1 IN THE HIGH COURT OF JUDICATURE AT BOMBAY ORDINARY ORIGINAL CIVIL JURISDICTION COMPANY SCHEME PETITION NO. 381 OF 2010 CONNECTED WITH COMPANY SUMMONS FOR DIRECTION NO. 331 OF 2010 In the matter of Companies Act, 1956 (1 of 1956) And In the matter of Sections 391 to 394 and 100 of the Companies Act, 1956. And In the matter of scheme of arrangement and restructuring Between Octant Interactive Technologies Limited (Demerged Company) And Its Shareholders And Creditors And Five X Finance & Investment Limited (Resulting Company) And Scheme of Amalgamation of 1) Swarnajyothi Agro & Exports Limited (First Transferor Company) And 2) Vanishekar Green Energy (P) Limited (Second Transferor Company) And 3) Indrabathi Energies (P) Limited (Third Transferor Company) With 2 Octant Interactive Technologies Limited (Transferee Company) Octant Interactive Technologies Limited, Petitioners. (Demerged Co./Transferee Co.) WITH COMPANY SCHEME PETITION NO. 450 OF 2010 CONNECTED WITH COMPANY SUMMOSN FOR DIRECTION NO. 383 OF 2010 In the matter of Companies Act, 1956 (1 of 1956) And In the matter of Sections 391 to 394 And 100 of the Companies Act, 1956. And In the matter of scheme of arrangement and restructuring Between Octant Interactive Technologies Limited (Demerged Company) And Its Shareholders And Creditors And Five X Finance & Investment Limited (Resulting Company) And Scheme of Amalgamation of 1) Swarnajyothi Agro & Exports Limited (First Transferor Company), 3 2) Vanishekar Green Energy (P) Limited (Second Transferor Company) And 3) Indrabathi Energies (P) Limited (Third Transferor Company) With Octant Interactive Technologies Limited (Transferee Company) Five X Finance & Investment Limited. Petitioners. (Resulting Co.) Mr. Kezer Kharawala, Counsel, i/b R.K. Associates, Advocate for the petitioners. Mr. N.D Sharma and Ms. Soma Singh i/b Mr. H. P. Chaturvedi, for R.D. in both the Petitions. CORAM: S.J Vazifdar J. DATED: 26th November, 2010 P.C.: 1. Heard learned counsel for the parties. 2. The sanction of the court is sought under Sections 391 to 394 and 100 of the Companies Act, 1956 to the Scheme of Arrangement/Demerger of the Finance Division business of Octant Interactive Technologies Limited (“the transferor company/demerged company”) into Five X Finance & Investment Limited (“the transferee company/resulting company”) and the sanction of the court is sought under sections 391 to 394 of the Companies Act, 1956 to a Scheme of Arrangement / Scheme of Amalgamation of Swarnajyothi Agro & Exports Limited (First Transferor Company), Vanishekar Green Energy (P) Limited (Second Transferor Company) and 4 Indrabathi Energies (P) Limited (Third Transferor Company) with Octant Interactive Technologies Limited, the Transferee Company. 3. The registered offices of Octant Interactive Technologies Limited and Five X Finance & Investment Limited are situated in the state of Maharashtra. 4. The Registered offices of the Transferor Companies are situated in the state of Andhra Pradesh. The counsel appearing on behalf of the Petitioners stated that the said Transferor Companies have filed their petitions for sanctioning the said Scheme of Arrangement in High Court of Andhra Pradesh and the said petitions are sanctioned by the High Court of Andhra Pradesh. 5. Counsel appearing on behalf of the Petitioners has stated that they have complied with all requirements as per directions of this Court and they have field necessary affidavits of compliance in the Court. Moreover, Petitioner Companies also undertake to comply with all statutory requirements if any, as required under the Companies Act, 1956 and the Rules made there under. 6. The Regional Director has filed an Affidavit stating therein that save and except as stated in paragraph No.6, the Scheme of Arrangement does not appear to be prejudicial to the interest of Shareholders and Public. Paragraph No. 6 of the Affidavit filed by the Regional Director reads as follows: (a) The Registered Offices of the Three Transferor Companies are situated in the State of Andhra Pradesh. Hence the present scheme of arrangement and amalgamation between the Transferor Companies and Transferee 5 Company will be subject to condition of similar approval from Hon’ble Court of Andhra Pradesh in respect of Transferor Companies. (b) The Demerged/Transferee Company (OITL) was inspected under section 209A of the Companies Act, 1956 during the year 2006 and inspecting officer have pointed out various violations under the provisions of the Companies Act, 1956. Registrar of Companies, Mumbai has been advised to issue Show Cause Notice to the Company/Directors in respect of violation noticed. The Petitioner Company vide its letter dated 14.10.2010 has undertaken to file compounding application for the various violation identified by the inspecting officer. This is for the information of this Hon’ble High Court. (c) In Clause 13 (c) of the Scheme, a reference has been made with regard to clause 16(a) is stated, which may be read as 13(a) and may be corrected accordingly. (d) In Clause 4 of the Scheme, it is stated that the deficit arising due to transfer of Finance Business to New Co. shall be debited to General Reserve or any other reserve including Profit and Loss Account and the surplus, if any, shall be credited to General Reserve Account as the case may be. In this connection it is suggested that the Reserve arising out of this scheme is a Capital Reserve and shall not be utilized for the purpose of declaring dividend. Hence the Demerged/Transferee Company (OITL) may be directed to give undertaking to this effect. (e) The deponent is in receipt of a complaint from one Mr. Amar Shah through SEBI alleged insider trading into the equity shares held by the promoters of M/s. Octant 6 Interactive Technologies Limited. The complainant has claimed that the promoter holding has been reduced from 67% to 37% and the share prices are going down by about 5% on lower-circuit. The matter has been referred to SEBI and asked to take appropriate action in the matter as the matter pertains to their jurisdiction. 7. So far as the objection in paragraph 6(a) is concerned, the Counsel for the Petitioner submits that the Honorable High Court’ of Judicature at Hyderabad, Andhra Pradesh, has sanctioned the Scheme of Arrangement / Amalgamation of Swarnajyothi Agro & Exports Limited (First Transferor), Vanishekar Green Energy (P) Limited (Second Transferor) and Indrabathi Energies (P) Limited (Third Transferor) with Octant Interactive Technologies Limited (Transferee) on 6th October 2010. 8. So far as objection in paragraph 6(b) is concerned, the counsel for the Petitioner submits that the Petitioner Company has not received any show cause notices from ROC office on the said violations till today. He further submits that in any case none of the alleged violations referred to by the Regional Director have any bearing whatsoever on the Scheme and hence, do not come in the way of the scheme. However, the Petitioner Company has undertaken to file compounding Application for the said violations before the concerned authorities if any notices or proceedings are served upon the Petitioner Company by the concerned authorities. The said undertaking is accepted. 9. Now so far as objection in paragraph 6 (c) is concerned, the counsel appearing for the Petitioner Company seeks leave of this Court to make necessary corrections in the scheme by substituting clause 16 (a) as clause 13 (a) in clause 13 (c). 7 The leave to amend as aforesaid is granted. The amendments to be carried out within a period of one week from today. 10. The Counsel appearing for the Petitioner submits that so far as objection in paragraph 6(d) is concerned, the Petitioner Company has given an undertaking that the Reserves arising out of this scheme will be credited to Capital Reserve and shall not be utilized for the purposes of declaring dividend. The said undertaking is accepted. 11. So far as the last objection 6(e) is concerned, the Counsel for the Petitioner submits that the Petitioner Company has not received any communication either from Mr. Amar Shah, complainant or from SEBI or from any other authority regarding the alleged allegations against the Petitioner Company. The counsel for the Petitioner submits that there is no substance in the said allegations and upon instruction from the Petitioner Company, he further states that as and when the Petitioner Company receives any such communication from SEBI or from any other authority the same will be dealt with, by the Company in accordance with law. The statement is accepted. 12. The allegation does not affect the Scheme. SEBI is always at liberty to take such action against the Company in the event of the allegation being established. 13. From the material on record, the Scheme of Arrangement/ Scheme appears to be fair and reasonable and is not violative of any provisions of law and is not contrary to 8 public policy. None of the parties concerned has come forward to oppose the Scheme. 14. Since all the requisite statutory compliances have been fulfilled in both the Company Petitions, Company Petition No. 381 of 2010 is made absolute in terms of prayer clauses (a) to (l) and Company Petition No.450 of 2010 is made absolute in terms of prayer clauses (a) to (g). 15. The Transferee Company to lodge a copy of this order and the Scheme of Arrangement 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 the order. 16. The Petitioners in both the Company Petitions to pay costs of Rs. 10,000/- each to the Regional Director. Costs to be paid within four weeks from today. 17. Filing and issuance of the drawn up order is dispensed with. 18. All authorities concerned to act on a copy of this order along with Scheme of Arrangement duly authenticated by the Company Registrar, High Court, Bombay. (S.J Vazifdar J.)