COMP/103/2008 1/6 JUDGMENT IN THE HIGH COURT OF GUJARAT AT AHMEDABAD COMPANY PETITION No. 103 of 2008 In COMPANY APPLICATION No. 64 of 2008 With COMPANY PETITION No. 104 of 2008 In COMPANY APPLICATION No. 65 of 2008 For Approval and Signature: HONOURABLE MR.JUSTICE RAVI R.TRIPATHI ========================================= 1 Whether Reporters of Local Papers may be allowed to see the judgment ? 2 To be referred to the Reporter or not ? 3 Whether their Lordships wish to see the fair copy of the judgment ? 4 Whether this case involves a substantial question of law as to the interpretation of the constitution of India, 1950 or any order made thereunder ? 5 Whether it is to be circulated to the civil judge ? ========================================= MAJESTY AGRO FOODS PRIVATE LIMITED Versus . - Respondent(s) ========================================= Appearance : MRS SWATI SOPARKAR for the Petitioner MR HARIN P RAVAL for the Respondent ========================================= CORAM : HONOURABLE MR.JUSTICE RAVI R.TRIPATHI Date : 07/07/2008 ORAL JUDGMENT 1. These are the petitions filed by the two petitioner companies for sanction of a scheme of arrangement in the nature of COMP/103/2008 2/6 JUDGMENT amalgamation of Majesty Agro Foods Private Limited, the transferor company with Shyam Software Industries Limited, the transferee company and Reconstruction of Share Capital of Shyam Software Industries Limited, under Section 391 to 394 of read with Section 100 to 103 of the Companies Act, 1956. 2. It has been submitted that the transferor company is a private limited company and is engaged in business of manufacturing and marketing of bakery and confectionary products. It is a profit making company. The transferee company is a listed public limited company and its shares are listed on Bombay and Ahmedabad Stock Exchanges. It was originally engaged in knowledge sharing activities. However, it being not remunerative activity, the management decided to diversify into field related to food and pharma industry. The amalgamation is proposed for achieving synergic advantages and consolidation of operations. The petition gives details of the advantages that would flow by virtue of the amalgamation of these companies. The scheme additionally envisages reconstruction of the share capital of the transferee company as an integral part of the scheme. The same is proposed in view of the impairment of some of the current assets of the company as well as the accumulated losses. The company has proposed the reconstruction in order to streamline its financial statements. It is clarified that the proposed reconstruction does not involve either diminution of liability towards unpaid capital or any repayment towards the paid up share capital. By order dated COMP/103/2008 3/6 JUDGMENT 06.02.2008 passed by this Court, the procedure prescribed under Section 101(2) of the Act and Rules 48 to 65 of the Companies Court Rules was dispensed with. 3. The proposed scheme was put for consideration of the equity shareholders and creditors of the transferor company and equity shareholders of the transferee company, at the respective meetings held on 15.03.2008 which were convened pursuant to the directions issued by this Court by orders passed on 06.02.2008 in Company Application No.64 and 65 of 2008. Some minor modifications were proposed at the meetings, being corrective and clarificatory in nature. The said modifications were adopted on being approved unanimously and thereafter the modified scheme was also carried unanimously. The Chairman's reports have been duly filed on 27.03.2008 giving the result of the said meetings. 4. After the petitions were admitted, the same were duly advertised in the newspapers being “The Times of India” and “Sandesh”, both Ahmedabad editions of 15.04.2008. The publication in the Government gazette was dispensed by order dated 03.04.2008. Affidavits dated 01.05.2008 have been filed confirming the said publications. No one has come forward with any objections to the said petitions after the publication. The said fact has been confirmed vide additional affidavit filed on 13.05.2008. 5. Notice of the petition was served upon the Official Liquidator COMP/103/2008 4/6 JUDGMENT for the transferor company. Report dated 12.05.2008 has been filed by the Official Liquidator and the same confirms that the affairs of the transferor company have not been conducted in a manner prejudicial to the interest of its members, creditors or public interest. 6. Notice of the petition has been served upon the Central Government and Mr.Harin P.Raval, learned Assistant Solicitor General of India appears for the Central Government. Affidavit dated 09.05.2008 has been filed by Mr.R.K.Dalmia, Deputy Registrar of the Companies along with the letter from the Regional Director dated 09.05.2008, whereby some observations are made with regard to the proposed scheme of arrangement. The issues so raised have been dealt with vide affidavit dated 13.05.2008 filed by the Directors of the respective petitioner companies. Both the companies have placed on record the provisional balance sheet as at 31.03.2008. Further for the transferee company, it has been submitted by Mrs.Swati Soparkar, learned advocate appearing for the petitioner companies that the issues raised by the Deputy Registrar of Companies pertaining to the proposed change in the capital clause and change of name, are covered under the widely accepted principle of Single Window Clearance. Since all these changes were proposed to be effected as an integral part of the scheme, the approval granted by the shareholders at the meeting to the scheme as a whole amounts to approval to all such incidental proposals and no separate procedure is required to be followed as COMP/103/2008 5/6 JUDGMENT envisaged by Sections 94, 97, 81 (A) and 21 respectively. It has been pointed out that the same has been specifically provided in Clause 12.3 of the scheme. It has been further submitted that when this Court sanctions the scheme, the scheme is sanctioned as a whole with all its clauses and proposals. The certified copy of the order sanctioning the scheme by this Court when filed with the Registrar of Companies, shall be treated as intimation to the Registrar of Companies and it shall take note of all the changes proposed and sanctioned by this Court. In view of the same, no separate compliances of aforesaid provisions of the Companies Act, 1956 are necessary. Reliance is placed upon by Mrs.Swati Soparkar on number of decisions of this Court and other High Courts in support of the said submission. The said transferor company has additionally placed on record the 'No Objection Certificate' from the Ahmedabad Stock Exchange. Considering the said decisions, facts and circumstances and in light of the aforesaid submissions, there is no reason to withhold the sanction of the scheme of arrangement. 7. Having heard Shri Harin P.Raval, learned Assistant Solicitor General of India appearing for the Central Government and Mrs.Swati Soparkar, learned advocate for the petitioner companies and having gone through the petitions and being satisfied that amalgamation would be in the interest of the companies and their members and creditors, the prayers in terms of paragraph 23 (a) of COMP/103/2008 6/6 JUDGMENT Company Petition No.103 of 2008 and paragraph 23 (a) of Company Petition No.104 of 2008 as well as the minutes under Section 103 (1) as per para 20 of the petition are granted. 9. The petitions are disposed of accordingly. So far as cost to be paid to the Central Government Standing Counsel is concerned, the same is quantified at Rs.3,500/- (Rupees Three Thousand Five Hundred Only) per petition. The same may be paid to learned Central Government Standing Counsel. (RAVI R.TRIPATHI, J.) *Shitole