYAN CHINNAPPA Sr. ADV., FOR Sri. ARUN KUMAR FOR M/S. CREST LAW PARTNERS)
AND :
NIL.
... RESPONDENT (COMMON)
(By Smt. SOWBHAGYA N A, CGC, FOR ROC Sri. K S MAHADEVAN & SRI V JAYARAM, ADVs. FOR OL)
CO. P. No. 297/2013 A/W. C.A. No. 763/2014
BETWEEN :
SONICWALL INFOSECURITY PRIVATE LIMITED A COMPANY INCORPORATED UNDER THE PROVISIONS OF THE COMPANIES
4 ACT, 1956, AND HAVING ITS REGD. OFFICE AT 4TH FLOOR, WING ‘A’ OFFICE 1 SALAPURIA SOFTZONE BANGALORE – 560 037.
... PETITIONER/APPLICANT
(COMMON)
(By Sri. DHYAN CHINNAPPA Sr. ADV., FOR Sri. ARUN KUMAR FOR M/S. CREST LAW PARTNERS)
AND :
NIL.
... RESPONDENT (COMMON)
(By Smt. SOWBHAGYA N A, CGC, FOR ROC Sri. K S MAHADEVAN & SRI V JAYARAM, ADVs. FOR OL)
CO. P. No. 298/2013 A/W. C.A. No. 764/2014
BETWEEN :
SONICWALL BV – INDIA BRANCH A BRANCH OFFICE OF SONIC WALL BV, A COMPANY INCORPORATED UNDER THE LAWS OF NETHERLANDS AND HAVING ITS PLACE OF BUSINESS IN BANGALORE IN THE STATE OF KARNATAKA AT #19, DBS BUSINESS CENTRE, 26 CUNNIGHAM ROAD BANGALORE – 560 052.
... PETITIONER/APPLICANT
(COMMON)
(By Sri. DHYAN CHINNAPPA Sr. ADV., FOR Sri. ARUN KUMAR FOR M/S. CREST LAW PARTNERS)
AND :
NIL.
... RESPONDENT (COMMON) (By Smt. SOWBHAGYA N A, CGC, FOR ROC Sri. K S MAHADEVAN & SRI V JAYARAM, ADVs. FOR OL)
CO. P. No. 299/2013 A/W. C.A. No. 765/2014
BETWEEN :
GALE NETWORKS PRIVATE LIMITED A COMPANY INCORPORATED UNDER THE PROVISIONS OF THE COMPANIES ACT, 1956, AND HAVING ITS REGD. OFFICE AT PLOT NO.123, EPIP PHASE-II WHITEFIELD INDUSTRIAL AREA BANGALORE – 560 066.
... PETITIONER/APPLICANT
(COMMON)
(By Sri. DHYAN CHINNAPPA Sr. ADV., FOR Sri. ARUN KUMAR FOR M/S. CREST LAW PARTNERS)
AND :
NIL.
... RESPONDENT (COMMON)
(By Smt. SOWBHAGYA N A, CGC, FOR ROC Sri. K S MAHADEVAN & SRI V JAYARAM, ADVs. FOR OL)
CO. P. No. 300/2013 A/W. C.A. No. 766/2014
BETWEEN :
DELL INDIA PRIVATE LIMITED A COMPANY INCORPORATED UNDER THE PROVISIONS OF THE COMPANIES ACT, 1956, AND HAVING ITS REGD. OFFICE AT DIVYASREE GREENS GR. FLOOR, SY.Nos.12/1, 12/2A AND 13/1A, CHALLAGHATTA VILLAGE VARTHUR HOBLI BANGALORE – 560 071.
... PETITIONER/APPLICANT
(COMMON)
(By Sri. DHYAN CHINNAPPA Sr. ADV., FOR Sri. ARUN KUMAR FOR M/S. CREST LAW PARTNERS)
6 AND :
NIL.
... RESPONDENT (COMMON)
(By Smt. SOWBHAGYA N A, CGC, FOR ROC Sri. K S MAHADEVAN & SRI V JAYARAM, ADVs. FOR OL)
THESE COMPANY PETITIONS ARE FILED UNDER SECTION 391 AND 394 OF THE COMPANIES ACT, 1956 WITH A PRAYER THAT THE SCHEME OF AMALGAMATION AT ANNEXURE-A BE SANCTIONED BY THE COURT SO AS TO BE BINDING ON ALL THE SHAREHOLDERS OR MEMBERS AND CREDITORS OF THE COMPANY AND ON THE SAID COMPANY.
C.A.No. 767/2014 IS FILED UNDER RULES 6 AND 9 OF THE COMPANIES COURT RULES R/W. ORDER VI, RULE 17 AND SEC. 151 OF CPC WITH A PRAYER THAT THE TRANSFEREE COMPANY AND THE TRANSFEROR COMPANY HAVE OBTAINED REVISED VALUATION FROM THEIR CHARTERED ACCOUNTANT TO REVISE THE SHARE EXCHANGE RATIOS ON 17.01.2014 AND ETC.
C.A.Nos. 760/2014, 761/2014, 762/2014, 763/2014, 764/2014, 765/2014 AND 766/2014 ARE FILED UNDER RULES 6 AND 9 OF THE COMPANIES COURT RULES R/W. ORDER VI, RULE 17 AND SEC. 151 OF CPC WITH A PRAYER THAT THE TRANSFEROR COMPANY AND THE TRANSFEREE COMPANY HAVE OBTAINED REVISED VALUATION FROM THEIR CHARTERED ACCOUNTANT TO REVISE THE SHARE EXCHANGE RATIOS ON 17.01.2014 AND ETC.
THESE COMPANY PETITIONS ALONG WITH COMPANY APPLICATIONS COMING ON FOR ORDERS THIS DAY, THE COURT PASSED THE FOLLOWING;
7 O R D E R
The applicants in C.A.Nos.767, 760, 761, 762, 763, 764, 765 and 766/2014 have filed these applications enclosing thereto the Valuation report, resolutions passed by the Transferor and Transferee companies and the consent letters issued by the shareholders of the respective applicant/petitioner companies. The share exchange ratio under the scheme was initially provided based on the unaudited accounts of the companies. However, on the accounts being audited there was revision in the valuation. Consequent thereto, share exchange ratio originally provided under the scheme has been suitably altered. The Board of Directors accordingly considered the same and obtained consent from the shareholders. As the altered share value is now a part of the scheme, the same has been produced along with these applications.
The above noticed documents, in the backdrop of the averments made in the affidavit accompanying
8 these applications being a part of the scheme are taken on record and the share exchange ratio indicated therein shall become part of the scheme. In that backdrop, the petitions are taken up for consideration.
The petitioner companies in Co.P.Nos.294, 295, 296, 297, 298, 299 and 300/2013 are the Transferor companies No. 01 to 07 and the petitioner company in Co.P.No. 301/2013 is the Transferee company. They are before this Court seeking sanction of the scheme of amalgamation evolved among themselves. The scheme of amalgamation is produced at Annexure- A to these petitions.
The Transferor and Transferee companies are all part of the Dell group. Hence with the intention to integrate and rationalize and to carry on business more efficiently have sought to merge the Transferor companies into the Transferee company. By the scheme of amalgamation they claim to achieve the same. The scheme as formulated was considered by the Board of
9 Directors of the petitioner companies on 22.08.2013, 23.08.2013, 26.08.2013 and 04.09.2013 respectively and approved the same. 5. The scheme was thereafter to be considered by the shareholders and creditors of the respective petitioner companies and approval was to be accorded. However since the consent letters had been given by the shareholders and creditors, the petitioners herein were before this Court in separate company applications filed under Sec.391 of the Companies Act seeking that the convening of the meeting for that purpose be dispensed as consent was already given in writing. This Court, by separate orders dated 26.11.2013 in each of the applications dispensed the convening of the meeting. Accordingly, as per the leave granted, the instant petitions are filed. Though there was marginal delay in filing, the delay has been condoned by separate order. 6. This Court, by the order dated 24.01.2014 had directed notice to the Regional Director in all these petitions and to the Official Liquidator in petitions of the
10 Transferor companies to secure them to verify the scheme and to express their observations. Simultaneously, the filing of the petitions was also directed to be advertised in ‘The Hindu’ English daily and ‘Udayavani’ kannada daily which has been complied. Pursuant to the publication no interested person has approached this Court and objected to the sanction of the scheme. 7. Insofar as the Transferor companies herein, the Official Liquidator had filed separate OLR in each case and sought for appointment of Chartered Accountant to verify the books and registers and provide their opinion. This Court, by the order dated 21.02.2014 had appointed M/s. John, Joseph & Mathew as the Chartered Accountants, who have on verification certified that the Transferor companies have maintained the books of account and the statutory registers as per the requirement of law and that the affairs of the company has not been conducted in any manner prejudicial to the members or the public. The Official
11 Liquidator, relying on the same has filed the OLR in the respective petitions. No observation is raised but has indicated that the Transferor companies be dissolved. 8. The Registrar of Companies, on behalf of the Regional Director, on examination of the scheme has filed separate affidavits dated 08.07.2014 in these petitions raising certain observations requiring response. The first observation is that the Transferor No.5 company is a foreign entity and in that view on allotting shares to it, the Regulations of FEMA/RBI is to complied. Hence an undertaking be made to that effect. The second observation is with regard to the clarification to be made relating to the approval from RBI to the share allotment pursuant to the earlier merger approved by the Court. The third observation relates to exchange ratio in respect of the Transferor company No.7. 9. The petitioner companies have filed the reply affidavit dated 30.07.2014. With regard to the allotment of shares to the foreign entity, an undertaking is made
12 that the requirement of the FEMA will be complied. Regarding the second observation noticed above it is indicated that in respect of the earlier approval for merger vide order dated 22.09.2011, application for approval has been made and since the Transferee company will continue to exist post merger, the approval will be obtained and the shares would be allotted. With reference to the third observation, it is explained that on valuation of the Transferor company No.7, it was found to be negative and as such no shares could be issued, which has been considered and approved by the shareholders. Reference is made to Sec.72A of the Income Tax Act with regard to the permissibility of the loss suffered by the Transferor company to be carried by the Transferee company. The clarifications issued through the affidavit has not evoked any further observation by the statutory authority and is therefore satisfactory. Further, what had been observed at the first instance is that subject to such undertaking and clarification the scheme could be approved. In any event the sanction to be granted by
13 this Court will always remain subject to compliance of statutory and other legal requirement, both pre and post approval of the scheme. 10. In the above light, a perusal of the scheme of amalgamation at Annexure-A will disclose that all aspects have been adverted and the interest of the shareholders, creditors and the employees has been protected. As noticed, the share exchange ratio has been altered due to the change in valuation and the same forms a part of the scheme since it has also received the approval of the Board of Directors and the shareholders. The authorities have not brought forth anything contrary to law or to public interest, if the scheme is sanctioned. On publication, no other interested person also has opposed the scheme. Hence, the scheme is liable to be sanctioned which shall however be subject to compliance of all statutory and legal requirements as noticed above.
In the result, the following: O R D E R (i) All the above noticed C.A.Nos.767, 760, 761, 762, 763, 764, 765 and 766/2014 are allowed and documents are taken on record.
(ii) All the Co.P.Nos. 294, 295, 296, 297, 298, 299, 300 and 301/2013 are allowed. (iii) The scheme of amalgamation at Annexure-A is sanctioned so as to bind the shareholders, members and creditors of all the companies. (iv) The Transferor companies named above, except Transferor Company No.5 shall stand dissolved without the process of winding up. (v) The Transferor Company No.5 which is a branch office shall stand closed.
15 (vi) A copy of this order shall be filed with the Registrar of Companies within thirty days from the date of receipt of the copy.
Sd/-
JUDGE.
LRS/bms