THE HON’BLE SRI JUSTICE G.V.SEETHAPATHY Company Petition Nos.100 and 101 of 2010 COMMON ORDER: These two petitions are filed under Sections 391 to 394 of the Companies Act, 1956 (hereinafter referred to as ‘Act’) seeking sanction of the Scheme of Arrangement. Heard the learned counsel for the petitioners and the learned Assistant Solicitor General representing the Registrar of Companies. Perused the records also. C.P.No.100 of 2010 is filed by M/s.Vasant Chemicals Private Limited (hereinafter referred as ‘transferor company’), a company incorporated under the Act on 25.10.1988 with its registered office situated at Begumpet, Hyderabad. The main objects of the transferor company as set out in the Memorandum of Association are as follows: “a. To carry on the business of manufacturers, dealers, distributors, importers and exporters of dyes, dye stuffs, dye intermediaries, optical brightening agents and all kinds of Organic Chemicals. b. To carry on the business of manufacturers, dealers, distributors of Pharmaceutical, Medicinal, Herbal Bacteriological Biological, Chemical, Industrial and other preparation, articles and compounds. c. To carry on the business of manufacturers and dealers in all types of inorganic chemicals and sorts. d. To take over the business of Vasant Chemicals a registered partnership Firm as a going concern or any other running concern dealing in similar line of activity.” The authorized share capital of the transferor company is Rs.5,00,00,000/- divided into 50,00,000 equity shares of Rs.10/- each. The present issued, subscribed and paid up capital of the transferor company is Rs.4,02,92,000/- divided into 40,29,200 equity shares of Rs.10/- each. C.P.No.101 of 2010 is filed by M/s.Vasant Foods Limited (hereinafter referred to as ‘transferee company’), a company incorporated under the Act, seeking sanction of the same Scheme of Arrangement. The transferee company was incorporated on 04.04.1996 with its registered office situated at Begumpet, Hyderabad and its main objects as set out in Memorandum of Association are as follows: “i. To carry on the business of manufacture, buy, Sell, trade and deal in all kinds of foods either as food, snacks or drinks of every description including ice creams, sodas and other aerated water, mineral water, edible oils, fruit juices, wafers biscuits, popcorn, cakes, pastries, bread, confectionery, vegetables, fruits, sausages, jams and pickles, cheese, milk, butter, crème, sweets meets, eggs, bacon, chicken or mutton patties, meat pies, potted meat, sea foods, table delicacies of every description for human consumption or otherwise. ii. To carry on the business of exporters and importers of all food products including dairy products, vegetable products, fruit products, confectioneries, meat and poultry products of every kind and description, and also that of farmers, dealers and traders in the above said products. iii. To carry on the business of consultants and advisers to the customers for the establishment, construction, erection or otherwise of any food industry in India or elsewhere and relating to any and all kinds of export services which may be required by any business, trade or industry or institution and to do all other things which are conductive to the attainment of the business. iv. To take over the business of Vasant Chemicals a registered Partnership Firm as a going concern or any other running concern dealing in similar line of activity. v. To carry on the business of trading of all kinds of goods, materials, substances and all kinds of chemicals (including chemicals for food processing industry).” The authorized share capital of the transferee company is Rs.2,00,00,000/- divided into 20,00,000 equity shares of Rs.10/- each. The present issued, subscribed and paid up share capital of the transferee company is Rs.1,74,10,700/- divided into 17,41,070 equity shares of Rs.10/- each.. The transferor and transferee companies have proposed the Scheme of Demerger. The benefits of the proposed Demerger are set out in detail in the Scheme, which is annexed to the two petitions and they are extracted in the petitions also and they are not reiterated here for the sake of brevity. It is stated that the Board of Directors of the transferor and transferee companies have in separate meetings held on 08.02.2010 approved the proposed Scheme of Demerger, subject to approval by the shareholders. It is stated that in the transferor company, there are 19 shareholders and all of them have given their consent by way of affidavits approving the proposed Scheme of Arrangement and the said affidavits are also placed on record. Based on the said affidavits, this Court by order, dated 13.04.2010, in C.A.No.353 of 2010, dispensed with convening the meeting of the shareholders. A copy of the said order is also placed on record. There are two secured creditors i.e., State Bank of India and Axis Bank Limited, for the transferor company and both of them have given No Objection Certificates for the proposed Scheme. There are 20 unsecured creditors for the transferor company and all of them have given their No Objection Certificates in respect of the proposed Scheme of Arrangement and they are also placed on record. The meeting of the secured and unsecured creditors of the transferor company was dispensed with by order, dated 13.04.2010, in C.A.No.353 of 2010. There are 19 shareholders in the transferee company and all of them have given consent and approved the proposed Scheme of Arrangement by way of affidavits. Based on the said affidavits, which are placed on record, this Court by order, dated 13.04.2010, in C.A.No.354 of 2010, dispensed with convening the meeting of the shareholders of the transferee company. It is stated that the transferee company does not have any secured or unsecured creditors. While admitting the two company petitions, this Court ordered issuance of notice to the Registrar of Companies, A.P., Hyderabad and also general notice by way of publication in ‘Indian Express’, English Daily, and ‘Vaartha’, Telugu Daily, of Hyderabad editions. In response to the general notice, no objections have been received from any quarter. The learned Assistant Solicitor General representing the Registrar of Companies filed a common affidavit in both the matters raising two objections - firstly that the transferee company should pay the stamp duty wherever applicable and secondly that the transferee company has to increase its authorized share capital to enable itself to allot the shares to the shareholders of the transferor company. Regarding the first objection, the learned counsel for the transferee company would submit that wherever applicable, the transferee company would pay the stamp duty. Regarding the second objection, he would draw the attention to Clause 11.5 of the proposed Scheme of Arrangement, wherein it is stated that the authorized share capital of the company is raised to Rs.7,00,00,000/-divided into 70,00,000 equity shares is of Rs.10/- each. The existing share capital of the transferee company is Rs.2,00,00,000/- and in the proposed Demerger, the share capital is proposed to be raised to Rs.7,00,00,000/-. It is stated that the said enhancement in the authorized share capital would take care of the allotment of shares of the shareholders of the transferor company upon the demerger. In the circumstances, having regard to the fact that the transferor and transferee companies have entered into a Scheme of Arrangement, which is considered to be beneficial to the interests of both the companies and their members, and the interests of the shareholders and the creditors of the companies have been duly safeguarded under the terms of the proposed scheme and the shareholders of both the companies, and the creditors of the transferor company having stated no objection for the proposed scheme and there being no objection received from any quarter in response to the general notice issued by way publication and the objections raised in the affidavit filed by the Registrar of Companies having been duly taken care of, it is considered that sanction of the proposed Scheme of Demerger can be accorded and it is accordingly accorded with effect from the appointed date i.e., 01.04.2009. The petitioners shall deposit a copy of the certified copy of this order within 30 days of 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/- (Rupees three thousand only) by way of costs to the learned Assistant Solicitor General. In the result, the Company Petitions are disposed of. ___________________ G.V.SEETHAPATHY,J Dt.02.08.2010 VGB