1 IN THE HIGH COURT OF JUDICATURE AT BOMBAY ORDINARY ORIGINAL CIVIL JURISDICTION COMPANY SCHEME PETITION NO. 543 OF 2010 CONNECTED WITH COMPANY SUMMONS FOR DIRECTION NO. 563 OF 2010 P N Writer and Company Private Limited....Petitioner/Demerged Company AND COMPANY SCHEME PETITION NO. 544 OF 2010 CONNECTED WITH COMPANY SUMMONS FOR DIRECTION NO. 564 OF 2010 Writer Lifestyle Private Limited.....Petitioner/Resulting Company In the matter of the Companies Act, 1956 (1 of 1956); AND In the matter of Sections 391 to 394 of the Companies Act, 1956; AND In the matter of Scheme of Arrangement between P N Writer and Company Private Limited (‘PNW’ or ‘the Demerged Company’) and Writer Lifestyle Private Limited (‘WLPL’ or ‘the Resulting Company’) and their respective Shareholders and Creditors Mr. Hemant Sethi i/b Hemant Sethi & Co., Advocates for the Petitioner. Mr. C.J. Joy with Mr. Anurag Gokhale, i/b Mr. S. K. Mohapatra for Regional Director. CORAM: S.J. KATHAWALLA , J DATE: 29TH OCTOBER, 2010 1. Heard learned counsel for the parties. 2 2. The sanction of the Court is sought under Sections 391 to 394 of the Companies Act, 1956 to the Scheme of Arrangement between P N Writer and Company Private Limited and Writer Lifestyle Private Limited and their respective shareholders (the “scheme “). The Scheme inter- alia provides for demerger of ‘Spa Retreat Project Undertaking’ of P N Writer and Company Private Limited, the Demerged Company into Writer Lifestyle Private Limited, the Resulting Company. The Resulting Company is wholly owned subsidiary of the Demerged Company. 3. Counsel appearing on behalf of the Petitioners has stated that the Petitioners have complied with all requirements as per directions of this Court and they have filed necessary affidavits of compliance in the Court. Moreover, Petitioner undertakes to comply with all statutory requirements, if any, as required under the Companies Act, 1956 and the rules made there under. The said undertaking is accepted. 4. The Regional Director has filed an affidavit stating therein that save and except as stated in paragraph 6(a), 6(b) & 6(c) of the said affidavit, the Scheme does not appear to be prejudicial to the interest of shareholders and public. In paragraph 6 of the said affidavit, the Regional Director has stated that: 6(a) Clause 5.1 of the Scheme provides for issue of preference shares by the Resulting Company to the members of the Demerged Company. However there is no provisions in the existing capital clause of the Memorandum of Association and Articles of Association of the Resulting Company enabling it to issue preference share capital. Hence the capital clause of the Resulting Company is required to be suitably amended before issuing new preference shares by the Resulting Company and subject to compliance of Section 94/95read with Schedule X of the Companies Act, 1956. 3 6(b) Clause 6.3 of the scheme states that “difference being the excess of new preference shares issued by WLPL on Demerger, over the net value of assets and liabilities shall be credited to/adjusted in “General Reserve Account” considering the nature of reserve and the said reserve account shall not be utilized for declaring dividend in future by the Resulting Company. 6(c) In the Divisional Balance Sheet as at 1/04/2010 submitted by the Demerged Company, an amount of Rs. 78,53,56,066/- is shown as Reserves and Surplus against the Resulting Company . However the Demerged Company vide its letter dated 19/10/2010 clarified that the said amount shall not be transferred upon Demerger to the Resulting Company. The Divisional Balance Sheet as at 1/04/2010 and the said letter dated 19/10/2010 are annexed hereto and marked as Exhibit-D collectively. 7. In so far as the query raised by the Regional Director in paragraph 6 (a) is concerned, the Counsel for the Petitioner states that the Resulting Company undertakes to suitably amend its Capital Clause before issuing new preference shares and also undertakes to comply with the provisions of Section 94/95 read with Schedule X of the Companies Act, 1956. The said Undertaking is accepted. 8. So far as the query raised in paragraph 6 (b) is concerned, the Resulting Company undertakes that after giving effect to treatment of Account as contemplated in clause 6.3 of the Scheme, the said reserve account shall not be utilized for declaring dividend in future by the Resulting Company. The said undertaking is accepted. 9. In so far as query made in paragraph 6(c) is concerned, the Counsel appearing for the Petitioner states that necessary clarification has been made by the Petitioner Company vide letter dated 19th 4 October 2010 addressed to the Regional Director which is annexed to the affidavit filed by the Regional Director. 10. Since all the requisite statutory compliances have been fulfilled, the Company Scheme Petition No 543 of 2010 and Company Scheme Petition No 544 of 2010 are made absolute in terms of prayer clauses (a) to (c) of the petition. 11. The Petitioner 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 order. 12. The Petitioner to pay costs of Rs.10,000/- each to the Regional Director. 13. Costs to be paid within four weeks from today. 14. Filing and issuance of the drawn up order is dispensed with. 15. All authorities concerned to act on a copy of this order along with Scheme duly authenticated by the Company Registrar, High Court (O. S.), Bombay. (S.J. KATHAWALLA, J)