IN THE HIGH COURT OF JUDICATURE AT BOMBAY ORDINARY ORIGINAL CIVIL JURISDICTION COMPANY SCHEME PETITION NO 538 OF 2011 CONNECTED WITH COMPANY SUMMONS FOR DIRECTION NO. 455 OF 2011. Garware Chemicals Limited .....Petitioner/Demerged Company AND COMPANY SCHEME PETITION NO 539 OF 2011 CONNECTED WITH COMPANY SUMMONS FOR DIRECTION NO. 456 OF 2011. Garware Polyester Limited ......Petitioner/Resulting Company In the matter of the Companies Act, 1956(1 of 1956); And In the matter of Sections 391 to 394 read with Sections 78, 100 to 103 of the Companies Act, 1956; And In the matter of Scheme of Arrangement between Garware Chemicals Limited (“the Demerged Company”) and Garware Polyester Limited (“the Resulting Company”) and their Respective Equity Shareholders Mr. Rajesh Shah i/b Rajesh Shah & Co. for the Petitioners. Mr. D.A.Dubey i/b Mr. H.P. Chaturvedi for Regional Director in both the Petitions. CORAM: S.C. DHARMADHIKARI. J DATE: 21st October, 2011 1. Heard learned counsel for the parties. 2 2. The sanction of the Court is sought under Sections 391 to 394 read with Sections 78, 100 to 103 of the Companies Act, 1956 to a Scheme of Arrangement between Garware Chemicals Limited and Garware Polyester Limited and their Respective Equity Shareholders. 3. Counsel appearing on behalf of the Petitioners have stated that the Petitioner Companies have complied with all requirements as per directions of this Court and they have filed necessary affidavits of compliance in the Court. Moreover, Petitioner Companies undertakes to comply with all statutory requirements, if any, as required under the Companies Act, 1956 and the rules made there under. The Undertaking is accepted. 4. The Regional Director has filed an affidavit stating therein that save and except as stated in paragraph 6(a) and (b) it appears that the scheme is not prejudicial to the interest of the shareholders and public. In paragraph 6 (a) and (b) of the Affidavit, it is stated that: 6. That the Deponent further submits that : (a) In Clause 2.4.4 of the Scheme, it is stated that the difference being the excess of the net assets value of the Manufacturing Business transferred to GPL, over the face value of equity shares allotted as per Clause 2.2.1 of the scheme and after considering the adjustment mentioning Clause 2.4.3 of the scheme and after considering any impairment in the value of investments in GCL would be credited in the General Reserve Account of the Resulting Company. In this connection it is submitted that the Reserve arising out of this scheme shall not be utilized for the purpose of declaring dividend by the Resulting Company (GPL). (b) In Clause 2.4.7 of the Scheme, it is stated that the excess of book value of assets over the book value of liabilities transferred shall be transferred to the Profit & Loss account. In this connection, it is submitted that the said amount which is proposed to be transferred to Profit & Loss account of the resulting company is not revenue 3 earned by the Resulting Company and hence, should be transferred to Capital Reserve account of the Resulting Company. 5. So far as observation raised in paragraph 6(a) of the Affidavit of the Regional Director is concerned, the Petitioners through their Counsel undertakes to comply with the suggestions of the Regional Director that the reserve arising out of Clauses 2.4.4 of the scheme shall not be utilised for declaration of dividend. The said undertaking is accepted. 6. So far as observation raised in paragraph 6(b) of the Affidavit of the Regional Director is concerned, the Petitioners through their Counsel undertakes to comply with the suggestions of the Regional Director that pursuant to clauses 2.4.7 of the scheme, the excess of book values of assets over the book values of liabilities transferred shall be transferred to Capital Reserve account. The said undertaking is accepted. 7. 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. 8. Since all the requisite statutory compliances have been fulfilled, the Company Scheme Petition No. 538 of 2011 is made absolute in terms of prayer clauses (a) to (d) and Company Scheme Petition No. 539 of 2011 is made absolute in terms of prayer clauses (a) to (c). 9. The Petitioner Companies to lodge a copy of this order and the Scheme duly authenticated by the Company Registrar, High Court (O. S.), 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 order. 10. Petitioners are directed to file a copy of this order alongwith a copy of the Scheme of Amalgamation with the concerned Registrar of Companies, electronically, along with E-Form 21 in addition to physical copy within 30 days from the date of issuance of the order by the Registry. 4 11. The Petitioners in both the Company Scheme Petitions to pay costs of Rs.10,000/- each to the Regional Director, Western Region, Mumbai. Costs to be paid within four weeks from today. 12. Filing and issuance of the drawn up order is dispensed with. 13. All authorities concerned to act on a copy of this order along with Scheme duly authenticated by the Company Registrar, High Court (O. S.), Bombay. (S.C. DHARMADHIKARI J.)