THE HON’BLE SRI JUSTICE N.V. RAMANA C.P. No. 81 of 2009 O r d e r: M/s. Inwinex Pharmaceuticals Limited, represented by its Managing Director has filed this Company Petition under Sections 391 to 394 of the Companies Act, 1956, seeking sanction of the Scheme of Arrangement, for reconstructing/restructuring the capital structure of the company. The petitioner was originally incorporated as a Private Limited Company as Invinex Laboratories Private Limited, under the provisions of the Companies Act, 1956 (herein referred to as ‘the Act’) with the Registrar of Companies, under Certificate of Registration No. 01-19106 on 02.01.1995. Later w.e.f. 18.04.1995, its name was changed to Invinex Laboratories Limited, and to its present name w.e.f. 14.10.2004 with its Registered Office at Plot Nos. 22 and 23, SVCIE, Miapur, Bachepally, Hyderabad – 500 325.. The main objects of the company, as set out in its Memorandum of Association is to manufacture, process, refine, formulate, purchase, sell, import, export, act as agents, stockists, distribute and/or deal with all kinds of chemicals, organic as well as inorganic, all kinds of drugs and pharmaceuticals, bio-technology products, tissue culture, bio- pesticides, insecticides, act as technical advisors, consultants to render technical know how, provide management and marketing services etc. The authorized share capital of the petitioner as on 31.03.2008 is Rs.9,00,00,000/- divided into 90,00,000 equity shares of Rs.10/- each. The issued, subscribed and paid up capital is Rs.8,24,04,000/- divided into 82,40,400 shares. The petitioner has accumulated losses to the tune of Rs.7,70,20,998/-, as is evident from the Profit and Loss Account for the period ended 31.03.2008. The petitioner has no secured creditors either by the period ended 31.03.2008 or the year ended 31.12.2008. However, the petitioner has one unsecured creditor, namely M/s. Ionic Health Care Private Limited, with unsecured loan of Rs.1,85,40,127/-, as on 31.03.2008, and by year ending 31.12.2008, it has two unsecured creditors, namely M/s. Ionic Health Care Private Limited and Sumeru Ayurveda Private Limited, with unsecured loan of Rs.2,69,48,627/-. The Board of Directors of the petitioner-company in their meeting held on 31.01.2009 have approved the Scheme of Arrangement for Reconstruction/Restructuring of Capital between the company and its members, subject to approval by the Court. The reasons assigned by the company for justification of the scheme are that it has been incurring losses for the past couple of years due to partial shut down of the factory from 12.04.2008 for the purpose of renovation and inadequate working capital facilities, and that it had incurred losses to the tune of Rs.7,70,20,998/- as on 31.03.2008, and as the company is unable to raise any finance either from the capital markets or financial institutions whether in the form of equity or debt, to undertake business activities in a larger scale, that the proposed scheme would enable the company show the actual financial position in its balance sheet to depict the representing asset value and proper corporate governance, which in turn will enable it to approach for financial assistance in order to develop its business and thereby increase its net worth to enhance the stake holder’s value, and will help revival of the company, which will be in the interests of its employees, shareholders and the National and State exchequer and the society in general. The proposed scheme seeks reduction of paid up capital against accumulated losses by reducing the shares, in that, a person holding 100 equity shares of Rs.10/- each aggregating to Rs.1,000/- shall after reduction hold 10 equity shares of Rs.10/- each aggregating to Rs.100/-, as specified in Clause 7 of the Scheme; convert the unsecured loan of Rs.26,10,000/- into equity share of Rs.10/- each and issued 34,15,000 equity shares of Rs.10/- each on preferential basis to promoters, promoter friends, relatives and associates and other strategic investors. The Managing Director has filed an affidavit stating the Scheme of Arrangement will not affect the employees of the petitioner in any manner and they would continue to enjoy the same benefits as they used to before the proposed Scheme of Arrangement. This Court by order dated 25.03.2009 passed in C.A. No.246 of 2009, ordered convening of the meeting of the shareholders on 04.05.2009 and appointed an Advocate as Chairman for the said meeting, and as directed by the Court, notices of the meeting were taken in the newspapers. On the appointed day, the meeting of the shareholders was convened on 04.05.2009 under the Chairmanship of the Advocate appointed by this Court. The Advocate having conducted the meeting, filed report on 06.06.2009 vide USR No. 794 of 2009 stating that a total number of 26,14,981 votes were polled in favour of the resolution by the members and proxies and that no votes were cast either by members or proxies against the resolution, that 131 members holding 4010 votes did not vote though they were present, and two proxies holding right to vote for 201 did not vote as the original members attended and voted, that a total number of 40 votes were invalidated. Considering the report of the Chairman, this Court, disposed of the Company Application on 09.06.2009. Thereafter, the petitioner filed this Company Petition, praying to sanction the Scheme of Arrangement for reconstructing/restructuring the capital structure as approved by the shareholder of the company so as to be binding on all the members, creditors and employees of the petitioner. On 25.06.2009, while admitting the Company Petition, issued notice to the Central Government and ordered publication of the notice in Times of India and Saakshi English and Telugu dailies respectively. The petitioner accordingly took out notices as ordered by this Court, to the Registrar of Companies, Andhra Pradesh, Hyderabad as also to the Regional Director, Ministry of Corporate Affairs, Chennai, and also by way of paper publication. The notices having been served, the Registrar of Companies, Andhra Pradesh, Hyderabad, filed affidavit stating that the Regional Director, Ministry of Corporate Affairs, Chennai, who is the competent authority on behalf of the Central Government, examined the scheme carefully with reference to the material papers made available to him and upon such examination, he decided not to raise any objection against the Scheme of Arrangement and leave the matter to this Court. Heard the learned counsel for the petitioner and perused the Scheme of Arrangement. The petitioner-company has no secured creditors, and considering the fact that the members of the company, 4379 in number, have not objected to the Scheme of Arrangement, as is evident from the report of the Chairman, appointed by this Court, and neither the persons interested in the affairs of the company nor the Registrar of Companies, who supervises the affairs of the companies, having not raised any objection to the Scheme of Arrangement, which having been proposed to raise finances in the best interest of the company, and not opposed to any provision of law or public interest, I am of the considered opinion that this Court should also have no objection to the sanctioning of the Scheme of Arrangement. Hence, the Company Petition is allowed as prayed for. _________________ N.V. RAMANA, J. Dated: 19th October, 2009. VGB/KSR