THE HON'BLE MR JUSTICE G.V.SEETHAPATHY COMPANY PETITION Nos :140 & 141 of 2010 DATED:25-08-2010 ORDER: These two petitions are filed under Sections 391 and 394 of the Companies Act, 1956 (for brevity, ‘the Act’), seeking sanction for the scheme of amalgamation of the transferor and transferee companies. 2. C.P.No.140 of 2010 is filed by M/s Srikrishna Drugs Limited (hereinafter referred to as ‘transferor company’) and C.P.No.141 of 2010 is filed by M/s Srikrishna Pharmaceuticals Limited (hereinafter referred to as ‘transferee company’). 3. Heard learned counsel for the petitioner; learned Assistant Solicitor General, representing the Registrar of Companies, and the learned counsel representing the Official Liquidator in both the matters. Perused the records. 4. M/s Srikrishna Drugs Limited-transferor company was originally incorporated as Private Limited company on 18.02.1985. Subsequently, the name of the company was changed as ‘Srikrishna Drugs Limited’ on 29-11-1994. The registered office of the transferor company is situate at Uppal road, Hyderabad. The authorized share capital of the transferor company is Rs.6,00,00,000/- divided into 6.00 lakhs equity shares of Rs.10/- each. The issued, subscribed and paid up share capital of the transferor company is Rs.3.50 crores divided into 3.50 lakhs equity shares of Rs.10/- each. 5. The objects of the transferor company are: to carry on business as manufacturers, buyers, sellers, distributors, agents, exporters and importers of all kinds of Cosmetic, toilet and dentifrice requisites and preparations including toothpowder, toothpaste, toothbrushes, face creams, shaving creams, talcum and face powder, shampoos, soaps, detergents and other washing materials, cleansing agents, perfumes, lotions and oils. 6. The detailed objects of the transferor company are set out in detail in the Memorandum and Articles of Association, annexed to the petition. 7. M/s Srikrishna Pharmaceuticals Limited-transferee company was originally incorporated on 26-09-1974 and it became a Public Limited Company on 19-07-1977 and again reconverted into a Private Limited company on 14-09-1987. The name of the company was changed to ‘M/s Srikrishna Pharmaceuticals Limited’ on 20-01-1995 and a separate certificate of incorporation was issued. The registered office of the transferee company is situate at Uppal road, Hyderabad. The authorized share capital of the transferee company is Rs.90,00,00,000/- divided into 90,00,000 equity shares of Rs.10/- each. The issued, subscribed and paid up capital of the transferee company is Rs.8,75,000/- divided into 87,500 equity shares of Rs.10/- each. 8. The main objects of the transferee company are: 1. to carry on business of manufacturers of and dealers in, including export and import, of Biochemicals, Fine and Heavy organic and inorganic chemicals; Vitamins like Nicotinamide, Thiamine with its derivatives; Chemotherapeutics such as anti-T.B.drugs like INH, PAS etc., anti-malarial, anti-fungal, anti-bacterial, anti-cancer drugs like Cyclophosphamide, anti-histamines and anti-diabetics like tolbutamide, chloropropamide etc; all types of alkaloids like Strychnine, Brucine etc; antibiotics; and as well as all the drug and dye intermediate compounds like ortho and para-nitrocholohenzenes, nitrophenols, aminophenols, nitroluenes, tollidines, benzidines etc., 2. To carry on the business of manufacturers of and dealers in, including export and import of, all types of dyestuffs like azo dyes, indigo dyes, vat dyes, reactive dyes used in paper, textiles, food and drugs and also in all types of organic and inorganic pigments, resins, enamels, paints and varnishes. 3. To carry on the business of manufacturers of and dealers in all types of vegetable extracts, essential and mineral oils and oleoresins. 4. To carry on business of manufacturers of and dealers in all types of fermentation products like food and fodder yeast, citric acid, alcohol and its allied and constituent products, enzymes etc. 5. To carry on business of manufacturing drugs on loan licence basis. 9. The detailed objects of the transferee company are set out in the Memorandum and Articles of Association, which is annexed to the petition. 10. It is stated that the scheme of amalgamation is proposed, wherein the transferor company is to be merged with the transferee company, as such, amalgamation would result in better and efficient realization of the resources of both the companies resulting in the synergy of operations and economies of scale. It is also stated that the proposed amalgamation would result in better administrative and managerial control and it will be to the benefit of both the companies, its members, creditors and employees. The salient features of the proposed scheme of amalgamation and its benefits are stated in detail in the scheme, annexed to the petition, and also extracted in the petition, and hence they are not reiterated here for the sake of brevity. 11. The Board of Directors of the transferor and transferee companies at their respective meetings held on 15-06-2010 approved the proposed scheme of amalgamation with effect from 01-04-2009, subject to the consent of the share holders and confirmation by this Court. 12. This Court in C.A.No.495 of 2010 appointed Sri Chetluru Srinivas, Advocate, as Chairperson to convene and hold the meeting of the share holders after issuing individual notices and also a general notice by way of publication in ‘Business Standard’ English Daily newspaper and ‘Andhra Bhoomi’ Telugu Daily newspaper of Hyderabad Editions. The Chairperson, after convening such meeting, filed his report on 28-07- 2010 stating that 28 shareholders attended the meeting in person and 9 attended by proxy and all of them have voted in favour of the proposed scheme of amalgamation and passed a resolution accordingly and none has objected for the scheme. 13. It is stated that there is one secured creditor for the transferor company i.e. Canara bank and there are 7 unsecured creditors of whom 3 are Directors and 4 are shareholders of the company. The transferor company filed letter of no objection issued by the secured creditor-Canara bank with regard to the proposed scheme of amalgamation. Similarly, the unsecured creditors also gave letters stating no objection for the proposed scheme and they are placed on record. It is stated that for the transferee company there is one secured creditor and one unsecured creditor and both of them have given letters, stating no objection for the proposed scheme of amalgamation. The said letter issued by the State Bank of India, the secured creditor, and also the letter issued by the sole unsecured creditor are also placed on record. 14. While admitting the petitions, notices were directed to be issued to the Regional Director, Ministry of Corporate Affairs, Chennai, the Registrar of Companies, Hyderabad and the Official Liquidator, attached to this Court, and also a general notice by way of publication in ‘Business Standard’ English Daily newspaper and ‘Andhra Bhoomi’ Telugu Daily newspaper of Hyderabad Editions. In response thereto, the learned Assistant Solicitor General, representing the Registrar of Companies, filed a common affidavit stating that the transferee company shall pay the stamp duty as per the regulations of the A.P.Stamp Act. 15. Learned counsel for the petitioner states that the transferee company would undertake to pay the necessary stamp duty as per rules. Learned counsel representing the Official Liquidator filed a report OLR.No.388 of 2010 in C.P.No.140 of 2010 stating that on examination of the information furnished, it is found that the affairs of the company appeared to have not been conducted in the manner prejudicial to the interest of the members or to the public interest. In response to the other notice, issued by way of publication in newspapers, no objection is received from any quarter in respect of the proposed scheme of amalgamation. 16. In the circumstances, as both the companies are stated to be engaged in a similar business activity relating to manufacture, sale etc., of chemicals and the Board of Directors and shareholders of both companies have approved and given consent to the proposed scheme of amalgamation and the creditors, secured and unsecured, of both the companies stated no objection for the proposed scheme and the Central Government and the Official Liquidator also stated no objection for the same, and no objection having been received from any quarter in response to the general notice issued by way of publication, and as it is considered that the proposed scheme of amalgamation would be beneficial to the interest of both the companies, their members, creditors and employees and the proposed scheme duly takes care of the interest of the members, creditors and employees, it is considered that sanction can be accorded for the proposed scheme of amalgamation and the same is accorded with effect from 01-04-2009, i.e. the date of appointment. On such amalgamation, the transferor company shall stand dissolved without going through the process of winding up. Petitioner shall file certified copy of this order within thirty days of the receipt of the same before the Registrar of Companies for registration and necessary follow up action. Petitioner shall pay a sum of Rs.3000/- (rupees three thousand only) towards costs for the Central Government to the learned Assistant Solicitor General. 17. Both the Company Petitions are allowed accordingly. There shall be no order as to costs. _______________________ G.V.SEETHAPATHY,J 25th August, 2010. Tsy