IN THE HIGH COURT OF JUDICATURE AT BOMBAY ORDINARY ORIGINAL CIVIL JURISDICTION COMPANY PETITION NO. 602 OF 2009 CONNECTED WITH COMPANY APPLICATION NO. 591 OF 2009 In the matter of the Companies Act 1 of 1956; AND In the matter of Sections 391 to 394 of the Companies Act, 1956; AND In the matter of Scheme of Amalgamation of BLUE CROSS GENERIC PRIVATE LIMITED with SOCRUS BIO SCIENCES LIMITED SOCRUS BIO SCIENCES LIMITED …………Petitioner / Transferee Company. Mr. Rajesh Shah i/b Rajesh Shah & Co., for the Petitioners. Mr. C. J. Joy and Mr. D. A. Dubey i/b Mr. S. K. Mohapatra for Regional Director in all Petitions. CORAM: Dr. D. Y. Chandrachud J. DATE: 27th November, 2009 PC: 1. Heard learned counsel for the parties. 2. The sanction of the Court is sought under Sections 391 to 394 of the Companies Act, 1956, to the Scheme of Amalgamation of BLUE CROSS GENERIC PRIVATE LIMITED, the Transferor Company with SOCRUS BIO SCIENCES LIMITED, the Transferee Company. 3. The Registered office of BLUE CROSS GENERIC PRIVATE LIMITED, the Transferor Company is situated at Indore in state of Madhya Pradesh. The counsel appearing on behalf of the Petitioners state that the said Transferor Company has filed its petition for sanctioning the said scheme in High Court of Madhya Pradesh and the said petition is now pending for hearing before the said Court. 4. Counsel appearing on behalf of the Petitioners has stated that they have complied with all requirements as per directions of this Court and they have filed necessary affidavits of compliance in the Court. Moreover, Petitioner Companies undertake to comply with all statutory requirements, if any, as required under the Companies Act, 1956 and the Rules made there under. Undertaking is accepted. 5. The Regional Director has filed an Affidavit stating therein that save and except as stated in paragraphs 6 (i) to 6 (iii) of the said Affidavit that scheme dose not appear to be prejudicial to the interest of shareholders and the public. In paragraph 6 of his Affidavit the Regional Director has stated as under :- (i) From Note no. 12 of the Schedule 16 of the Balance Sheet as at 31/03/2006 of the Transferee Company it is observed that the Transferee Company has given loans and advances to Shreeji Harbals Limited, Rs. 46.94 lakhs and Rs. 48.41 2 lakhs to handful investrade Private Limited amounting to Rs. 95,35,000/- to its related parties. Shri Giriraj Kishore Agarwal a director of the Transferee Company was also Director on the Board of Handful Investrade Private Limited. This transactions of giving loans and advances of Rs. 48.41 lakhs by the Transferee Company to Handful Investrade Private Limited without approval of the Central Government wherein Shri Giriraj Kisahor Agrawal is a interested director, which is in prima facie violation of section 295 of the Act. The Registrar of Companies, Mumbai has been directed to initiate necessary penal action against the Transferee Company and its Directors in this regard. The above facts being 'Material Fact' in the contest of Transferee Company, being a listed company are brought to the notice of this Hon'ble High Court for information. (ii) On post amalgamation, the share holding of the promoters would substantially increase from 10.43% to 58.99. The said disclosure has been made in para 6 of the Explanatory Statement under section 393 of the Act attached to the notice dated 13/05/2009 convening the meeting of equity shareholders of the Transferee Company. This is for the information of this Hon'ble High Court. 3 (iii) In clause 17 of the scheme, the date” 30th day of June, 2009” be substituted by “30th day of December, 2009”, in view of the fresh Board Resolution dated 29/06/2009 passed by the Transferor and Transferee Company. 6. Mr. Premraj Alwa, Director of the Petitioner Company have filed his affidavit dated 26th November, 2009 in reply to the objections raised by the Regional Director in his Affidavit. In the said Affidavit, it is, inter alia, stated that as regards the alleged violation under section 295 of the Act by the Petitioner Company undertakes to file compounding application for the said violations. The said undertaking is accepted. So far as the observations made by the Regional Director in paragraph 6 (ii) of his affidavit is concerned, it is further sated that as per clause 35 of the listing agreement with BSE, the shares allotted/to be allotted to the shareholders of transferor company pursuant to amalgamation is required to be shown under the category of Promoters & PAC, (though some of the shareholders to whom shares of Socrus Bio Sciences Limted are allotted pursuant to amalgamation have no relationship with the Promoters & PAC) in that case, post amalgamation, the Promoters and PAC equity stake in Socrus Bio Sciences Limited is going to be 58.99%. He further stated that the actual equity stake of the Promoters and PAC is going to be 36.75% only post amalgamation. This is an increase from the existing 10.43% to 36.75% only post amalgamation. Counsel appearing on behalf of the Petitioner Company states that the said increase in share holding of the promoter does not override any regulation or any provisions of the Act. So far as the observations 4 made by the Regional Director in paragraph 6 (iii) is concerned, Petitioner Company undertakes to substitute the words “30th day of June, 2009” by “30th day of December, 2009” by way of amendment. Therefore, Petitioner Company seeks leave of the Court to substitute the same. Accordingly, leave is granted. Amendment to be carried out within a period of two weeks from today. Upon amendment, the clause 17 of the scheme stands modified to the said extent. It is further stated that none of the alleged violations referred to by the Regional Director have any bearing whatsoever on the Scheme and hence, do not come in the way of the scheme being sanctioned by the Court. It is also stated that it is always open to the Regional Director to adopt such proceedings in accordance with law with regard to the alleged violations against the Company and its Directors, as the case may be, even after the scheme is sanctioned. It is also stated that the Transferee Company has no objections to such liberty being reserved to the Regional Director subject to the Company’s right to defend such proceedings in accordance with law and that if any such proceedings are adopted against the Transferee Company, the same can be and may be continued against the Transferee Company. 7. In view of the statements made in the said affidavit, the Regional Director/Registrar of Companies is at liberty to adopt appropriate proceedings in accordance with law against the Petitioner Company for the aforesaid violations. Moreover, it is not stated and there is nothing to suggest that the alleged violations are detrimental to the scheme as such. 5 8. 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. 9. Since all the requisite statutory compliances have been fulfilled, the Company Petition is made absolute in terms of prayer clauses (a) to (i). The scheme is sanctioned subject to the order to be passed by the High Court of Madhya Pradesh in the Petition filed by the Transferor Company in the said High Court. 10. The Petitioner Company 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 the order. 11. The Petitioner to pay costs of Rs.7,500/- to the Regional Director, Western Region, Mumbai. Costs to be paid within four weeks from today. 12. Filing and issuance of the drawn up order is dispensed with. 13. All concerned authorities to act on a copy of this order along with the Scheme duly authenticated by the Company Registrar, High Court, Bombay. (Dr. D. Y. Chandrachud, J.) 6