IN THE HIGH COURT OF JUDICATURE OF ANDHRA PRADESH : HYDERABAD MONDAY, THE TWENTY EIGHTY (29TH) DAY OF JUNE TWOTHOUSAND AND TEN Present: THE HON’BLE SRI JUSTICE G.V.SEETHAPATHY Company Petition Nos.86 and 87 of 2010 C.P.No.86 of 2010: M/s Surana Telecom & Power Limited, a company registered under the Companies Act, 1956, having its registered office 2nd Floor, Surya Towers, S.P. Road, Secunderabad-3, rep. by its Director Mr. Devendra Surana … Applicant C.P.No.87 of 2010: M/s Surana Ventures Limited, a company registered under the Companies Act, 1956, having its registered office 2nd Floor, Surya Towers, S.P. Road, Secunderabad-3, rep. by its Director Mr. Devendra Surana … Applicant THE HON’BLE SRI JUSTICE G.V.SEETHAPATHY Company Petition Nos.86 and 87 of 2010 COMMON ORDER: The petitioner in C.P.No.86 of 2010 is the Transferor Company. The petitioner in C.P.No.87 of 2010 is the Transferee Company. The above petitions are filed under Sections 391 and 394 of the Companies Act. 2. CP No.86 of 2010 is filed by M/s Surana Telecom & Power Limited, a company registered Under the Companies Act, 1956, having its registered office situated at Secunderabad. The Company was incorporated on 14.08.1989 originally as ‘Surana Petro Products Private Limited and subsequently, the name was changed to Surana Telecom and Power Limited. 3. C.P.No.87 of 2010 is filed by M/s Surana Ventures Limited, a company registered under the Companies Act, 1956, having its registered office situated at Secunderabad. The company was incorporated on 08.11.2006. 4. The authorized share capital of the Transferor Company is Rs.15 crores, divided into 3,00,00,000 equity share of Rs.5/- each. The issued, subscribed and paid up capital of the company as on 31.12.2009 is Rs.10,40,22,000/-, divided into 2,08,04,400/- fully paid up equity shares of Rs.5/- each. The main object of the applicant Transferor Company as set out in the Memorandum and Articles of Association is engaged in the business of manufacture of Telecom and Power products such as jelly filled telephone cables, jointing kits, electrical power cables and components, optical fibre cables and solar photo voltaic modules and lighting systems. The details of the objects of the transferor company are set out in detail in the Memorandum and Articles of Association, which is enclosed to the petition and they are not repeated herein for the sake of brevity. 5. The authorized share capital of the Transferee Company is Rs.50 crores, divided into 5,00,00,000 equity shares of Rs.10/- each. The issued, subscribed and paid up capital of the company is Rs.15 crores, divided into 1,50,00,000 equity shares of Rs.10/- each. The objects of the Transferee Company as set out in the Memorandum and Articles of Association is ‘engaged in the business of construction, real estate, investment, business of generators, business of manufacturing, business of consultancy in India and Abroad’. The details of the objects of the Transferee Company are set out in detail in the Memorandum and Articles of Association and they are not repeated herein for the sake of brevity. 6. The two companies have proposed a scheme of arrangement, where under the Transferor Company as a going concern shall be transferred and vested in or deemed to have been transferred to the Transferee Company pursuant to the provisions of Section 394 of the Companies Act. The reasons for the scheme of arrangement inter-alia is stated to be that considering the size of the Transferor Company and significant growth in its business operations and for greater focus in the various activities of the said company to ensure accelerated growth and improved profitability, it would be advantageous to re-organize the company by vesting the Solar undertaking of Surana Telecom and Power Limited in Surana Ventures Limited. The re-organization, essentially to ensure better operational management and focus on accelerated growth of individual units, will ensure higher returns to the shareholders, creditors, and employees besides being in general public interest. The details of the benefits of the scheme are set out in the memorandum and Articles of Association, which are annexed to the applications. The Board of Directors of the Transferor Company at the meeting held on 26.11.2009 have unanimously approved the scheme. The Board of Directors of the Transferee Company at the meeting held on 25.11.2009 also approved the scheme of arrangement. The Transferor Company is listed with the BSE and NSE (Bombay Stock Exchange & National Stock Exchange). By Letter dated 30.11.2009 the Transferor Company informed both the exchanges regarding the proposed scheme and the Transferor Company received no objection vide letters from BSE on 9.2.2010 and NSE on 18.02.2010 . 7. The Transferor Company previously filed CA No.173 of 2010 seeking appointment of a chairman to convene a meeting of the shareholder of the company for considering the proposed scheme of arrangements. This Court by order dated 10.03.2010 allowed the said application and appointed Mr. M Pratap Singh, Practicing Advocate as chair-person with a direction to convene the meeting of the shareholders of the company to be held on 12.04.2010 at 10.30 a.m. at Hotel Kamat Lingapur, Begumpet. The notice of the meeting was also directed to be published in Business Standard (English daily), Hyderabad and Andhra Prabha (Telugu daily), Hyderabad. In pursuance of the directions of this Court, the Chairman convened the meeting of the shareholders of the petitioner company on 12.04.2010 and filed his report stating that the meeting was attended personally by 44 members of the applicant company holding 78,84,386 shares of Rs.5/- each for Rs.3,94,21,930/- and 35 proxies entitled to 56,49,215 shares of Rs.5/- each for Rs.1,12,98,430/-. The total share holders who voted in person along with the proxies together are entitled to 61.10% of the total paid up capital. The Chairman further stated that the majority of the members at the meeting were of the opinion that the scheme of arrangement should be approved. The total shareholders who voted in favour of the resolution approving the scheme of arrangement are entitled to 1,27,09,465 shares of Rs.5/- each for Rs.6,35,47,325/- i.e., 99.99% and the total shareholders who voted against the resolution dissenting the scheme of arrangement are entitled to 1,040 shares of Rs.5/- each for Rs.5,200/- i.e., 0.01%. Two of the members who attended the meeting in person voted against the scheme of arrangement. The details of the shareholders and the proxies who attended the meeting are enclosed to the report of the Chairman. 8. In the Transferee Company, there are only 8 shareholders and meeting of the shareholders was dispensed with by order dated 10.03.2010 in CA No.176 of 2010 filed by the Transferee Company for the said purpose. 9. The Transferor Company filed CA No.174 of 2010 seeking appointment of Chairman to convene the meeting of the creditors of the Company. This Court by order dated 10.03.2010 appointed the same Advocate as Chairman with a direction to convene, hold and conduct the meeting of the Creditors on 12.04.2010 at 2 p.m. at Hotel Kamat Lingapur, Begumpet, Hyderabad. The quorum for the meeting was fixed as five and further directed to publish the notice in ‘Business Standard’ (English daily newspaper)) and ‘Andhra Prabha’ (Telugu daily), having circulation at Hyderabad. The Chairman convened the meeting on 12.04.2010 after serving the notices on the creditors initially and also by publishing the notice in the newspapers as directed and filed his report on 19.04.2010. In the said report, the Chairman has stated that the said meeting was attended personally by 11 creditors of the applicant company for a debt amount of Rs.10,01,19,708/- and 6 proxies for a debt amount of Rs.74,550/- and the total creditors who voted in person along with the proxies together are for a debt amount of Rs.10,01,94,258/- and in the said meeting, all the creditors have unanimously approved the scheme of arrangement and voted in favour of the same. The details of the creditors, who attended the meting and the proxies are enclosed to the report of the Chairman. 10. The Transferee Company also filed CA No.175 of 2010 for appointment of the Chairman to convene the meeting of the creditors of the applicant company. This Court by order dated 10.03.2010 appointed the same Advocate as Chairperson. The Chairperson after issuing notices and formal publication filed his report, stating that the meeting was attended by four creditors personally for a debt amount of Rs.2,22,56,734/- and there were no proxies and all the four creditors unanimously approved the scheme of arrangement and voted in favour of the same. The details of the creditors, who attended the meeting, are enclosed to the report of the Chairperson. 11. At the time of admission of these petitions, notices were ordered to the Regional Director, Ministry of Corporate Affairs, Chennai, Registrar of Companies, Hyderabad and the Official Liquidator and publication was directed to be made in ‘Business Standard’ English daily land ‘Andhra Prabha’ Telugu daily, Hyderabad editions. Learned Assistant Solicitor General, representing the Regional Director, Chennai and the Registrar of Companies, Hyderabad, filed a common affidavit, stating no objection for the proposed scheme of arrangement except that the Transferee Company should pay the stamp duty as per the regulations of A. P. Stamp Act, for which the Transferor Company stated no objection. The Official Liquidator did not file any report. 12. In the circumstances, having regard to the fact that the proposed scheme of arrangement is to ensure accelerated growth and improved profitability and is advantageous for better operational management, yielding good returns to the shareholders, employees and is in the public interest and as the Board of Directors of both the companies have approved the proposed scheme of arrangement and the majority of the shareholders i.e., 99.99% of the Transferor Company also approved the same and the shareholders of the transferee company have given written affidavits approving the scheme of arrangement and as the creditors of both the companies have also approved the same and the Central Government and the Official Liquidator also do not have any objection for the proposed scheme of arrangement, it is considered that the proposed scheme of arrangement between the Transferor and Transferee companies as set out in the said scheme enclosed to the petitions, can be sanctioned and the same is accordingly sanctioned. 13. The parties to the Scheme of Arrangement or other persons interested shall be at liberty to apply to this Court for any directions that may be necessary in regard to the working of the Scheme of Arrangement. 14. The Transferor and Transferee companies shall pay the costs of these petitions set at Rs.3,000/- each to the learned Assistant Solicitor General and the Transferor and Transferee companies do file with the Registrar of Companies a certified copy of this order within 30 days from the date of receipt of the same. 15. The company petitions are allowed accordingly. ___________________ G.V.SEETHAPATHY, J Date: 28.06.2010 bss