1 IN THE HIGH COURT OF JUDICATURE AT BOMBAY ORDINARY ORIGINAL CIVIL JURISDICTION COMPANY PETITION NO.701 OF 2009 CONNECTED WITH COMPANY APPLICATION NO.524 OF 2009 In the matter of the Companies Act, 1956; AND In the matter of Agri -Tech (India) Limited, a Company incorporated under the Companies Act I of 1956, having its Registered Office at Nath House, Nath Road, Aurangabad - 431 005; AND In the matter of Section 391 read with Section 394 of the Companies Act I of 1956 for the- ·Scheme of Arrangement/ Compromise between Agri-Tech (India) Limited and its Secured Creditors. Agri-Tech (India) Limited, a Company incorporated under the Companies Act I of 1957, having its Registered Office at Nath House, Nath Road, Aurangabad - 431 005. Petitioners 2 Coram: S. J. KATHAWALLA J. Date: 27th October 2010 Mr. D. V. Merchant, Senior Counsel alongwith Mr. Dilip Rai i/b Aruna Singh, Advocate for the Petitioner. Mr. Jimmy Avasia alongwith Mr. Riyaz Chagla i/b Mr. S. K. Mohapatra, for Regional Director Mr. S. K. Chari i/b M/s. M. V. Kini & Co. for Canara Bank (Secured Creditor) P.C.: 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 Arrangement/Compromise between M/s. Agri-Tech (India) Ltd. 'and its Secured Creditors. 3) Counsel appearing on behalf of petitioners stated that they have complied with all statutory requirements as per direction of this Court and they have filed necessary affidavits of compliance in the Court. Moreover, Petitioner Company undertakes to comply with all statutory requirements, if any, as required under the Companies Act, 1956 and the rules made thereunder. The Undertaking is accepted. 3 4) The Regional Director has filed an affidavit, inter alia, stating that:- i) As per Clause 1.9 of Part II of the Scheme, guarantor includes in addition to the promoters stated therein other public limited Companies also. One among them being M/s, Nath Bio Genes (India) Ltd., which has also filed a similar petition ix] s.391 read with Section 394 of the Companies Act. 1956 before the Hon'ble High Court bearing C.P.No.702 of 2009. ii) As per Clause No.1.6 of the Scheme, the amount due and payable by the Company is as on 31/12/2008. iii) As per Clause 4A of the Scheme "the Company and the guarantor(s) shall jointly and/or severely pay an aggregate of Rs.489.71 lacs to the Secured Creditors as per the Schedule given in Exhibit "B" of the Scheme, in 13 installments. iv) From the foregoing paragraphs it is clear that in addition to the Petitioner Company the guarantors are also jointly and severely responsible for the repayment of dues payable by the Petitioner Company. However, the guarantors are not a party to the proceedings before this Hon 'ble High Court. v) It is also pertinent to consider by this Hon'ble High Court that without hearing of the guarantor (3rd party), no order can be .passed that too fixing financial responsibility on a body corporate by an Order of this Hon 'ble Court. vi) It is, therefore, necessary to bring the said guarantor as necessary party in the proceeding before' this 4 Hon'hle High Court so that the consent of the guarantors/their views shall be obtained before passing any Order by this Hon 'ble Court. vii) Consequent thereto the prayer clause of the Petition needs to be amended so that the Order, if any, passed by this Hon 'ble High Court approving the Scheme is binding on the Petitioner Company, its guarantors and all its Secured Creditors. viii) As stated hereinabove, as per the Exhibit "B" of the Scheme, the amount proposed to be settled are payable in 13 installments. However, it is noticed that as per Exhibit "B" the installments for the period ending 31/12/2008, 31/03/2009, 30/06/2009, 30/09/2009 and 31/12/2009 have already become overdue. It is not clear whether the Petitioner or guarantors, if any, .have made any payments to the Secured Creditors. If not paid, how the above 5 installments are going to be paid and for which a fresh schedule needs to be fixed by this Hon 'ble High Court. ix) As stated hereinabove, one of the guarantors VIZ. Nath Bio-Genes (India) Ltd., has also filed a similar Petition for a Scheme of Compromise with its Creditors. As per provisions of Section 372A of the Companies Act, when the Company is in default in making payment of its Secured Creditors that Company is prohibited from giving any guarantee without the compliance of Section 372A(2) of the Companies Act, 1956. 5 x) The Petitioner Company may also be directed to comply with the Regulatory norms of the Stock Exchange in which the shares are already listed. 5) In response to the above mentioned queries raised by the Regional Director, the Petitioner has filed an affidavit dated 15th March, 2010 of one Mr. Ramesh S. Phadatare, Manager (Legal & Finance) of the Petitioner Company. In the said affidavit, it is, inter alia, stated that the Regional Director vide its letter dated 22 n d December, 2009 had raised similar queries to what has been stated by him in his aforesaid affidavit. It is further stated that the Petitioner by its letter dated 26th December, 2009 has already explained the said queries. A copy of the said letter dated 26th December, 2009 is also annexed to the said affidavit. So far as queries raised in paragraphs (i) to (vii) of the said affidavits are concerned, the Counsel for the Petitioner tendered the respective affidavit of guarantors giving an undertaking to abide by the Scheme. The Counsel further submits that along with the said Affidavits, the corporate guarantors have filed the resolutions passed by the respective companies giving the. undertakings and their respective letter of consent and that the copies of the same have already been filed with the Regional Director. The said 6 Affidavits are taken on record. The undertaking given in the said affidavits are accepted. 6) So far as the query raised in paragraph (viii) of the Affidavit of Regional Director is concerned, the Counsel for the Petitioner submits that the Petitioners have already amended clause 4(A) of the Scheme and they have added Exhibit "B" to the said Scheme wherein they have set out the manner in which the Secured Creditors will be paid. The Counsel for the Petitioner further submits that the Petitioner Company shall make the payments to the Secured Creditors as per the provisions of the Scheme from the effective date. 7) So far as the query raised in paragraph (ix) of the Affidavit of Regional Director is concerned, the Counsel for the Petitioner submits that the said guarantees are not given under the scheme for the first time and the same were given to the Secured Creditors prior to de-merger of Nath Seeds Ltd., i.e. prior to the year 2000. Therefore, Section 372A of the Companies Act will not apply as the guarantees are not given under the Scheme. In any event, the Scheme itself under Clause 5(h) provides that the guarantors have to obtain 7 specific approval within 60 days from the date of passing of the Scheme. 8) So. far as the query raised in paragraph (x) of the Affidavit of Regional Director is concerned, the Counsel for the Petitioner submits that the Petitioner Company is listed with the Ahmedabad Stock Exchange and that the said Stock Exchange has given its no objection to the Scheme. A copy of the said letter of the said Exchange is annexed to the Affidavit filed by the' Petitioner Company. 9) The Counsel appearing for Regional Director has raised a query regarding the lapsing of the Scheme. The Counsel for the Petitioner Company submits that in Clause 9 of Part IV of the Scheme, it is mentioned that in the event of this Scheme not being effective for any reason whatsoever on or before September, 2009 or such other date as may be extended by the secured creditors, who are not less than 75% in terms of debt, the Scheme would come to an end. The Counsel further submits that there are only four Secured Creditors of the Petitioner Company. The three of the said secured debt is with ARCIL and remaining secured debt is with Canara Bank. The Counsel states that ARCIL has already given its consent vide its letter dated 6tp. October, 2010 to the proposed Scheme. The 8 said letter has already been taken on record at the time of hearing of the said Petition on 15th October, 2010. Moreover, the counsel for the other Secured Creditor, viz., Canara Bank, is present in the Court and on instructions of his client, he submits that his client has no objection to the proposed Scheme. The Counsel for the Petitioner submits that since all the Secured Creditors of the Petitioner Company has now given consent to the Scheme, there is no question of the Scheme coming to an end. 10) 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. 11) Since all the requisite statutory compliances have been fulfilled, the Company Petition is made absolute in terms of prayer clauses (a) & (b). 12) The Petitioner Company 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 this order. 9 13) The Petitioner to pay costs of Rs.10,OOOj- to the Regional Director, Western Region, Mumbai. Costs to be paid within four weeks from the date of this order. 14) Filing and issuance of the drawn up order is dispensed with. 1;5) All the authorities concerned to act on a copy of this order along with the Scheme duly authenticated by the Company Registrar, High Court, Bombay. (5.J. KATHAWALLA,J.)