1 vai IN THE HIGH COURT OF JUDICATURE AT BOMBAY ORDINARY ORIGINAL CIVIL JURISDICTION COMPANY SCHEME PETITION NO. 707 OF 2010 CONNECTED WITH COMPANY SUMMONS FOR DIRECTION NO. 622 OF 2010 Mahindra Shubhlabh Services Limited..Petitioner AND COMPANY SCHEME PETITION NO. 708 OF 2010 CONNECTED WITH COMPANY SUMMONS FOR DIRECTION NO. 623 OF 2010 Mahindra and Mahindra Limited…..Petitioner In the matter of the Companies Act, 1956 (1 of 1956); AND In the matter of sections 391 to 394 read with sections 78, 100 to 104 of the Companies Act, 1956; AND In the matter of Scheme of Arrangement between Mahindra Shubhlabh Services Limited (“Demerged Company”) and Mahindra and Mahindra Limited (“Resulting Company”) and their respective Shareholders. Mr. Hemant Sethi i/b Hemant Sethi & Co., Advocates for the Petitioners in both Petitions. Ms. Soma Singh i/b H.P. Chaturvedi for Regional Director in both the Petitions. Mr.Manvendra Kane with Ms.Motiwalla i/b Motiwalla & Co. for the Objectionists. Mr. Rupesh Nalavde, Advocate for Merino Industries Limited one of the Unsecured Creditor of Mahindra Shubhlabh Services Limited. CORAM: S.J. VAZIFDAR, J DATE: 25 TH MARCH , 2011 1. Heard learned counsel for the parties. 2 2. The sanction of the Court is sought under Sections 391 to 394 read with Sections 78 and 100 to 104 of the Companies Act, 1956 to the Scheme of Arrangement between Mahindra Shubhlabh Services Limited, the Demerged Company and Mahindra and Mahindra Limited, the Resulting Company and their respective Shareholders. The Scheme, inter alia, proposes to demerge the Non Fruit Business of the Demerged Company and transfer and vest into the Resulting 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, Petitioners undertake 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 paragraphs 6(a) & (b), of the said affidavit, it appears that the scheme is not prejudicial to the interest of shareholders and public. In paragraph 6 of the said affidavit, the Regional Director has stated that: (a) “Clause 24 of the Scheme deals with change in object clause of the Memorandum of Association of the Resulting Company. In this connection the Resulting Company may be directed to comply with section 40 read with section 18 of the Act and to file amended copy of Memorandum of Association alongwith Form 21 with the Registrar of Companies.” (b) The deponent is in receipt of complaint/objection from Shri Chandiramani Mukesh Mohan, addressed to the Resulting Company and copy endorsed to the deponent and other regulatory authorities requesting to appoint independent valuers for valuation report and 3 independent company to give fairness opinion for the present scheme of arrangement between the Demerged Company and Resulting Company and their respective shareholders. In this connection advocate for the petitioner companies has forwarded copy of e-mail reply given by the petitioner company to Shri Chandiramani Mukesh Mohan which is self explanatory and found to be satisfactory. A copy of letter dated 28/01/2011 of M/s Hemant Sethi & Co. along with copy of above referred e-mail reply is annexed hereto and marked as Exhibit-D. This Hon’ble High Court may be pleased to consider the objections of Shri Chandiramani before passing orders on the present scheme of arrangement between the Demerged Company and Resulting Company.” 5. In so far as observations made in paragraph 6(a) of the Affidavit of the Regional Director is concerned, the Petitioner/Resulting Company through its Counsel undertakes to file an amended copy of Memorandum of Association along with Form 21 with the Registrar of Companies. The said undertaking is accepted. 6. In so far as observations made in paragraph 6(b) of the Affidavit of the Regional Director is concerned, the Counsel appearing for the Petitioner/Resulting Company submits that the Resulting Company has by its E-Mail dated 20th October 2010 replied to the various queries raised by Shri Chandiramani Mukesh Mohan and thereafter there has been no response from Shri Chandiramani Mukesh Mohan. He further states that though Shri Chandiramani had attended the Court convened meeting of the Equity Shareholders, he did not vote on the proposed Scheme of Arrangement in the meeting. The Counsel appearing for the Petitioner/Resulting Company submits that the proposed Scheme of Arrangement has been approved by majority of the Equity Shareholders of the Petitioner/Resulting Company constituting a 4 majority in number and three-fourth in value of the Equity Shareholders, their proxy-holders and authorised representatives present and voting at the meeting. 7. From the 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 public policy. None of the parties concerned have come forward to oppose the Scheme. 8. The B.P.T. has opposed the petition on the ground that it has a claim against the transferee company of an aggregate sum of about Rs.5.00 crores. He states that the liabilities of the transferor company are about Rs.29,36,00,000/- as on 31.3.2010. The assets of the transferor company are about Rs.1,59,00,000/-. In other words, according to him the rights of the B.P.T. to recover its dues from the transferee company are theoretically affected. 9. The B.P.T. has not been able to demonstrate how the scheme, if sanctioned would effectively prejudice the recovery of the dues. The liabilities of Rs.29,36,00,000/- is the entire liability of the transferor company. The scheme contemplates the transfer of the assets and liabilities of the division of the transferor company viz. non-food business. The assets of the division are about Rs.26,73,00,000/- whereas, the liabilities are about Rs.18,51,00,000/-. Apart from this in the facts and circumstances of the present case, it is difficult to say that the recovery of a sum of Rs.5.00 crores would be prejudicially affected by the scheme being sanctioned in view of the fact the net worth excluding revaluation reserve of the transferee company is Rs. 781,098,00000/-. The objection is therefore, rejected. 5 10. Since all the requisite statutory compliances have been fulfilled Company Scheme Petition No 707 of 2010 is made absolute in terms of prayer clause (a) to (e) of the Petition and Company Scheme Petition No. 708 of 2010 is made absolute in terms of prayer clauses (a) and (b) of the Petition. 11.The Petitioners 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 Petitioners in both the Petitions to pay costs of Rs.10,000/- each to the Regional Director. Costs to be paid within four weeks from today. 13.Filing and issuance of the drawn up order is dispensed with. All authorities concerned to act on a copy of this order along with Scheme and the Form of Minutes annexed to the Company Scheme Petition No. 707 of 2010 filed by the Demerged Company, duly authenticated by the Company Registrar, High Court (O. S.), Bombay. (S.J. VAZIFDAR, J)