1 csp377-11.doc IN THE HIGH COURT OF JUDICATURE AT BOMBAY ORDINARY ORIGINAL CIVIL JURISDICTION COMPANY SCHEME PETITION NO.377 OF 2011 In the matter of the Companies Act, 1956 (1 of 1956); And In the matter of section 391 to 394 and other applicable provisions of the Companies Act, 1956; And In the matter of the scheme of amalgamation of Gloryshine Property Developers Pvt Ltd (the Transferor Company) with Sarthak Industries Ltd (the Transferee Company) their respective shareholders Sarthak Industries Ltd .. Petitioner And British Motor Car Co(1934) Ltd .. Intervener Mr.Hemant Sethi for the petitioner. Mr.Rohan Cama a/w Mr.Ranjit i/by Malvi Ranchoddas & Co for the interveners. Dr.T.Pandian, O.L present. CORAM : S.C.DHARMADHIKARI, J. 16th September 2011. P.C.: . This is a company petition seeking approval to a scheme of 2 csp377-11.doc Amalgamation under sections 391 and 394 of the Companies Act, 1956. 2 The transferor and transferee companies have both filed petitions. There is compliance made with the statutory requirements. All necessary and requisite particulars have been disclosed. There are declarations and statements made on oath. The relevant annexures pointing out the salient features of the scheme and the financial position of both companies are on record. The scheme and its salient features have been emphasised and it is stated that by virtue of the arrangement that is arrived at, there will be no prejudice to either the shareholders or creditors of the company nor is the scheme propounded contrary to public policy. 3 The Official Liquidator as also the Regional Director have no objection to the scheme being sanctioned and approved by this Court. 4 However, one intervener British Motor Car Company (1934) Ltd., has intervened and has opposed the scheme on the ground 3 csp377-11.doc that there is a claim which has been lodged presently with a sole Arbitrator and it has been stated that the transferee company M/s.Sarthak Industries Ltd owes to the Intervener a sum of Rs. 100.07 lakhs consisting of unpaid bills of Rs.11,41,930/- worked out till 31st July 2007. This is on the basis of the bills raised and remaining unpaid from 1st April 2001 to 1st December 2004. The basis of the claim is an Agreement dated 15th October 1997 for supply of electricity. He submitted that the rate under that agreement is admitted and as and when the amounts were demanded, they were liable to be paid by the transferee company. The transferee company terminated the agreement pre-maturely and stopped taking supply with effect from 1st February 2004. At the time of discontinuance of the supply, the aforementioned sum was due and payable and that is how the claim has been made against the transferee company. 5 Mr.Cama, learned counsel appearing on behalf of the intervener submitted that the transferor company is in the business of real estate. It is a loss making unit. Once a loss making unit or company is taken over by the transferee company, then, the 4 csp377-11.doc transferee company must show that the meetings of the creditors have been dispensed with because the net worth of that company is much more to satisfy all the debts and liabilities. In the instant case, the liabilities of the transferor company far exceed the assets and considering the fluctuating real estate market, it is not possible that such claim of the intervener will be honoured. Even if it is assumed that the same is pending before the Arbitral Tribunal, yet, in the light of the weak financial position, atleast the sum mentioned as outstanding and due and payable in the balance-sheet that is to the tune of Rs.7 lakhs with interest accrued be secured and only then appropriate orders be passed granting sanction and approval to the scheme. 6 Mr.Sethi appearing on behalf of the transferee company, on the other hand submits that the entire basis of the claim of the intervener is fallacious inasmuch as the claim is yet to be crystalised. It is pending adjudication before the Arbitral Tribunal. The claim far from being admitted is highly disputed inasmuch as there is counter claim which has been filed. The details of the counter claim are set out in the affidavit in reply which is filed by the 5 csp377-11.doc transferee company and for all these reasons it is submitted that the intervener’s objections should be over ruled and the scheme be sanctioned. 7 My attention is also invited to the affidavit in rejoinder which has been filed on behalf of the intervener. 8 With the assistance of the learned counsel appearing for the parties, I have perused these objections and the affidavits on record so also I have heard the detailed submissions. Reliance is placed upon an order passed by me on 10th March 2006 in Company Petition No.670 of 2005 connected with Company Application No.411 of 2005 (Tech Pacific (India) Ltd Vs. Samsung India Electronics Pvt Ltd). 9 To my mind, the objector or intervener cannot, on the basis of the claim which has been made against the transferee company, succeed and oppose the scheme when such a claim is pending adjudication. Once it has been pointed out that the sum is a disputed liability and it is being adjudicated, then, to my mind, it will 6 csp377-11.doc not be possible to withhold sanction and approval to the scheme only on account of such a claim. In the affidavits that have been filed by the parties, they have placed their own version in support of their claims and counter claims. This Court is not a forum which could adjudicate and decide the same. Admittedly, the parties are before the Arbitral Tribunal which has taken cognizance of these versions and they are being adjudicated. Nothing prevents the interverner/objector, on the basis of the contents of the balance- sheet in making an application for securing the alleged admitted sum. Once such a course is available under the Arbitration and Conciliation Act, 1996 and even thereafter when the intervener/ objector secures and obtains an award crystalising the claims, then, all the more there is no reason to withhold the approval and sanction to the scheme. Nothing has been pointed out in the statutory provisions relied upon, which would indicate that this Court, can on the strength of a disputed claim, withhold the sanction and approval to the scheme. 10 As a result of the aforesaid discussion, the company petitions are made absolute in terms of prayer clause (a). 7 csp377-11.doc 11 Filing and issuance of drawn up order is dispensed with. 12 All concerned to act on copy of order and the scheme annexed to the petition duly authenticated by the Company Registrar. 13 The petitioner is directed to file a copy of the said order with the Registrar of Companies, electronically, alongwith E-Form 21 in addition to physical copy within 30 days from the date of issuance of the order by the Registry. (S.C.DHARMADHIKARI, J)