IN THE HIGH COURT OF JUDICATURE AT BOMBAY ORDINARY ORIGINAL CIVIL JURISDICTION COMPANY PETITION NO 925 OF 2009 CONNECTED WITH COMPANY APPLICATION NO. 1089 OF 2009 In the matter of Section 391 & 394 of the Companies Act, 1956; And In the matter of Scheme of Arrangement of Corporate Ispat Alloys Limited and its shareholders Corporate Ispat Alloys Limited, a Company incorporated under the } provisions of Companies Act, 1956 having its registered } office at 601, Tulsiani Chambers, Nariman Point, } Mumbai – 400021, Maharashtra. } ….Petitioner Mr. Hemant Sethi i/b Hemant Sethi & Co. for the Petitioner. Mr. C.J Joy with Mr. Jaydeep Deo i/b Mr. S. K. Mohapatra for Regional Director CORAM: S.J KATHAWALA . J DATE: 8th JANUARY 2010 1 Heard learned counsel for the parties. 2 The sanction of the Court is sought under Sections 394 of the Companies Act, 1956 to a Scheme of Arrangement of Corporate Ispat Alloys Limited and their Respective Shareholders . 3 Counsel appearing on behalf of the Petitioner has stated that the Petitioner has complied with all requirements as per directions of this Court and has filed necessary affidavits of compliance in the Court. Moreover, the Petitioner undertakes to comply with all statutory requirements, if any, as required under the Companies Act, 1956 and the rules made there under. Undertaking is accepted. 4 The Regional Director has filed an affidavit and has stated in paragraph 6(a) that as per the Balance Sheet for the financial year 2006-07, 2007-08 and 2008-09 of the Petitioner Company it is noted that there is prima facie violation of section 295 of the Act in respect of advances given towards purchase of goods. It would amount to loan to a Private Limited Company viz, AMR Iron & Steel Private Limited in which one of the Director Shri Manoj Jayaswal is interested. It is further stated that the Petitioner company has given corporate guarantee of Rs 2050/- lacs in favour of Mahugairi Coal Company Private Limited in which Abhishek Jayaswal is a interested Director , which is prima facie violation of Section 295 of the Companies Act,1956. It is further stated that the Petitioner Company has financial transactions of purchase & sale of goods with AMR Iron & Steel Private Limited during the year 2006-07, 2007-08 and 2008- 09 & transactions of sales of goods with Inertia Iron & Steel Private Limited during the year 2008-09, which is prima facie violation of section 297 of the Act. The Registrar of Companies, Maharashtra, Mumbai has been directed to initiate necessary penal action against the company and its directors in respect of the above said violations of section 295 & 297 of the Act. The learned counsel for the Petitioner states that the Petitioner Company has vide letter dated 22/12/2009 given necessary undertaking for filing of necessary applications for compounding the said violations under sections 621A of the Companies act, 1956 which is recorded in the affidavit of the Regional Director. 5 It is further stated in para 6(b) of the affidavit that as per clause 4.3 read with 6.1 of the scheme, the difference between the value of Chitrapur coal block mining right appearing in the books of accounts of CIAL and the fair value determined by the Board of Directors of CIAL in accordance with clause 4.3 of the scheme, as part of financial restructuring exercise shall be credited to the General Reserve Account of the Company. The counsel appearing for the Petitioner states that the Petitioner Company has vide its letter dated 22nd December 2009 undertakes that the amount which will be credited to the General Reserve Account of CIAL as part of financial restructuring exercise shall not be used for the purpose of declaration of dividend which is recorded in the affidavit of the Regional Director. The undertaking is accepted. 6 Save as aforesaid, the Scheme does not appear to be prejudicial to the interest of shareholders and public. 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 Petition is made absolute in terms of prayer clauses (a). So far as the violation of Section 295 and 297 of the Companies Act, 1956, by the Petitioner Company is concerned, the Registrar of Companies, Mumbai / Regional Director, Western Region, are at liberty to take appropriate action pursuant to the Companies Act, 1956 against the Petitioner Company. 9 The Petitioner to pay costs of Rs.7500/- to the Regional Director. Costs to be paid within four weeks from today. 10 Filing and issuance of the drawn up order is dispensed with. 11 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.J KATHAWALLA J.)