IN THE HIGH COURT OF JUDICATURE AT BOMBAY ORDINARY ORIGINAL CIVIL JURISDICTION COMPANY SCHEME PETITION NO 338 OF 2010 CONNECTED WITH COMPANY SUMMONS FOR DIRECTION NO 338 OF 2010 PANTALOON RETAIL (INDIA) LIMITED …………Petitioner / Demerged Company COMPANY SCHEME PETITION NO 339 OF 2010 CONNECTED WITH COMPANY SUMMONS FOR DIRECTION NO 339 OF 2010 FUTURE MALL MANAGEMENT LIMITED ………… Petitioner / the Resulting Company No 1 COMPANY SCHEME PETITION NO 340 OF 2010 CONNECTED WITH COMPANY SUMMONS FOR DIRECTION NO 340 OF 2010 FUTURE MERCHANDISING LIMITED ………… Petitioner / the Resulting Company No 2 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 103 of the Companies Act, 1956. AND In the matter of Scheme of Arrangement Between Pantaloon Retail (India) Limited (‘PRIL or ‘the Demerged Company’) And Future Mall Management Limited (‘FMML’ or ‘the Resulting Company No 1’) And Future Merchandising Limited (‘FML’ or ‘the Resulting Company No 2’) And their respective Shareholders and Creditors Mr. Janak Dwarkadas, Mr. Virag Tulzapurkar, Senior Counsels with Ms Alpana Ghone and Mr. Ankit Lohia i/b M/s. Rajesh Shah & Co., Advocates for the Petitioners. Mr. C J. Joy with Mr. Vishwajit P Sawant i/b S.K. Mohapatra for Regional Director in all the Petitions. CORAM : S. J. Kathawalla, J. DATE : 24th August, 2010 PC: 2 1. Heard learned counsels for the parties. 2. The sanction of the Court is sought under Sections 391 to 394 read with sections 78, 100 to 103 of the Companies Act, 1956, to the Scheme of Arrangement between Pantaloon Retail (India) Limited (‘PRIL or ‘the Demerged Company’) and Future Mall Management Limited (‘FMML’ or ‘the Resulting Company No 1’) and Future Merchandising Limited (‘FML’ or ‘the Resulting Company No 2’) and their respective Shareholders and Creditors (“the Scheme”). 3. The Counsel for the Petitioner Companies state that the said Scheme is presented for demerger of Mall Management Undertaking and Project Management Undertaking of Pantaloon Retail (India) Limited and vesting in Future Mall Management Limited and demerger of Mall Asset Management Undertaking and Food Services Undertaking of Pantaloon Retail (India) Limited and vesting in Future Merchandising Limited and also for various other matters consequential, incidental or otherwise integrally connected therewith. The Counsel further states that the Petitioner Companies have 3 complied with all requirements as per directions of this Court and they have filed necessary affidavits of compliance in the Court. Moreover, Petitioner Companies through their Counsel 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 its Affidavit stating therein that save and except as stated in paragraphs 6 (a) to (d) of the said Affidavit, the Scheme does not appear to be prejudicial to the interest of shareholders and public. The paragraphs 6(a) to (d) of the said read thus: “(a) The present authorized share capital of the First Resulting Company is Rs. 5 lacs only. As per the Scheme the first Resulting Company has to issue more than Rs. 1 crore value of equity shares. Hence the First Resulting Company has to increase its authorized capital suitably to that effect. Hence the First Resulting Company may be directed to comply with the provisions of section 94/97 read with Schedule X of the Companies Act, 1956 while increasing its authorized capital. 4 (b) The Scheme may be approved by this Hon’ble High Court subject to the condition that as stated in Clause No. 8.1.6 of the scheme the new shares proposed to be issued by the First Resulting Company are listed in the respective stock exchanges in which the shares of the Demerged Company are listed. (c) The Demerged Company was inspected under section 209A of the Companies Act, 1956 by the Ministry of Corporate Affairs during the year 2007 and pointed out various violations like 259/257/212/310(4 counts)217(2)(a)/217(1)(e)/211(5)(5 counts) 215/147 and 113 of the Companies Act, 1956. The Directors of the Demerged Company have filed compounding applications under section 621A of the Companies Act, 1956 in respect of violation of section 212 of the Companies Act, 1956 and the same is pending for consideration before the appropriate authority. As regards other violations committed by the Demerged Company, reply has been submitted by the company in response to SCN issued by Registrar of Companies, Mumbai and the same is pending before the appropriate authority for further consideration and directions. In this connection liberty may be granted to the Registrar of Companies/Regional Director/Ministry of Corporate Affairs to initiate 5 necessary penal action against the company and its Directors if the said violations are established against the company and its directors. (d) The Demerged Company in the present scheme of arrangement is also a party in another scheme of arrangement in company scheme petition No. 341 and 342 of 2010. If the present scheme is being approved by this Hon’ble High Court, the same can be given effect to only after giving effect of that scheme at the first instance by the Demerged Company herein.” 5. The Petitioner Companies have filed their respective affidavits all dated 16th day of August, 2010 in reply to the above issues raised by the Regional Director. 6. As regards to the objection at paragraph 6(a) of the Regional Director’s Affidavit is concerned, the Resulting Company No. 1 in paragraph 3 of its affidavit has undertaken to comply with the provisions of section 94/97 read with Schedule X of the Companies Act 1956, while increasing its authorised share capital in respect of filing of necessary forms with the Registrar of Companies after payment of necessary fees and stamp duty as applicable on the said forms. The said undertaking is accepted. 6 7. As regards to the objection at paragraph 6(b) of the Regional Director’s Affidavit is concerned, the Resulting Company No. 1 in paragraph 5 of its affidavit has undertaken to list the equity shares, to be issued to the shareholders of the Demerged Company, on the stock exchanges on which the shares of the Demerged Company are listed as mentioned in Clause 8.6 of the Scheme. The said undertaking is accepted. 8. As regards to the objection at paragraph 6(c) of the Regional Director’s Affidavit is concerned, the liberty is granted to the Registrar of Companies / Regional Director / Ministry of Corporate Affairs to initiate necessary penal action against the Demerged Company and its Directors if the said violations are established against the Demerged Company and its directors. 9. As regards to the objection at paragraph 6(d) of the Regional Director’s Affidavit is concerned, the Demerged Company, Resulting Company No.1 and the Resulting Company No. 2 in paragraph 3, 7 and 3 of their respective affidavits have given an undertaking that the present scheme would be effected only after giving effect at the 7 first instance to another Scheme of Arrangement wherein the Demerged Company i.e. the Petitioner Company in Company Scheme Petition No. 342 of 2010 is also a Party. 10. The Counsel for the Petitioner Companies state that the some creditors viz. M/s Featherlite Office Systems Private Limited, M/s Servo Tech Electricals Private Limited, Mr. Ashok Kumar Lalwani, Mr. Kamal Lalwani, Mr. Anand Kumar Chaurasia, Mrs. Chanda Chaurasia, Ms. Vinita Chaurasia, Ms. Parul Chaurasia, and Mr. Kamal Kishore Chaurasia, of the Demerged Company had appeared before the Court at the earlier occasion and/or written letters to the Demerged Company expressing their objections to the proposed Scheme. The Counsel further states that the Demerged Company has now received “No Objection Letters” from all the said creditors and that copies of all the said letters have been annexed to the Affidavit dated 16th August, 2010 filed by the Demerged Company. 11. 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 8 parties concerned has come forward to oppose the Scheme except as mentioned in paragraph 10 herein above. 12. Since all the requisite statutory compliances have been fulfilled, Company Scheme Petition No. 338 of 2010, 339 of 2010 and 340 of 2010 filed by the Demerged Company, Resulting Company No 1 and the Resulting Company No. 2 respectively are made absolute in terms of prayer clauses (a) to (c) of the respective petitions. The Scheme is sanctioned subject to the undertaking given by Petitioner Companies in their affidavit that the current scheme can be given effect only after giving effect to the another Scheme i.e. lodged in Company Scheme Petition No. 341 of 2010 and 342 of 2010 at the first instance of the Demerged Company herein. The Counsel also states that except the said creditors hereinabove, no other creditors who have come forward to oppose the Scheme. The Demerged Company and the Resulting Company No. 1 are granted liberty to present form of minutes for cancellation of Share Capital and reduction of Securities Premium Account as per Clause 5.1 (iii) and 9.1 (iii) of the Scheme, 9 as per the averment made in company Scheme Petitions 338 of 2010 and 339 of 2010. 13. The Petitioner Companies to lodge a copy of this order and the Scheme, duly authenticated by the Company Registrar, High Court, 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. 14. The Petitioner Companies in all the Company Scheme Petitions to pay costs of Rs.10,000/- each to the Regional Director, Western Region, Mumbai. Costs to be paid within four weeks from today. 15. Filing and issuance of the drawn up order is dispensed with. 16. All concerned authorities to act on a copy of this order along with Scheme duly authenticated by the Company Registrar, High Court, Bombay. (S. J. Kathawalla, J.) 10