IN THE HIGH COURT OF JUDICATURE AT BOMBAY ORDINARY ORIGINAL CIVIL JURISDICTION COMPANY PETITION NO.551 OF 2009 CONNECTED WITH COMPANY APPLICATION NO.530 OF 2009 Uttam Galva Steels Limited. .......Petitioner/Resulting Company In the matter of the Companies Act I of 1956 AND In the matter of Section 391 to 394 of the Companies Act,1956 AND In the matter of the Scheme of Arrangement between Shree Uttam Steel and Power Limited and Uttam Galva Steels Limited. Mr. Hemant Sethi i/b Hemant Sethi & Co. Advocates for Petitioner Mr. C. J. Joy a/w Mr. V. B. Tiwari and Ms. Nisha Valani i/b Mr. S. K. Mohapatra for Regional Director . CORAM: S. J. KATHAWALLA. J DATE : 7th AUGUST, 2009 PC: 1. Heard learned counsel for parties. 2. The sanction of the Court is sought under Section 391 to 394 of the Companies Act, 1956 to the Scheme of Arrangement between Shree Uttam Steels and Power Limited, the Demerged Company and Uttam Galva Steels Limited, the Petitioner/Resulting Company. This petition is presented by the Resulting Company. The Demerged Company has filed similar Petition before High Court of Bombay, Goa Bench which is still pending. The Petitioner has complied with all the requirements as per directions of this Court. 3. This Scheme of Arrangement is presented for demerger of Power Division of Shree Uttam Steel and Power Limited into Uttam Galva Steels Limited and Reorganisation of Preference Share Capital of Shree Uttam Steel and Power Limited pursuant to the relevant provisions of the Companies Act, 1956. 4. Counsel appearing on behalf of the Petitioner have stated that they have complied with all the requirements as per directions of this Court and they have filed necessary affidavits of compliance in the Court. Moreover, Petitioner Company also undertake to comply with all statutory requirements, if any, as required under the Companies Act, 1956 and the rules made thereunder. 5. By an order dated 24th April,2009 made in Company Application No.530 of 2009 the Petitioner Company was directed to convene meeting of Equity Shareholders and the meeting of Secured Creditors and Unsecured Creditors was dispensed with in view of undertaking given by the Petitioner Company to give individual notice of final hearing of Petition to all the Secured Creditors and to those Unsecured Creditors having outstanding balance of Rs.5,00,001 and above by Registered Post AD. 2 6. In pursuance of said order the meeting of Equity Shareholders of the Petitioner Company was held on Saturday, 6th June,2009. The Equity Shareholder has approved the Scheme of Arrangement between Shree Uttam and Power Limited and Uttam Galva Steels Limited without any modification by the requisite majority in numbers and more than three-fourth in value by the members present and validly voted at the meeting of the Petitioner Company. 7. In this background, the Petitioner Company has approached this court to sanction the Scheme of Arrangement between Shree Uttam and Power Limited and Uttam Galva Steels Limited so as to be binding on the both the Companies and their respective members and creditors. The Petitioner asserts that no one will be prejudiced if the Scheme of Arrangement is sanctioned by the Hon’ble Court which will be beneficial and in the interest of all the Companies, their Shareholders, Creditors and to the general public and all concerned. 8. The Regional Director has filed affidavit and has stated in para 6(a) that the Registrar of Companies has received a complaint from one Mr. Dhirendra Gandhi alleging non receipt of the notice of the court convened meeting. The said matter was taken up with the Company by the Registrar of Companies and the Company rebutted the allegation with proof of dispatch and further confirmed that it had sent another copy by 3 speed post as sought by the complainant. The counsel appearing for the Petitioner Company states that the said Equity Shareholder is holding only one Equity Shares has neither attended the meeting nor has he filed any affidavit in court objecting to the scheme. 9. Also in paragraph 6(b) of the said affidavit, the Regional Director has further stated that the Petitioner/Resulting Company was recently inspected under section 209A of the Companies Act, 1956 and inspecting officer has observed certain violations of section 295(1), 297, 193, 211, 21 and 217(3) of the Companies Act,1956. Necessary penal action is being taken by the Ministry. Further Mr. Raghvendra Kumar Agarwal, Senior Vice President and Company Secretary of the Petitioner Company vide his affidavit dated 17th July, 2009 has undertaken to go for compounding of an offence, if any, that will be reported out of the said inspection. The counsel appearing for the Petitioner states that this facts are already disclosed in the paragraph 26 of the Petition and further states that as and when notices are received from the Registrar of Companies suitable replies will be filed. It is open to Registrar of Companies and other appropriate authorities to initiate necessary action in this regards against the Petitioner Company. Moreover, the Petitioner Company has already given the undertaking to go for compounding of an offence that will be reported out of the said inspection. 4 10. It is further stated that the save and except as stated in paragraph 6(a) & 6(b) of the affidavit it appears that the scheme is not prejudicial to the interest of shareholders and public. 11. Upon perusal of the entire 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 any public policy. None of the parties concerned have come forward to oppose the Scheme. Moreover, the Regional Director has stated that the scheme as proposed is not prejudicial to the interest of shareholders and the public,save and except what is mentioned in paragraphs 8 & 9 above. 12. There is no objection to the Scheme of Arrangement, save and except what is mentioned in paragraphs 8 & 9 herein and since all the requisite statutory compliances have been fulfilled Company Petition is made absolute in terms of prayer clause (a) & (b) subject to the Scheme being sanctioned by the High Court of Bombay,Goa Bench in case of the Demerged Company. However, it is open for the Registrar of Companies and other appropriate authorities to initiate necessary action against the Petitioner Company with regard to violation pointed out by Regional Director in its affidavit. 5 13. The Resulting Company to lodge 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 30 days from the date of sanctioning of the Scheme by the Goa Bench in respect of the Demerged Company. 14. The Petitioner to pay cost of Rs.7,500/- to the Regional Director. Costs to be paid within four weeks from today. Petitioner to comply with statutory compliances, applicable, if any. 15. Filing and issuance of the drawn up order is dispensed with. All concerned authorities to act on a copy of this order and the Scheme duly authenticated by Company Registrar, High Court, (O.S) Bombay. (S. J. KATHAWALLA, J) 6