IN THE HIGH COURT OF JUDICATURE AT BOMBAY ORDINARY ORIGINAL CIVIL JURISDICTION COMPANY SCHEME PETITION NO. 348 OF 2010. CONNECTED WITH COMPANY SUMMONS FOR DIRECTION NO. 319 OF 2010 TRANSWARRANTY CREDIT CARE PRIVATE LIMITED …………Petitioner / First Transferor Company. AND COMPANY SCHEME PETITION NO. 349 OF 2010. CONNECTED WITH COMPANY SUMMONS FOR DIRECTION NO. 320 OF 2010. TRANSWARRANTY FOREX & COMMODITIES PRIVATE LIMITED …………Petitioner / Second Transferor Company. WITH COMPANY SCHEME PETITION NO. 350 OF 2010. CONNECTED WITH COMPANY SUMMONS FOR DIRECTION NO. 321 OF 2010. TRANSWARRANTY FINANCE LIMITED …………Petitioner / Transferee Company. In the matter of the Companies Act 1 of 1956; AND In the matter of Sections 391 to 394 of the Companies Act, 1956; AND In the matter of Scheme of Amalgamation of TRANSWARRANTY CREDIT CARE PRIVATE LIMITED and TRANSWARRANTY FOREX & COMMODITIES PRIVATE LIMITED with TRANSWARRANTY FINANCE LIMITED Mr. Shaym Mehta with Mr. Rajesh Shah i/b Rajesh Shah & Co., Advocate for the Petitioners. 1 Mr. C. J. Joy and Mr. N. D. Sharma i/b Mr. S.K. Mohapatra for Regional Director in both Petitions. Dr. T. Pandian, Dy. Official Liquidator, present in CSP Nos. 348 of 2010 and 349 of 2010 CORAM: S. J. Kathawalla, J. DATE: 15th October, 2010. PC: 1. Heard learned counsel for the parties. 2. The sanction of the Court is sought under Sections 391 to 394 of the Companies Act, 1956, to the Scheme of Amalgamation of TRANSWARRANTY CREDIT CARE PRIVATE LIMITED and TRANSWARRANTY FOREX & COMMODITIES PRIVATE LIMITED with TRANSWARRANTY FINANCE LIMITED. 3. Counsel appearing on behalf of the Petitioners states that they have complied with all requirements as per directions of this Court and they have filed necessary affidavits of compliance in the Court. Moreover, Petitioner Companies undertake to comply with all statutory requirements, if any, as required under the Companies Act, 1956 and the Rules made thereunder. The undertaking is accepted. 4. The Regional Director has filed an Affidavit stating therein that save and except as stated in para 6(a), (b) and (c) of the Affidavit the Scheme dose not appear to be prejudicial to the interest of shareholders and public. The Paragraph 6 of the said Affidavit is read thus:- 2 “ 6. That the Deponent respectfully submits that :- (a) The Clause No. 10.7 of the scheme provides for creation of Trust. The Trust deed is not appears to have been approved by shareholders of the Transferee Company. On enquiry made by this deponent, the Transferee Company, vide its letter dated 06/09/2010 submitted that the proposed Trust Deed is to be approved by shareholder of Transferee Company in the ensuing Auunal General Meeting to be held on 16/09/2010. Copy of the Trust Deed and the notice to the shareholders for the AGM scheduled on 16/09/2010 are annexed as Exhibit D-1 & D-2 respectively. Where from its noticed that the beneficial interest is vested with the Transferee Company. It is therefore submitted that the scheme may be approved by the Hon’ble High Court subject to the condition that the Trust Deed is approved by the shareholders of the Transferee Company before the scheme is given effect to and the Trust Deed is also forming part of this Scheme. (b) It is submitted that after the appointed date both the Transferor Companies have allotted on preferential basis to its promoter partly paid shares. In the First Transferor Company about 52,29,500 number of shares partly paid to an extent of Rs. 2.50 each (face value of Rs. 10) to Mr. Kumar Nair , promoter director. Similarly in the Second Transferor Company also 4,92,310 shares of partly paid Rs. 2.50 each (face value of Rs. 10) has been allotted in favour of Mr. Kumar Nair , promoter director. Though preferential allotment is made in favour of promoter director his holding in Transferee Company, which is a listed company are not increasing post amalgamation. It is noticed that pre amalgamation the promoter are holding 56.38% of capital of Transferee Company, however post amalgamation their holding only 53.62%. Therefore no increase in their holding. However, the Hon’ble High Court may direct the Transferee Company / Promoter director to comply with the direction given by the Bombay Stock Exchange vide its letter dated 13/04/2010 (which is marked as Exhibit – K to the petition filed by the Transferee Company). c) The Transferee Company is a Non Banking Finance Company, hence the Transferee Company may be directed to file the copy of the Scheme along with the copy of the Hon’ble Court’s order on this petition within 30 days from the date of order, with the RBI. 5. The counsel on behalf of the Petioner Company states thath the Petitioner Company has filed an Affidavit dated 16th September, 2010 and 28th September, 2010 and 28th September, 2010 in Company Scheme Petition No. 3 350 of 2010 in reply to the queries raised by the Regional Director in his Affidavit. With reference to Paragraph 6(a) of the Affidatvit of Regional Director is concerned, it is stated that the Annual General Meeting of the Petitioner Company was held on 16th September, 2010, wherein the Trust Deed was approved by the shareholders of the Transferee Company by passing a Special Resolution. 6. As regards the objection of the Regional Director contained in Para 6(a) of his Affidavit to the effect that the Trust Deed must form a part of the Scheme, it is clear from Clause 10.7 of the Scheme that the Trust Deed had not been executed on the date of formulating the Scheme and the execution of the Trust Deed was contemplated in future. From the record it is clear that the Trust Deed was not executed as on the date of the approval of the Scheme by the shareholders and creditors. Knowing this position the shareholders and creditors have sanctioned the Scheme and none are objecting to the same even today. The Transferee Company has filed an Affidavit dated 28th September 2010 placing on record that the Trust Deed was approved by the shareholders of the Transferee Company at its AGM held on 16th September 2010. The Trust Deed was thereafter executed on the same date. As such the Trust Deed has come into existence subsequent to the approval of the Scheme. As such it cannot form part of the Scheme. In the circumstances the objection of the Regional Director as contained in Para 6(a) of his Affidavit is rejected. 7. With reference to paragraph 6(b) of the affidavit of Regional Director is concerned, the Transferee Company/ Promoter Director in its Affidavit has 4 given an undertaking to comply with the directions given by the Bombay Stock Exchange Limited in the following manner:- a. The Partly paid shares issued by transferee company in lieu of the partly paid shares in the transferor company pursuant to the scheme of amalgamation shall be made fully paid up within a period of one year form the date of allotment. b. There will not be any fresh issue of equity shares in the transferee company till the entire partly paid shares are made fully paid up. c. 38,14,540 partly paid equity shares shall be listed on the exchange but need not be permitted for trading till they are made fully paid up. The said undertaking is accepted. 8. So far as paragraph 6(c) of the Regional Director’s Affidavit is concerned, the Transferee Company has given an underkaking to file a copy of the Scheme alongwith copy of this order with Reserve Bank of India with in 30 days from the date of the order. The said underkating is accpted. 9. The Official Liquidator has filed a report stating that the affairs of the Transferor Companies have been conducted in a proper manner and that the Transferor Companies may be ordered to be dissolved. 10. From the material on record, the Scheme appears to be fair and reasonable and is not violative of any provisions of law and is not contrary to public policy. None of the parties concerned have come forward to oppose the Scheme. 5 11. Since all the requisite statutory compliances have been fulfilled, Company Scheme Petition Nos. 348 of 2010 and 349 of 2010 filed by the Transferor Companies are made absolute in terms of prayer clauses (a) to (j) and Company Scheme Petition No. 350 of 2010 filed by the Transferee Company is made absolute in terms of prayer clauses (a) to (i). 12. The Petitioner Company to lodge a copy of this order and the Scheme duly authenticated by the Company Registrar High Court, (O.S.) Bombay, with the concerned Superintendent of Stamps for the purpose of adjudication of stamp duty payable, if any, on the same within 60 days from the date of the order. 13. The Petitioner Companies in both Petitions to pay costs of Rs.10,000/- each to the Regional Director, Western Region, Mumbai and the Petitioner Company in the Company Scheme Petition Nos. 348 of 2010 and 349 of 2010 pay costs of Rs.10,000/- each to the Official Liquidator, High Court, Bombay. Costs to be paid within four weeks from today. 14. Filing and issuance of the drawn up order is dispensed with. 15. All concerned authorities to act on a copy of this order along with the Scheme duly authenticated by the Company Registrar, High Court, Bombay. (S. J. Kathawalla, J.) 6