bsb IN IN IN THE HIGH COURT OF JUDICATURE AT BOMBAY THE HIGH COURT OF JUDICATURE AT BOMBAY THE HIGH COURT OF JUDICATURE AT BOMBAY ORDINARY ORDINARY ORDINARY ORIGINAL CIVIL JURISDICTION ORIGINAL CIVIL JURISDICTION ORIGINAL CIVIL JURISDICTION COMPANY COMPANY COMPANY APPLICATION NO. 188 OF 2009 APPLICATION NO. 188 OF 2009 APPLICATION NO. 188 OF 2009 IN IN IN COMPANY COMPANY COMPANY APPLICATION NO. 1337 OF 2008 APPLICATION NO. 1337 OF 2008 APPLICATION NO. 1337 OF 2008 IN IN IN COMPANY COMPANY COMPANY PETITION NO. 374 OF 2002 PETITION NO. 374 OF 2002 PETITION NO. 374 OF 2002 CONNECTED CONNECTED CONNECTED WITH WITH WITH COMPANY COMPANY COMPANY APPLICATION NO. 123 OF 2002 APPLICATION NO. 123 OF 2002 APPLICATION NO. 123 OF 2002 1. Dr.Paresh M. Desai 2. Mrs.Kalpana P. Desai ... Applicants v/s Godrej Industries Ltd., Mumbai ... Respondent Company Mr.C.J.Joy with Mr.P.Khosla i/by S.K.Mahapatra for the Regional Director. Mr.Paresh M. Desai - applicant present in person in Company Application No.188 of 2009 present. Mr.Virag Tulzapurkar, Sr. Counsel with Ms.Sneha Phene and Ms.Rajni Divkar i/by Little & Co. for the respondent Company. CORAM: CORAM: CORAM: S.C. DHARMADHIKARI, J. S.C. DHARMADHIKARI, J. S.C. DHARMADHIKARI, J. DATED: DATED: DATED: 18TH MARCH, 2009 18TH MARCH, 2009 18TH MARCH, 2009 P.C. P.C. P.C.: 1. Heard the Applicants appearing in person and Mr.Tulzapurkar, learned Senior Counsel appearing for the Respondent Company. 2. Perused the Company Application and the annexures 2 thereto so also the affidavit in reply filed on 12th March, 2009, copy of which has already been served in advance to the applicants appearing in person. 3. The applicants had given another affidavit requesting production of some documents but for the reasons that are indicated in the present order, I do not think it fit to call for production of any document. 4. The applicants are praying that they should be made parties to the Company Application No.1337 of 2008. 5. It is undisputed before me that the Company Application No.1337 of 2008 was filed on 29th August, 2008 by the respondent in this Court and the request in the said application was that the respondent be directed and permitted to deposit, in the Investor Education and Protection Fund under Section 205C of the Companies Act, within such a period as this Court deems fit and proper, an amount of Rs.85,00,000/- approximately lying as the balance in the account of the H.D.F.C. Bank, Fort Branch, Mumbai. Prayer clause (b) of the said application reads as under:- "(b) That the applicant Company be directed to pay to such shareholders whose amounts are lying unclaimed and who claims their amounts from the applicant Company on or before the final hearing 3 of the present Company Application from the aforesaid account mentioned in the prayer clause (a) hereinabove and if there are such claims then the balance remaining after such payments be directed to be deposited with the Investor Education and Protection Fund established under Section 205C of the Companies Act, 1956 as provided in prayer clause (a) above." 6. After setting out the relevant details in regard to share holding what the respondent Company point out is that the Board of Directors of the respondent Company in their meeting held on 22.2.2002 proposed the Scheme of Arrangement under Section 391 of the Act for purchase of Equity Shares of the respondent Company from its shareholders and the consequent cancellation of the Equity Shares so purchased by the respondent Company. 7. After setting out the salient features of the Scheme, it was stated that the resolution of the Board was subject to the approval of the requisite majority of the shareholders and creditors and sanction of this Court. Reference is made to an order dated 1.3.2002 pursuant to which Meetings of the Equity Shareholders, Secured Creditors and Unsecured Creditors were to be convened. The said meeting was duly convened on 6.4.2002 and it was stated that the Scheme has been approved by the requisite majority. Thereafter, petition for sanction of the Scheme was presented to this Court on 9.4.2002 and on 6.6.2002 this Court passed 4 an order sanctioning reduction of Equity Share Capital and Share Premium Account in terms of prayers in the petition. Thus, the Scheme of the Arrangement was sanctioned by this Court. The order of the Single Judge in that behalf came to be challenged but the Division Bench dismissed the Appeal on 2nd July, 2002. The Board of Directors recorded 26th July, 2002 as the Record Date. In the meanwhile, Special Leave Petition challenging the order of the Division Bench came to be admitted but no interim relief was granted. 8. The Company pointed out that pursuant to the above resolutions and orders, there are 1,49,701 shareholders holding 1,30,68,276 Equity Shares to whom cheques in the sum of merely Rs.23,52,28,968/- approximately were sent. Save and Except cheques in the sum of Rs.84,99,474/- sent to 12,823 Shareholders, all other cheques were duly encashed. 9. The question, therefore, arose as to what is to be done with regard to this amount which was lying with the respondent. The respondent was entitled to seek directions of this Court, with regard to the investment of this amount, as the Appeal filed in the Supreme Court came to be disposed of on 22.2.2006. Thus, all orders of the Court sanctioning the Arrangement had gain 5 finality. The Company purchased 1,30,68,276 Equity Shares and despatched the above Sums. 10. Since six years had elapsed after the Scheme and there appeared to be no reasonable prospect of 12,823 shareholders claiming their monies, rather than they remaining idle and lying with the Bankers of the respondent, in a separate account, it was thought that it would be better if it is utilized by depositing it with the Investor Education & Protection Fund. 11. It is in that context and seeking the assistance of the Court with regard to this sum, that the Subject Company Application No.1337 of 2008 was filed in this Court. 12. It was placed before a learned Single Judge of this Court on 5th and 10th December, 2008. Directions were sought, which were given, with regard to bringing the sum in Court. Thereafter a detailed order has been passed on 18th December, 2008 and permission was given to deposit a sum of Rs.85,00,000/- with the Registrar (O.S.)/Prothonotary and Senior Master of this Court with further directions to refund Rs.51,004/- to the Respondent. 6 13. It was found that the monies could not be invested in the Fund as Section 205C of the Companies Act, 1956 had no application to a contingency of the present nature. Therefore, until and unless the amount is actually invested in the Prime Minister’s Relief Fund, this Court thought it fit to give a last opportunity to such shareholders who wish to claim the amount which was due to them and payable under the Scheme of Arrangement. In other words, such of the shareholders who did not come forward to avail of the benefit or did not encash their cheques despite receipt thereof can make an application to the Prothonotary & Senior Master. Their claim could be duly scrutinized by the Prothonotary & Senior Master and thereafter the amount can be released to them. 14. The applicant does not dispute that there is a Scheme of Arrangement. He does not dispute the Court order sanctioning the Scheme. All that he alleges is that the respondent Company has misused the order passed by this Court in the year 2002 by purporting to send a communication to the shareholders and requesting the shareholders to send their response to the Buy-back Scheme. According to him, if the Scheme has worked itself out in 2002, then calling for such responses shows fraudulent and dishonest conduct of the Company. 7 That is evident from a receipt, copy of which is annexed by him at Exhibits G and H to the affidavit in support of the Company Application No.188 of 2009. He submits that he would point out all these facts and the back ground to the Court and, therefore, he must be made a party to the Company Application No.1337 of 2008. The Company Application be heard again by recalling the orders passed till date and at his request this Court should grant interim protection in terms of prayer clause (c). He requests that further direction be issued with regard to prosecuting the Company after investigation by a appropriate authority including the Central Bureau of Investigation. 15. The Company application is opposed by the respondent and in the affidavit in reply it is pointed out by the respondent that this Company Application is misconceived and untenable. The question of committing contempt of this Court’s orders does not arise as falsely alleged, inasmuch as, for the same relief Criminal Writ Petition No.2551 of 2008 alongwith Misc. Application No.32 of 2009 was filed by the Applicants. They alleged commission of offences punishable under Sections 463, 465, and 467 of the Indian Penal Code. That criminal writ petition was dismissed by the Division Bench vide its order dated 4th March, 2009. 8 16. Further, it is alleged that the instant application is hopelessly delayed. The shares were bought back by the respondent way back in the year 2002. The last date for the receipt of Account Fund, as per the order of this Court, was subsequently confirmed on November 28, 2002. The applicants are not the shareholders of the respondent any longer. Their shares were bought back and it is falsely alleged that they were not bought back. The respondent has specifically invited the attention of the Court to a notice of the Extraordinary General Meeting. It is stated that the communication with regard to such meeting and the Scheme of Buy-back was duly served at the last recorded address, in the records of the Company, of the present applicants. Once they are served at the recorded address, then there is no further obligation, inasmuch as, the applicants cannot take advantage of any alleged change in the address. If there is any alleged change after the Scheme has been worked out, then, that address need not be recorded because the applicants do not continue as shareholders. That apart, the communications were sent to the applicants by U.C.P. on 9.8.2002. The proof of posting is annexed as Annexure-I to the affidavit in reply. In such circumstances, this Company Application should not be entertained is the request. Respondent 9 prays that it be dismissed. 17. The applicant appearing in person and Shri Tulzapurkar, learned senior counsel appearing for the respondent Company have been heard by me at length. 18. With their assistance I perused the Company Application and reply affidavit with their annexures. 19. In my opinion, no relief can be granted to the applicants in this application. 20. The Scheme of Arrangement sanctioned by this Court way back in the year 2002 has worked itself out. It was sanctioned in the year 2002 and that order of sanction has been confirmed vide order of the Supreme Court of India. Thereafter the shares have been bought back by the respondent. All the persons to whom the cheques were forwarded but who failed to encash the same despite the receipt thereof, cannot make any grievance, save and except, now applying to the Registrar (O.S.)/Prothonotary & Senior Master of this Court. The matter is strictly between the respondent Company and this Court. The Scheme is already Implemented. There is no question of anybody claiming to be to the shareholders and on that basis seeking leave of the 10 Court to either make submissions or get himself impleaded as a party. The unutilized sum which is lying with the Banker of the Respondent is something which the Company does not want to claim for itself. It seeks directions of the Court with regard to the investment of the idle and dormant fund. It is in that context Company Application No.1337 of 2008 has been filed. In that application, on affidavit all details were set out and the Court after satisfying itself firstly called upon the Registrar of Companies to make his submissions. Secondly, it was pointed out to this Court that the Company is facing Audit objections and is willing to deposit the monies in the Investor Education and Protection Fund or such other Fund as this Court may deem fit and appropriate. After notice was issued to the Union of India and Central Investment and Protection Fund, the matter came to be placed before this Court on 19.9.2008. On that date, time of 5-6 weeks was sought to take instructions whether the amount proposed to be deposited by the respondent can be accepted in the Investment Fund. At that stage also, request was made to permit the Company to deposit the sum of Rs.84,99,474/- in this Court. The amount was permitted to be deposited and thereafter the Court issued instructions with regard to its Investment in a Fixed deposit with a Nationalized Bank. 11 21. Thereafter, the matter appeared on 5th December, 2008 and later on 18th December, 2008. The Court noted that Section 205C of Companies Act is not applicable and, therefore, the amount cannot be invested in the Investor Fund. Subsequently, the Court issued the following directions:- "3. The next question is: what is the direction to be issued in respect of this amount which is quite substantial around Rs.85,00,000/- (Rupees Eighty-five lakhs). The applicants have already deposited the said amount in this Court which is lying with the Registrar (Original Side)/Prothonotary and Senior Master. The only option that can be explored at this stage is to call upon the Applicant Company to issue publication in Maharashtra Times (Marathi), Mumbai Edition, Mumbai Samachar (Gujrathi), Mumbai Edition and Times of India (English), Mumbai Edition. Besides publication in the abovesaid newspapers, the Applicants shall publish such notice on its web-site to indicate that the interested eligible shareholders may approach this Court for withdrawal of the amount payable to them in terms of the Scheme within reasonable time, in any case, not later than 31st December, 2009, failing which, Court may consider of issuing direction to deposit the said amount in Prime Minister’s Relief Fund or any such Fund which caters to the public issues. The notice be displayed additionally on High Court official web-site as well as on the official web-site of Ministry of Corporate Affairs which shall be facilitated by the Registrar of Companies. (4) At this stage, counsel for the applicants has invited my attention to the fact that the Company has already paid sum of Rs.51,004/- (Rupees Fifty-one thousand and Four only) to the eligible shareholders as per the Scheme. To that extent, the amount will have to be reimbursed to the Applicant Company. The 12 Registrar (Original Side)/Prothonotary and Senior Master is directed to refund amount of Rs.51,004/- (Rupees fifty one thousand and four only) to the Applicant Company forthwith. The rest of the amount deposited by the Applicants shall remain invested in appropriate Fixed Deposit Scheme to derive best interest returns. (5) The Registrar (Original Side)/Prothonotary and Senior Master may seek directions from the Court in the event of any intimation received by her from individual eligible shareholders for payment, to be placed before the Court within two weeks from receipt thereof. That procedure will ensure that the claim is genuine and undisputed." 22. From a perusal of this order, it is apparent that the Court is concerned with the request, limited as it is, as to whether the amounts should be permitted to be invested by the respondent Company. The Company pointed out that the money is lying with it. The Company pointed out that despite the cheques being duly despatched the shareholders have not encashed them. The Scheme has worked itself out but the amounts are lying uninvested and unutilized. There being an audit objection, Court’s assistance was sought. It is in that context the Court issued the above directions. 23. In the meanwhile, the criminal writ petition was also placed before a Division Bench of this Court and after hearing the applicants and the respondent Company at length, the Court found no merit in the same insofar as it relates to criminal contempt on the part of the 13 respondent and therefore dismissed the writ petition. 24. I do not see as to how the applicants can claim to be necessary parties to the Company Application No.1337 of 2008. They have admittedly not encashed the cheques. The cheques have been despatched duly to them. Even today Mr.Tulzapurkar, learned senior counsel, on instructions, makes a statement that the Pay Order in the sum of Rs.5,400/- can be handed over to the applicants. The applicants refuse to accept it. Merely because there is refusal to accept does not mean that the Court must implead the Applicants as parties to the Company Application No.1337 of 2008, more so, considering the nature of the relief claimed by the respondent therein. 25. Further, there is no denial of the fact that the applicants failed to encash the warrants of Rs.2700/- each dated 12.9.2002. The respondent issued duplicate warrants dated 22.9.2006. These were valid for the period specified therein. Merely because the applicants forward a letter in 2006, it does not mean that either the Scheme is in force or has not worked itself out. There is no question of any relief in this application being granted on the basis of some endorsement on the receipt. In paragraph 8 of the reply to the present 14 Company Application, the respondents have pointed out that the order of this Court expressly provided that the Buy-back would be effected without any deed or act of the shareholders. The same was not subject to any surrendering of the share certificates with the transfer form and/or seeking appropriate instructions to the depository participant. Therefore, any occasion to forge any signature of the applicants does not arise. That apart, the correct position is set out in two letters dated 17th October, 2006 and 11th December, 2006. 26. The applicants reliance on the letter dated 12.8.2005 issued by Godrej Consumer Products Ltd. is indeed misleading. That is a separate legal entity. That called upon the holders of shares of erstwhile Godrej Soaps Ltd. to exchange their shares with Godrej Consumer Products Ltd. The receipt of the applicants’ letter dated 21st August, 2006 does not in any manner advance the case of the applicants. It is clear that nothing was pending to be done in August, 2006 insofar as the arrangement of the Scheme of Buy-back is concerned. 27. Further, in para 10 of the affidavit in reply, the respondents have stated thus - 15 "10. I say that including the applicants there were other shareholders who had not encashed the warrants. The uncashed amount was approximately Rs.85 lacs. The respondent deposited the said amount in the Hon’ble High Court. The respondents filed Company Application No.1337 of 2008 seeking directions in respect of the unpaid amounts. The application was based on a list of the cheques issued but not encashed as per the respondent’s reconciliation of Bank statement as on September 25, 2008 was attached to the Application. However pursuant to the Court’s suggestion bifurcation of the shareholders was made into two parts. Part-A comprised of shareholders to whom cheques were issued but not encashed and the cheques were lying with the Shareholders and not returned to the Company for revalidation. A list of the shareholders in Part-A was furnished in Court. Part B comprised of the list of shareholders to whom duplicate/revalidated cheques had been issued aggregating to Rs.51,004/-. The names of the two Applicants herein appear at item Nos.3 and 4 in this list under folio Nos.0321993 and 0321994. The applicants shares were included in Part B. At the hearing of the application held on 18.12.2008, the respondent applied for refund of Rs.51,004/- and deposit of the balance sum set out in the list including shareholders in Part A, in the Prime Minister’s Relief Fund. I therefore submit that the applicants’ amount is included in Part A does not form part of the amount to be transferred to the Prime Ministers relief Fund and therefore they should not be joined as a party to the Company Application No.1337 their present application be dismissed with cost. A copy of the order date December 18.2008 passed in the above Company Application is annexed as Exhibit 4." 28. Taking into consideration the contents of this paragraph and for this reason as well, I do not find any merit in the request of the applicants to implead them as parties to the Company Application No.1337 of 2008. I am in agreement with Mr.Tulzapurkar appearing for the 16 respondent that considering the order and directions issued by this Court on 18.12.2008, Company Application No.1337 of 2008 is not a proceeding which can be said to be pending for anything other than reporting compliance and Issuing incidental Directions about Investment in an Appropriate Fund. 29. For the reasons that have been already set out while rejecting the criminal writ petition, I do not see any merit in the request with regard to punishing the Director of the respondent Company or any officers for contempt, as well. Once the Scheme of Buy-back has worked itself out completely, there is no question of granting any stay of the orders passed by this Court nor relief in terms of prayer clause (c) of the application. 30. I am satisfied that the application, belated as it is, is also misconceived. The applicants do not have any locus to come before this Court and request to be impleaded as parties in Company Application No.1337 of 2008. 31. For the above mentioned reasons, I do not find any merit in this Company Application and it is accordingly dismissed. 17 32. Although, the respondent’s counsel prays for costs, considering that the applicants are appearing in person, there will be no order as to costs. (S.C.DHARMADHIKARI, (S.C.DHARMADHIKARI, (S.C.DHARMADHIKARI, J.) J.) J.)