COMP/16320/2008 1/10 JUDGMENT IN THE HIGH COURT OF GUJARAT AT AHMEDABAD COMPANY PETITION No. 163 of 2008 In COMPANY APPLICATION No. 234 of 2008 With COMPANY PETITION No. 164 of 2008 In COMPANY APPLICATION No. 235 of 2008 For Approval and Signature: HONOURABLE MS.JUSTICE H.N.DEVANI ========================================= = 1 Whether Reporters of Local Papers may be allowed to see the judgment ? 2 To be referred to the Reporter or not ? 3 Whether their Lordships wish to see the fair copy of the judgment ? 4 Whether this case involves a substantial question of law as to the interpretation of the constitution of India, 1950 or any order made thereunder ? 5 Whether it is to be circulated to the civil judge ? ========================================= = LUXOR INVESTMENTS LIMITED - Petitioner(s) Versus . - Respondent(s) ========================================= = Appearance : NANAVATI ASSOCIATES for Petitioner(s) : 1, None for Respondent(s) : 1, MR HARIN P RAVAL for Respondent(s) : 1, ========================================= = COMP/16320/2008 2/10 JUDGMENT CORAM : HONOURABLE MS.JUSTICE H.N.DEVANI Date : 23/09/2008 COMMON ORAL JUDGMENT 1. Luxor Investments Limited, the transferor company has filed this petition under Sections 391 and 394 of Companies Act, 1956 for amalgamation with Reliance Logistics Private Limited, the transferee company, whereby the whole of the undertaking and business of the transferor company is to be transferred to and vested in the transferee company. Luxor Investments Limited, the petitioner of Company Petition No.163 of 2008 is the Transferor Company, while Reliance Logistics Limited, the petitioner of Company Petition No.164 of 2008 is the Transferee Company. 2. The transferor company was incorporated to carry on business of investment/finance and is holding investments in various companies. It is registered as a non-banking financial company (NBFC) with RBI. The transferor company is a wholly owned subsidiary of the transferee company. 3. The transferee company is presently engaged in the business of providing logistics services consisting of, inter alia, transportation, vehicle tracking services and sale of vehicle tracking units. The transferee Company also invests its surplus funds in mutual funds and other securities, as also by way of inter corporate lending. COMP/16320/2008 3/10 JUDGMENT 4. The circumstances and/or reasons and/or rationale that have justified the Scheme of Amalgamation, as stated in the petitions are as under:- a. The Transferee Company is engaged in the business of providing logistics services. The logistics industry is growing at a rapid pace which has opened several new avenues for the Transferee Company. The Transferee Company has an ambitious growth plan for its business operations. b. The amalgamation would enable the Transferee Company to reduce administrative costs of running two companies and will enable the Transferee Company to achieve economy better administration and operation thereby achieving greater profitability for the Transferee Company. c. The amalgamation will enable the Transferee Company to improve its financials and have a stronger asset base thereby enabling the Transferee Company to expand its operations and avail of the new opportunities in the Logistics industry. d. Integrating and combining the businesses of both the Companies will lead to greater and optimal utilization of resources. The amalgamation would enable the Transferee Company to increase its value realization of operations and confer a competitive advantage to the Transferee Company. COMP/16320/2008 4/10 JUDGMENT e. Therefore, in order to achieve the aforesaid objectives, it is proposed to consolidate the Transferor Company and the Transferee Company into a single company. The amalgamation will result in the creation of a single larger unified entity in place of two smaller entities under the same management and control, thus resulting in better profitability and synergy of operations. 5. In the aforesaid circumstances, a Scheme of Amalgamation of the transferor company with transferee company has been formulated under Sections 391 to 394 of the Companies Act, 1956, whereby the whole of the undertaking of the transferor company is to be transferred to and vested in the transferee company, as a going concern. 6. It is further stated in the petitions that keeping in mind the paramount and overall interests of the shareholders of the petitioner companies, the Board of Directors of the petitioner companies have thought it fit and advantageous that the Undertaking and business of the petitioner companies be consolidated by way of Amalgamation with the transferee company who is the holding company of the transferor company. It is further stated that Directors of the transferor company and that of the transferee company have approved the proposed Scheme of Amalgamation and are of the opinion that the Scheme is in the interest of all concerned and that the Scheme is, in no way, prejudicial to the interests of shareholders or public at large. COMP/16320/2008 5/10 JUDGMENT 7. In the circumstances, the transferor company filed Summons for direction in this Court being Company Application No.234/08 seeking necessary directions, for dispensing with the holding of meeting of Members and Creditors of the transferor company, in view of the fact that transferor company has only 7 equity shareholders and 1 preference shareholder, who have given consent in writing and produced on record of the proceedings. The transferor company has no secured creditors and has three unsecured creditors, all of whom have given approval and consent in writing to the Scheme of Amalgamation, which is produced from the record of proceedings. As a result, by order dated 31.3.2008 and as corrected by order dated 4.4.2008, this Court was pleased to dispense with the convening and holding of meetings of Equity Shareholders, Preference Shareholders, Secured Creditors and Unsecured Creditors of the transferor company. The Scheme of Amalgamation thus stood approved unanimously and thereby fulfilling the requirement of the Companies Act, 1956, of approval by the requisite majority, i.e. majority in number representing more than three-fourth in value of the equity Shareholders, Preference Shareholders and also Creditors of the transferor company. 8. Similarly, the transferee company, i.e. petitioner of Company Petition No.164 of 2008 also filed Summons for direction in this Court being Company Application No.235 of 2008 seeking necessary directions, inter alia, for dispensing with the holding of meetings of Equity Shareholders, Preference Shareholders and Secured Creditors of the transferee company for the purpose of considering and approving the Scheme of Amalgamation in view of the fact that COMP/16320/2008 6/10 JUDGMENT all the (20) Equity Shareholders, all (one) Preference Shareholder and all (two) Secured Creditors have given approval and consent in writing and produced on the record of the proceedings. Further, a direction was sought for convening and holding of meeting of Unsecured Creditors, which was ordered on 31.3.2008. Accordingly, necessary notices were sent and meeting was held on the scheduled date i.e. 5.5.2008, wherein the Resolution was passed approving the Scheme of Amalgamation by the requisite majority of Unsecured Creditors, i.e. majority in number representing more than three-fourth in value of the Unsecured Creditors of the Transferee Company. The report dated 5.5.2008 of the Chairman of the said meeting of Unsecured Creditors reporting the result is at Annexure-M of the Company Petition No.164 of 2008. The Scheme of Amalgamation thus stands approved by the requisite majority of Equity Shareholders, Preference Shareholders, Secured Creditors and also Unsecured Creditors also of the Transferor Company. 9. It is in the above premises that the present petitions are filed before this Court. This Court had admitted both the petitions on 15.5.2008 and had issued notice to the Central Government through Regional Director, Corporate Affairs at Mumbai. Public advertisement was ordered to be published in Indian Express, English daily and Loksatta – Jansatta, Gujarati daily, both published from Ahmedabad. Publication of advertisement in Official Gazette was dispensed with. In Company Petition No.163 of 2008, notice was also issued to the Official Liquidator attached to this Court. Accordingly, public advertisements for both the petitions were published in Indian Express and Loksatta – Jansatta, Ahmedabad editions on COMP/16320/2008 7/10 JUDGMENT 4.6.2008. The copies of the advertisement are placed on record of the proceedings along with Affidavit dated 25.6.2008, filed in this Court. 10. In response to the Notice, an affidavit dated 16.7.2008 had been filed by one Shri R.K. Dalmia, Dy. Registrar of Companies on behalf of the Regional Director wherein it is stated that the transferor company is registered as NBFC with RBI and in this connection, the transferor company may be directed to inform the RBI about the Amalgamation along with the order of the High Court approving the Scheme of Amalgamation within a period of one month from the date of the order. 11. The Official Liquidator attached to this Court has filed his report on 16.7.2008 and has submitted that the Official Liquidator appointed one M/s. Malay J. Dalal, Chartered Accountants for carrying out scrutiny/investigation of the affairs of the company. Accordingly, the said Chartered Accountants, after scrutiny of the Books of Accounts and affairs of the company, i.e. transferor company, have submitted their investigation report dated 30.6.2008, which is annexed to the Report of the Official Liquidator filed in the proceedings of Company Petition No.163 of 2008. The Official Liquidator in para 7 of his Report, has stated that the Auditors/Chartered Accountants appointed by him, have submitted in their report that the acts and transactions of Luxor Investments Ltd. were conducted within the objects mentioned in the Memorandum of Association of the said company and that the affairs of the said company have not been conducted in a manner prejudicial to the interest of its members or the public. COMP/16320/2008 8/10 JUDGMENT 12. Since the pleadings are completed and directions issued by this Court at the time of admission of both the petitions are complied with, both the petitions are taken up for final hearing and decided by this common order. 13. Heard Mr. K.S. Nanavati, learned Senior Advocate with Mr. Nandish Chudgar, learned advocate for Nanavati Associates for the petitioner company and Shri Harin Raval, learned Assistant Solicitor General for the Central Government. 14. The learned Counsel for the petitioner Company has submitted that pursuant to the public advertisement, no one has raised any objection against the Amalgamation, in the circumstances; there is no objection to the Amalgamation. It is further pointed out that the Official Liquidator in his report has not raised any objection against the amalgamation. That a common affidavit has been filed on behalf of the Central Government wherein it has been stated that the transferor company is registered with the Reserve Bank of India (RBI) as a non-banking financial company and in this connection, the Company be directed to inform the RBI about the Amalgamation along with the order of the High Court approving the same, within one month from the date of the order. 15. Having heard the learned Advocates for the parties and having perused the record of the case and having regard to the fact that no objections have been raised by any of the Shareholders or Creditors of the petitioner Companies or anyone from the public; and more particularly in view of the COMP/16320/2008 9/10 JUDGMENT report of the Official Liquidator and the affidavit filed on behalf of the Regional Director, Company Affairs, this Court is of the view that the Scheme of Amalgamation of the transferor Company (Luxor Investments Limited) with the transferee Company (Reliance Logistics Private Limited) is just and fair. Nothing adverse has been brought to the notice of this Court and as such the Scheme of Amalgamation deserves to be sanctioned. However, the resultant company shall within 30 days from the date of receipt of this Order, inform about this order along with copy of the order to RBI about the Amalgamation of Luxor Investments Limited with Reliance Logistics Private Limited, as stated in the affidavit dated 16.7.2008 filed on behalf of the Regional Director, Corporate Affairs, Reserve Bank of India to process the same in accordance with law. 16. In the aforesaid premises, the Scheme of Amalgamation (Exh. G to the petition) is hereby sanctioned. All legal consequences shall follow. Various reliefs have been prayed for. However, in view of the aforesaid order, the same are not required to be considered at this stage. Both the petitions are accordingly allowed in the aforesaid terms. 17. The fees of Mr. Harin Raval, Assistant Solicitor General for Central Government is quantified at Rs.3,500/- each for both the petitions and it would be open for the petitioners of both the petitions to pay the fees to the learned Counsel for the Central Government directly, by Account Payee Cheque. ( Harsha Devani, J. ) COMP/16320/2008 10/10 JUDGMENT hki