IN THE HIGH COURT OF JUDICATURE AT BOMBAY ORDINARY ORIGINAL CIVIL JURISDICTION COMPANY PETITION NO.747 OF 2009 CONNECTED WITH COMPANY APPLICATION NO.861 OF 2009 Endurance Systems (India) Private Limited. ...Petitioner/Transferor Company AND COMPANY PETITION NO.748 OF 2009 CONNECTED WITH COMPANY APPLICATION NO.862 OF 2009 Endurance Technologies Private Limited. ...Petitioner/Transferee Company In the matter of the Companies Act I of 1956 AND In the matter of Section 391 to 394 read with Sections 78,100 to 103 of the Companies Act, 1956 AND In the matter of the Scheme of Arrangement between Endurance Systems (India) Private Limited and Endurance Technologies Private Limited Mr Hemant Sethi i/b Hemant Sethi & Co. Advocates for Petitioner Mr. R.Ramarao, Official Liquidator in Company Petition No.747 of 2009 present. Mr. Gajendrasinh Jadhavrao i/b S. K. Mohapatra for Regional Director in both the Petitions. CORAM : S. J. KATHAWALLA, J DATE : 16th OCTOBER, 2009 PC: 1. Heard learned counsel for parties. 2. The sanction of the Court is sought under Section 391 to 394 read with Sections 78, 100 to 103 of the Companies Act, 1956 to the Scheme of Arrangement between Endurance Systems (India) Private Limited and Endurance Technologies Private Limited for amalgamation of Endurance Systems (India) Private Limited, the Transferor Company with Endurance Technologies Private Limited, the Transferee Company and reduction and utilization of Securities Premium Account and reorganisation of Reserve of Endurance Technologies Private Limited pursuant to the relevant provisions of the Companies Act, 1956. 3. The Transferor Company is 100% Subsidiary of the Transferee Company. 4. Counsel appearing on behalf of the Petitioners have stated that they have complied with all the requirements as per directions of this Court and they have filed necessary affidavits of compliance in the Court. Moreover, Petitioner Companies also undertake to comply with all statutory requirements, if any, as required under the Companies Act, 1956 and the rules made thereunder. 5. By an order dated 21st August, 2009 in Company Application No.861 of 2009 of the Transferor Company and Company Application No.862 of 2009 of the Transferee Company the meeting of Equity Shareholders were dispensed with in view of the consents given by all the Equity Shareholders and the meeting of Secured Creditors and Unsecured Creditors was dispensed with in view of the undertaking given by the Petitioner Companies to give individual notice of final hearing of 2 Petition to all its Secured Creditors and to those Unsecured Creditors having outstanding balance of Rs.1,00,000/- and above by Registered Post AD respectively. 6. The Equity Shareholders of the Transferee Company in Seperate Extra Ordinary General Meeting held on 31st August, 2009 has unanimously approved and passed Special Resolution for reduction and utilisation of Securities Premium Account pursuant to Scheme of Arrangement in terms of Section 78, 100 to 103 of the Companies Act, 1956 the same is annexed at Exhibit “H” of the Company Petition of the Transferee Company. 7. In view of averment made in paragraph 20 of Company Petition of the Transferee Company reduction and Utilisation of Securities Premium Account does not involve neither diminution of liability in respect of unpaid capital nor payment to any shareholder of any unpaid share capital account and hence the interest of the creditors of the Petitioner/Transferee Company are not affected by such reduction and the procedure under section 101(2) of the Companies Act, 1956 has been dispensed with vide order dated 21st August, 2009 in Company Application No.862 of 2009. 8. In this background, the Transferor Company and the Transferee Company have applied to this court to sanction the Scheme of Arrangement between Endurance Systems (India) Private Limited and Endurance Technologies Private Limited so as to be binding on both the Companies and their respective members and creditors. The Petitioners submits that no one will be prejudiced if the Scheme of Arrangement is sanctioned by this Hon’ble Court which will be beneficial and in the interest of both 3 the Companies, their Shareholders, Creditors and to the general public and all concerned. 9. The counsel appearing on behalf of the Petitioners states that the Transferee Company has received notice dated 14th October,2009 from Interarch Building Products Private Limited purporting to be creditor of the Transferee Company. It is stated that the purported amount claimed by Interarch Building Products Private Limited is disputed and no affidavit has been filed setting out the grounds of said objection. The counsel appearing for the Petitioner states that the objecting Creditors have not been able to point out any specific provision in the Scheme which according to them would prejudice any of the Unsecured Creditors. It is further stated that present Scheme is an Arrangement between Petitioner and their respective shareholders as there is no Arrangement and/or Compromise with the Creditors. The Scheme cannot be used as tool to recover debts. I see no reason not to sanction the proposed Scheme. It will be open to the said unsecured creditors to pursue legal remedy as may be advised for recovery of their claim amount. 10. The Regional Director has filed affidavit stating therein that the scheme is not prejudicial to the interest of shareholders and public. However in paragraph 6 of the said affidavit, the Regional Director has stated that the Petitioner Companies may be directed to delete clause 10.12 of the Scheme of Arrangement. The said clause 10.12 is read as under: “Notwithstanding the above,the Board of Directors of the Transferee Company, is authorised to account any of these balances specified in 10.1 to 10.11 in any manner whatsoever, as it may be deemed fit”. 4 The Counsel appearing for the Petitioners seeks leave to delete the said clause 10.12 from the Scheme of Arrangement. The leave to amend by deleting the clause 10.12 of the Scheme of Arrangement is granted. Amendment to be carried out within four weeks from date of the order. 11. The Official Liquidator has filed his report stating that the affairs of the Transferor Company have been conducted in a proper manner and that the Transferor Company may be ordered to be dissolved without winding up. 12. Upon perusal of the entire material on record and in view of the fact that 100% of the shareholders of the Transferor Company and the Transferee Company have accorded consent to the proposed Scheme of Arrangement. In my opinion the Scheme appears to be fair and reasonable and is not violative of any provisions of law and is not contrary to any public policy. Moreover, the Regional Director has stated that proposed scheme does not appears to be prejudicial to the interest of shareholders and the public save and except what is stated hereinabove and the Official Liquidator has also stated that the affairs of the Transferor Company have been conducted in a proper manner and that the Transferor Company may be ordered to be dissolved without winding up. 13. There is no objection to the Scheme of Arrangement, save and except as stated above and since all the requisite statutory compliances have been fulfilled the Scheme of Arrangement deserved to be sanctioned. Hence Company Petition No.747 of 2009 is made absolute in terms of prayer clauses (a) to (c) and Company Petition No.748 of 2009 is made absolute in terms of prayer causes (a) to (f). 5 14. The Transferee Company to lodge copy of this order and the Scheme after deleting clause 10.12 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 this order. 15. The Petitioner in both the Company Petitions to pay costs of Rs.7,500/- each to the Regional Director. Petitioner in Company Petition No.747 of 2009 to pay cost to the Official Liquidator, High Court, Bombay a sum of Rs.7,500/-. Costs to be paid within four weeks from today. 16. Petitioner in Company Petition No.748 of 2009 to publish notice of registration of order and minute of reduction of Securities Premium Account by Registrar of Companies once each in the two local newspaper viz. Lokmat Times in English and Lokmat in Marathi both circulating in Aurangabad and in the Maharashtra Government Gazette within 30 days of registration aforesaid. 17. Filing and issuance of the drawn up order is dispensed with. 18. All concerned authorities to act on a copy of this order along with scheme also form of minutes (annexed to Company Petition No.748 of 2009 being Exhibit “I”) duly authenticated by Company Registrar, High Court, (O.S.) Bombay. (S. J. KATHAWALLA, J) 6