THE HON'BLE SRI JUSTICE B.SESHASAYANA REDDY Company Petitions No.166 and 167 of 2011 17th November, 2011 Between:- C.P.No.166/2011 Shafoli Fabrics Private Limited, Hyderabad Rep.by its Managing Director – Mrs.Meera Mehra .. petitioner C.P.No.167/2011 Shafoli Constructions Private Limited, Hyderabad, Rep.by its Director – Mrs.Meera Mehra .. Petitioner THE HON'BLE SRI JUSTICE B.SESHASAYANA REDDY Company Petitions No.166 and 167 of 2011 COMMON ORDER:- These two Company Petitions have been taken out under Section 391 to 394 of the Companies Act, 1956 read with Rule 9 of the Companies (Court) Rules, 1959 seeking sanction of the Scheme of Arrangement. More precisely, Shafali Fabrics Private Limited (hereinafter referred to as ‘SFPL’) is the petitioner in C.P.No.166 of 2011 and Shafali Constructions Private Limited (hereinafter referred to as ‘SCPL’) is the petitioner in C.P.No.167 of 2011. SFPL was incorporated on 27-6-1978 under the provisions of the Companies Act, 1956. The registered Office of SFPL is situated at 8- 3-236/1, Yousufguda, Hyderabad in the State of Andhra Pradesh. The Authorized Share Capital of SFPL is 1,50,000/- equity shares of Rs.10/- each. The Issued, Subscribed and Paid-up capital of SFPL is 20,000/- equity shares of Rs.10/- each. The objects of SFPL, as set out in the Memorandum of Association, are, inter alia, are to carry the business of manufacturers, producers, processors, designers, exporters, importers, wholesalers and retailers of, agents for, and dealers in all kinds of spun, woven, dyed, bleached, printed, knitted, looped or otherwise processed or manufactured textiles, cloth, fabrics, tufts, druggets, durries, rugs, carpets, underlays, matting, floor cloths, linen, furnishing fabrics, coverings and materials of all kinds etc. SFPL is primarily engaged in printing, processing, stitching and trading garments business and property development business. SCPL was incorporated on 19-7-2011 under the provisions of the Companies Act, 1956. The Registered Office of SCPL is situated at Barkat Village, 8-2-583, Road No.9, Banjara Hills, Hyderabad in the State of Andhra Pradesh. The Authorized share capital of SCPL is 50,000 equity shares of Rs.10/- each. The Issued, Subscribed and Paid-up capital of SCPL Company is 10,000 equity shares of Rs.10/- each. The objects of SCPL, as set out in its Memorandum of Association, are to carry on the business and activities of real estate purchase, construction, development and sale of townships, information technology parks, bio-technology parks, entertainment parks, shopping complexes, commercial complexes, industrial complexes, hotels, resorts, hostels and leisure theme parks, multiplexes, cinema halls, residential complexes, educational institutions and hospitals in India and Abroad. SCPL is primarily engaged in property development business. The existing business of SFPL has been cleaved in (1) the property development division, (2) printing, processing, stitching and trading garments. The proposed Scheme of Arrangement envisages the spin off the property development business with the concomitant assets, proportionate reserves and share capital as a going concern into a newly formed Company SCPL for achieving independent focus in this area. Upon completion of the process of demerger, SFPL would continue to focus on existing line of business and the new Company, SCPL would undertake the property development business. It is stated in the petitions that the proposed Scheme of Arrangement would not affect the employees of the SFPL and they would continue to enjoy the same benefits as they used to before the proposed arrangement. SFPL and SCPL in their respective Board Resolutions 22-7- 2011 and 1-8-2011 approved the proposed Scheme of Arrangement. The meeting of the shareholders and unsecured creditors of SFPL AND SCPL came to be dispensed with as per Orders in Company Applications No.983 of 2011 and 982 of 2011 respectively. SFPL has only one unsecured creditor namely Mrs.Meera Mehra. She has placed on record her consent letter, which finds place at page No.115 of C.P.No.166 of 2011. There are no secured or unsecured creditors of SCPL. These two Company Petitions came to be admitted on 19-9- 2011. Petitioners were directed to take out hearing of these petitions by way of publication in “The Business Standard” (English Daily) and “Andhra Bhoomi” (Telugu Daily) and file proof of publications. The petitioners are also directed to take out notices to the Regional Director, South Eastern Region, Ministry of Corporate Affairs, Hyderabad and the Registrar of Companies, Hyderabad. In compliance of the directions, the petitioners took out publications in “The Business Standard” (English Daily) and “Andhra Bhoomi” (Telugu Daily), and filed proof. The Regional Director, South Eastern Region, Ministry of Corporate Affairs, Hyderabad, has filed common affidavit. The only objection taken by the Regional Director is that the Resulting Company has to pay stamp duty under the Regulations of the Andhra Pradesh Stamp Act on the consideration payable for the transfer of property development division of SFPL in favour of SCPL. Heard Sri S.Ravi, learned Senior Counsel for the petitioners and the learned Assistant Solicitor General appearing for the Regional Director, South Eastern Region, Ministry of Corporate Affairs, Hyderabad. Learned Senior Counsel submits that the Resulting Company undertakes to pay the Stamp Duty under the Regulations of the Andhra Pradesh Stamp Act on the consideration payable for the transfer of property development division of SFPL in favour of SCPL. All the statutory formalities have been complied with. No objections have been received from any quarter. 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. In the facts and circumstances, I do not see any impediment in granting sanction to the proposed scheme of arrangement, since all the requisite statutory compliances have been fulfilled. Accordingly, the Company Petitions are Allowed. The parties to the Scheme of Arrnagement or other persons interested shall be at liberty to apply for any directions that may be necessary in regard to the working of the Scheme of Arrangement. The petitioners do lodge an authenticated copy of the scheme and copy of this order with the Registrar of Companies within 30 days from the date of the order. The petitioner in each of the petitioners shall pay a sum of Rs.5,000/- (Rs.Five thousand only) to the Regional Director, Ministry of Corporate Affairs, South East Region, Hyderabad. The petitioner in Company Petition No.167 of 2011 has to pay the Stamp Duty as provided under Article 20(d) of Schedule 1A of the Indian Stamp Act as applicable to the State of Andhra Pradesh. __________________________ B.Seshasayana Reddy, J 17th November, 2011 smr