M/s SASHI SYSTEMS PRIVATE LIMITED v. M/s SAAHI SOFTSOL PRIVATE LIMITED

M/s Saahi Softsol Private Limited, A company incorporated under the Companies Act, 1956 and having its registered Office at Flat No.101, 3-6-140/A, First Floor, City Centre, Himayathnagar, Hyderabad, Rep. by its Director, Mr.G.Raji Reddy …Petitioner/ (Transferee Company) HON’BLE SRI JUSTICE G.V.SEETHAPATHY COMPANY PETITION Nos.119 & 120 OF 2010 COMMON ORDER: These petitions are filed under Sections 391 to 394 of the Companies Act, 1956 for according sanction to the scheme of arrangement wherein demerger of the M/s Saahi Systems Private Limited (hereinafter referred to as “transferor company”) and M/s Saahi Softsol Private Limited (hereinafter referred to as “transferee company”) is proposed.

#2. Heard the learned counsel for the petitioners in both the petitions and the learned Assistant Solicitor General representing the Registrar of Companies, Hyderabad. Perused the records.

#3. The transferor company is a private limited company incorporated on 03-03-2000 as a public limited company initially and subsequently on 01-09-2009 it was converted into a private limited company and a fresh certificate of incorporation was issued by the Registrar of Companies. The registered office of the transferor company is situate at City Centre, Hyderabad. The authorized share capital of the transferor company is Rs.1 crore, divided into 10,00,000 equity shares of Rs.10/- each. The issued, subscribed and paid up share capital of the transferor company is Rs.75,07,000/-, comprising 7,50,700 equity shares of Rs.10/- each.

#4. The main objects of the transferor company, as set out in the Memorandum and Articles of Association, are extracted in the petition and they are not reiterated here for the sake of brevity.

#5. The transferor company is engaged in the business of manufacture and sale and export of computer peripherals, accessories, computer consumables floppy discs, hard discs etc. The transferor company is also engaged in the business of software development and also infrastructure business.

#6. The transferee company was incorporated on 23-04-2009 with its registered office at City Centre, Hyderabad. The authorised share capital of transferee company is Rs.1,00,000/-, divided into 10,000 equity shares of Rs.10/- each. The issued, subscribed and paid up share capital of the transferee company is Rs.1,00,000/-, consisting of 10,000 equity shares of Rs.10/- each.

#7. The objects of the transferee company, as set out in the Memorandum and Articles of Association, are extracted in the petition and they are not reiterated here for the sake of brevity.

#8. The transferee company is engaged in the business of manufacture and sale and export of computer peripherals, accessories, computer consumables floppy discs, hard discs etc. The transferee company is also engaged in the business of software development.

#9. It is stated that the transferor company has decided to demerge its software division so that it will focus only on software development. It was, therefore, proposed that the software division of the transferor company shall be demerged and the same be merged with the transferee company so that it will lead to streamlining of the administrative work of the companies and minimize the paper work and result in better utilization of the resources. It is further stated that the proposed scheme of arrangement would be beneficial and advantageous the shareholders, employees and creditors of both the companies. The benefits of the scheme are set out in detail in the scheme annexed to the petition and the salient features thereof are extracted in the petition.

#10. The Board of Directors of the transferor and transferee companies in their respective meetings held on 10-03-2010 approved the scheme of arrangement w.e.f 01-04-2010, subject to the approval of the shareholders and confirmation by this Court.

#11. Earlier, the transferor and transferee companies filed C.A.Nos.467 and 468 of 2010 seeking a direction to dispense with the meeting of the shareholders for approval of the scheme. As there were only seven shareholders in the transferor company and all of them gave affidavits stating no objection for the proposed scheme of arrangement, the meeting of the shareholders was dispensed with and C.A.No.467 of 2010 was accordingly allowed on 15-06-2010. As there were only two shareholders in the transferee company and both of them have given affidavits stating no objection for the proposed scheme of arrangement, C.A.No.468 of 2010 was also allowed on the same day i.e., 15-06-2010 and the meeting of the shareholders was dispensed with.

#12. It is stated that there is one secured creditor viz., Reliance Capital Limited and one unsecured creditor viz., Kotak Mahindra Limited for the transferor company. Both of them have given letters stating no objection for the proposed scheme and the said letters are placed on record. It is stated that there are no secured or unsecured creditors for the transferee company.

#13. While admitting two company petitions on 13- 07-2010, this Court directed issuance of notice to the Regional Director, Ministry of Corporate Affairs, Sastri Bhavan, Chennai, Registrar of Companies, Hyderabad and also to the Official Liquidator attached to this Court and also ordered publication of general notice ‘Business Standard English daily’ and ‘Andhra Jyothi Telugu daily’ newspapers of Hyderabad editions.

#14. The learned Assistant Solicitor General, representing the Registrar of Companies, filed a common affidavit, inter alia raising the following objections: a) Para 13 of the scheme contemplates change of name of the company and alteration of its objects clause of the remaining business of Saahi Systems Private Limited. The company is required to comply with the provisions of Sections 21 and 17 of the Companies Act,

#1956. b) The transferee company should pay the stamp duty wherever applicable as per Regulations of the Andhra Pradesh Stamp Act. c) The transferee company has to increase its authorized capital to enable itself to allot the shares to the shareholders of the transferor company. The company has to comply with Sections 94, 97 etc., of the Companies Act,

#1956. Regarding the first objection, the learned counsel for the petitioner would submit that the company would comply with the provisions of Sections 21 and 17 of the Companies Act. Regarding the second objection, he would submit that the transferee company would pay the stamp duty wherever applicable. Regarding the third objection, he would submit that the transferee company would increase the authorized capital to enable allotment of shares to the shareholders and comply with the provisions of Sections 94 and 97 of the Companies Act.

#15. No objections are received from any other quarter in response to the general notice published in the newspapers.

#16. In the circumstances and having regard to the fact that both the transferor and transferee companies are engaged in similar type of business and the proposed scheme of arrangement involving demerger is considered to be to the benefit of both the companies, its creditors and employees and would not in any way adversely affect their interest and the Board of Directors of both the companies having approved the proposed scheme and the shareholders of both the companies also having given consent for the proposed scheme of demerger and the creditors of the transferor company also stating no objection for the same and no objection having been received from any quarter in response to the general notice issued by way of publication in the newspapers and the objections raised by the Central Government in their affidavit having been undertaken to be complied with by the petitioners, it considered that the proposed scheme of demerger can be sanctioned, subject to compliance with the provisions of Sections 21, 17, 94 and 97 of the Companies Act, 1956 and accordingly sanction accorded.

#17. The petitioners shall file a certified copy of this order within 30 days after receiving the same before the Registrar of Companies for the purpose of registration and for taking necessary follow up action. The petitioners shall pay a sum of Rs.3,000/- each towards costs to the learned Assistant Solicitor General.

#18. In the result, the company petitions are disposed of as stated above. ____________________ G.V.SEETHAPATHY, J 10th August, 2010. Lrkm