COMP/273/2008 1/6 JUDGMENT IN THE HIGH COURT OF GUJARAT AT AHMEDABAD COMPANY PETITION No. 273 of 2008 In COMPANY APPLICATION No. 441 of 2008 With COMPANY PETITION No. 274 of 2008 In COMPANY APPLICATION No. 442 of 2008 For Approval and Signature: HONOURABLE MR.JUSTICE K.A.PUJ Sd/- ==================================== 1. Whether Reporters of Local Papers may be allowed to see the judgment ? YES 2. To be referred to the Reporter or not ? NO 3. Whether their Lordships wish to see the fair copy of the judgment ? NO 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 ? NO 5. Whether it is to be circulated to the civil judge ? NO ==================================== CORE EMBALLAGE LIMITED - Petitioner Versus Blank Name - Respondent ==================================== COMP/273/2008 2/6 JUDGMENT Appearance : MRS SWATI SOPARKAR for Petitioner. MR HARIN RAVAL, ASSISTANT SOLICITOR GENEAL for Central Government. ==================================== CORAM : HONOURABLE MR.JUSTICE K.A.PUJ Date : 12/12/2008 COMMON ORAL JUDGMENT 1. These are the petitions filed by two petitioner Companies for sanction of a Scheme of Arrangement in the nature of Demerger and Transfer of Manufacturing Division of Core Emballage Limited (the De-merged Company) to CEL Packaging Private Limited (the Resulting Company) under Section 391 read with Sections 394 of the Companies Act, 1956. 2. The De-merged Company is a listed public company engaged in the manufacturing of corrugated boxes and other packaging materials. It has been submitted that the Company has faced several financial crisis in the past and has been able to improve its net worth by entering into one time settlement with its lenders. However, it has substantial accumulated losses. The present scheme proposes transfer of its manufacturing COMP/273/2008 3/6 JUDGMENT division to a newly formed company and the consideration for the said undertaking is proposed to be paid to the de-merged Company which will help it to reduce its outstanding financial liabilities. The de- merged Company is proposed to continue with its trading activities. The petition gives the details of the advantages that are envisaged out of the said arrangement. 3. Vide the order dated 8th August, 2008, separate meetings of the Equity Shareholders, Secured Creditors and Unsecured Creditors were directed to be convened and the meeting of the sole Preference Shareholder and Unsecured Loan Creditors were dispensed with in light of the written consent letters submitted by them, being placed on record. The meeting of the Equity Shareholders of the Resulting Company was dispensed with in view of the consent letters from all the shareholders approving the scheme being placed on record. The Secured Creditors and Unsecured trade Creditors of the De-merged Company unanimously approved the Scheme in the meetings COMP/273/2008 4/6 JUDGMENT convened respectively 25th September 2008 and 3rd October, 2008, whereas the scheme was approved by requisite statutory majority of 98.41% in number and 99.99% in value at the meeting of the Equity Shareholders convened on 3rd October 2008. 4. After the petitions were admitted, the same were duly advertised in the newspapers (Indian Express and Sandesh, Ahmedabad edition dated 28th October, 2008) and the publication in the Government Gazette was dispensed with as directed in the order dated 20th October, 2008. No one has come forward with any objections to the said petitions even after the publication. 5. Notice of the petition has been served upon the Central Government and Shri Harin Raval, Assistant Solicitor General of India appeared for the Central Government. An affidavit dated 26.11.2008 by Mr. R.K. Dalmia, the Deputy Registrar of Companies, along with the letter from the Regional Director dated 25.11.2008 has been placed on record. The only COMP/273/2008 5/6 JUDGMENT observation pertain to the submission of latest financial statements. On behalf of the petitioner Companies, separate affidavits both dated 29.11.2008 has been filed by the respective Directors of the petitioner Companies submitting the financial statements as on 30.09.2008 and further confirming that there is no material change in the financial statements since the above referred date. 6. Heard Smt. Swati Soparkar, learned advocate appearing for the petitioner Companies and Mr. Harin Raval for the Central Government. 7. Having gone through the petitions and being satisfied that the proposed arrangement would be in the interest of the Companies and their members and Creditors, prayers in terms of paragraph 23 (a) of Company Petition No.273 of 2008 of the De-merged Company and paragraph 15 (a) of Company Petition No.274 of 2008 of the Resulting Company, are hereby granted. COMP/273/2008 6/6 JUDGMENT 8. The petitions are disposed of accordingly. So far as the costs to be paid to the Central Government Standing Counsel is concerned, I quantify the same at Rs.3,500/- per petition. The same may be paid to the learned advocate Shri Harin Raval. Sd/- [K. A. PUJ, J.] Savariya