IN THE HIGH COURT OF GUJARAT AT AHMEDABAD COMPANY PETITION No 301 of 2003 For Approval and Signature: HON'BLE MR.JUSTICE K.A.PUJ ============================================================ 1. Whether Reporters of Local Papers may be allowed : YES to see the judgements? 2. To be referred to the Reporter or not? : NO 3. Whether Their Lordships wish to see the fair copy : NO of the judgement? 4. Whether this case involves a substantial question : NO of law as to the interpretation of the Constitution of India, 1950 of any Order made thereunder? 5. Whether it is to be circulated to the concerned : NO Magistrate/Magistrates,Judge/Judges,Tribunal/Tribunals? -------------------------------------------------------------- HIGH TECH WEAVES (INDIA) PVT. LTD. Versus . -------------------------------------------------------------- Appearance: 1. COMPANY PETITION No. 301 of 2003 MR PAVAN S GODIAWALA for Petitioner No. 1 MR JITENDRA MALKAN for Respondent No. 1 -------------------------------------------------------------- CORAM : HON'BLE MR.JUSTICE K.A.PUJ Date of decision: 09/02/2005 ORAL JUDGEMENT 1. This is a petition filed by the petitioner company for sanctioning of scheme of Amalgamation of High Tech Weaves (India) Pvt. Ltd., (the transferee company) with Ankit Sizers Pvt. Ltd. (the transferor company) under sec. 391 read with section 394 of the Companies Act, 1956. 2. The petitioner company is a private company and is engaged in the business of manufacturing, dealing, trading in natural and synthetic and man made fiber clothes and yarns since its incorporation. The transferor company namely Ankit Sizers Pvt. Ltd. is also engaged in the business of manufacturing, dealing, trading in natural and synthetic and man made fiber clothes and yarns since its inception. Both the companies are private companies and are closely run and managed by the same management and engaged in the similar business. The Amalgamation is proposed for sinergic advantages. The petition gives details of advantages that would flow by virtue of amalgamation of this company. Vide order dated 18.11.2003 passed in Company Application NO. 528/2003, meeting of share holders and the creditors were dispensed with as they unanimously gave their consent for approval of scheme of amalgamation. The said consent letters were put on record. 3. The petition was admitted by this court on 25.11.2003 and after the petition was admitted, the same was duly advertised in news papers being "Indian Express: Vadodara edition and "Gujarat Mitra" Surat edition. Publication in the Government Gazette was dispensed with, as directed by the court in the order dated 25.11.2003. Notice was also issued to the Central Government through Regional Director, Department of Company Affairs. 4. In response to the notice issued to the Regional Director, Mr. JM Malkan ld. Sr. Standing Counsel appeared for the Central Govt. and produced letter dated 10.8.2004 received from the Regional Director, which was taken on record. The Regional Director has observed in his letter that the exchange ratio of 10:1 viz. 1 share of Rs. 100/- each of transferee company against 10 shares of Rs. 10/- each of transferor company has been arrived at by including share application money as "Reserve & Surplus/Paid Up Capital" to arrive at net worth. As the company has informed that they would be repaying the share application money, the exchange ratio on the scheme being approved as referred to in clause 5(a) of the scheme would require suitable amendment. In this connection, Mr. Pavan S. Godiawala ld. advocate on behalf of petitioner company has submitted that company has repaid the share application money, however, wishes of the share holders of both the companies namely transferor and transferee company was that the share exchange ratio should be kept intact even after the repayment and hence considering the wishes and wisdom of share holders of both the companies, it is not necessary to direct for amendment of clause 5(a) of the scheme. The Regional Director has further observed that neither the scheme nor the petition of transferor company has a clause/prayer for its dissolution without winding up in the event the scheme being approved by this court. It has, therefore, been suggested that the transferor company has to amend the petition/scheme. In this connection, Mr. Godiawala has submitted that the provision of sec. 394(1) (b)Iv) of the Companies Act, 1956 is amply clear. It states that where an application is made to the court under sec. 391 for the sanctioning of a compromise or arrangement proposed between a company and any persons as are mentioned in that section, and it is shown to the Court :(a) that the compromise or arrangement has been proposed for the purposes of, or in connection with, a scheme for the reconstruction of any company or companies or the amalgamation of any two or more companies; and (b) that under the scheme the whole or any part of the undertaking, property or liabilities of any company concerned in the scheme (in this section referred to as a "transferor comapny") is to be transferred to another company (in this section referred to as "the transferee company"), the court may, either by the order sanctioning the compromise or arrangement or by a subsequent order, make provision for all or any of the following matters:(iv) the dissolution, without winding up of any transferor company in light of the clear provision of the law, it is not necessary to incorporate the clause of dissolution of the transferor company either in the petition or in the Scheme and therefore the amendment sought in the report is not necessary. The petitioner transferor company is ordered to be dissolved without winding up. 5. It is fairly submitted that the business of both the companies are neither prejudicial nor detrimental to the share holders, creditors, revenue authorities and public at large. Looking to the totality of the facts and the report filed by the Regional Director, there are no discrepancies in the working of the petitioner company nor if the proposed scheme is sanctioned would cause any harm to the interest of the share holders and creditors of both the transferor and transferee companies. Further, the said scheme is not prejudicial or fraud on the exchequer/revenue. There are no other remakrs/observation apart from the above. The said remarks are sufficiently answered. It was also submitted by the ld. advocate for the petitioner company that there are no objections from any concern pursuant to the public advertisement. The remarks made in the Regional Director's report are also sufficiently dealt with, and there are no objections to the Scheme of the Amalgamation and therefore it is necessary and in the interest of the all concerns, the Scheme is required to be sanctioned. 6. After having heard Mr. Pavan Godiawala ld. advocate for the petitioner company, Mr.JM Manlkan ld. Sr. Standing Counsel for the Central Govt. and the OL and after having gone through the petition as well as the scheme, I am of the view that the amalgamation is in the interest of both the companies namely transferor and transferee company as well as members and the creditors. I, therefore, grant the prayer made by the petition in Para-15(a) of the petition. 7. This petition is disposed of accordingly. So far as the costs to be paid to the ld. Sr. Central Govt. Standing Counsel is concerned, I quantify the same at Rs. 3500/-. The same may be paid to Mr. J.M. Malkan ld. Sr. Central Govt. Standing Counsel for the Central Government. (K.A. PUJ, J.) mandora/