COMP/41/2008 1/5 JUDGMENT IN THE HIGH COURT OF GUJARAT AT AHMEDABAD COMPANY PETITION No. 41 of 2008 With COMPANY PETITION No. 42 of 2008 For Approval and Signature: HONOURABLE MR.JUSTICE RAVI R.TRIPATHI ========================================= 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 ? ========================================= MILESTONE ORGANIC LIMITED Versus . . - Respondent(s) ========================================= Appearance : MRS SWATI SOPARKAR for the Petitioner MR HARIN P RAVAL for the Respondent ========================================= CORAM : HONOURABLE MR.JUSTICE RAVI R.TRIPATHI Date : 07/07/2008 ORAL JUDGMENT 1. These are the petitions filed by two petitioner companies for sanction of a scheme of arrangement in the nature of amalgamation of Milestone Organic Limited, the transferor company with Bodal Chemicals Limited, the transferee company, under Section 391 to COMP/41/2008 2/5 JUDGMENT Section 394 of the Companies Act, 1956. 2. It has been submitted that both the petitioner companies are listed public limited companies and the shares are listed on Bombay Stock Exchange. Both the companies are engaged in similar line of commercial activities, viz. manufacturing of dyes and chemicals. The amalgamation is proposed for achieving synergic advantages and consolidation of operations. The petition gives details of the advantages that would flow by virtue of the amalgamation of these companies. 3. The proposed scheme was put for consideration of the equity shareholders and unsecured creditors of the transferor company, there being no secured creditor at the respective meetings held on 27.12.2007 which were convened pursuant to the directions issued by this Court vide order dated 21.11.2007 in Company Application No.508 of 2007. The proposed scheme was unanimously approved at both the meetings. The Chairman's report is filed on 07.01.2008 setting out the result of the said meetings. Similarly, the proposed scheme was put for consideration of equity shareholders, preference shareholders, secured creditors and unsecured creditors of the transferee company, at the respective meetings held on 26.12.2007 which were convened pursuant to the directions issued by this Court vide order dated 21.11.2007 in Company Application No.509 of 2007. The proposed scheme was COMP/41/2008 3/5 JUDGMENT unanimously approved at all the meetings. The Chairman's report is filed on 08.01.2008, wherein the result of the said meetings are set out. 4. After the petitions were admitted, the same were duly advertised in the newspapers being “The Indian Express” and “Sandesh”, both Ahmedabad editions of 14.02.2008 for the transferee company and in Baroda editions for the transferor company. The publication in the Government gazette was dispensed with as directed in order dated 31.01.2008. Affidavits dated 07.03.2008 have been filed confirming the said publication. No one has come forward with any objections to the said petitions even after the publication for the transferee company. The said fact has been confirmed by filing additional affidavit. Whereas, in case of the transferor company, an objection was filed by one of the Labour Unions. However, since the transferor company settled the issues raised therein, the same is withdrawn by the concerned party. All the above communications have been placed on record along with affidavit dated 18.06.2008. 5. Notice of the petition was served upon the Official Liquidator for the transferor company. Report dated 17.04.2008 has been filed by the Official Liquidator and the same confirms that the affairs of the transferor company have not been conducted in a manner prejudicial to the interest of its members, creditors or COMP/41/2008 4/5 JUDGMENT public interest. 6. Notice of the petition has been served upon the Central Government and Shri Harin P.Raval, Senior Standing Counsel appears for the Central Government. Affidavit dated 09.05.2008 has been filed by Mr.R.L.Dalmia, Deputy Registrar of Companies along with the letter from the Regional Director dated 06.05.2008, wherein some observations are made with regard to the proposed scheme of arrangement. The issues so raised are dealt with in affidavit filed by the Directors of the respective petitioner companies. Both the companies have placed on record the provisional balance sheets as on 31.03.2008. 7. Further it has been submitted by Mrs.Swati Soparkar, learned advocate for the transferor company that the issues raised by the Regional Director pertaining to the observations of the auditors of the company are resolved. The issue for the acceptance of deposits has been resolved in light of order dated 14.05.2008 of the Ministry of Corporate Affairs granting specific exemption as well as extension for the repayment of the same. On the issue of default in repayment of bank loan, it has been submitted that the same was already settled before filing of the present proceedings. A 'no due certificate' of the Baroda People's Cooperative Bank Ltd. is produced on record, confirms the same. Similarly, the issue of the appointment of company secretary for the transferee company COMP/41/2008 5/5 JUDGMENT is also clarified factually. 8. Heard Shri Harin Raval, learned Assistant Solicitor General of India appearing for the Central Government. 9. Having gone through the petitions and being satisfied that amalgamation would be in the interest of the companies and their members and creditors, the prayers in terms of paragraph 22 (a) of Company Petition No.41 of 2008 and paragraph 23 (a) of Company Petition No.42 of 2008 are granted. 10. The petitions are disposed of accordingly. So far as cost to be paid to the Central Government Standing Counsel is concerned, is quantified at Rs.3,500/- (Rupees Three Thousand Five Hundred Only) per petition. The same be paid to learned Central Government Standing Counsel Shri Harin P.Raval. (RAVI R.TRIPATHI, J.) *Shitole