IN THE HIGH COURT OF JUDICATURE AT BOMBAY ORDINARY ORIGINAL CIVIL JURISDICTION COMPANY PETITION NO.608 OF 2009 CONNECTED WITH COMPANY APPLICATION NO.678 OF 2009 GODREJ CONSUMERBIZ LIMITED …………Petitioner / First Transferor Company. COMPANY PETITION NO.609 OF 2009 CONNECTED WITH COMPANY APPLICATION NO.679 OF 2009 GODREJ HYGIENE CARE LIMITED …………Petitioner / Second Transferor Company. COMPANY PETITION NO.700 OF 2009 CONNECTED WITH COMPANY APPLICATION NO.680 OF 2009 GODREJ CONSUMER PRODUCTS LIMITED …………Petitioner / Transferee Company. In the matter of Sections 391 to 394 of the Companies Act, 1956. AND In the matter of Scheme of Amalgamation of Godrej ConsumerBiz Limited (“the First Transferor Company”) and Godrej Hygiene Care Limited (“the Second Transferor Company”) with Godrej Consumer Products Limited (“the Transferee Company”) and Their Respective Shareholders Mr. Janak Dwarkadas i/b Rajesh Shah & Co., for the Petitioners. Mr. P. Ramarao, Official Liquidator present in C.P. No. 608 of 2009 and 609 of 2009. Mr. C. J. Joy i/b Mr. S.K. Mohapatra for Regional Director in all Petitions CORAM: S. J. Kathawalla J. DATE: 8th October, 2009 PC: 1. Heard learned counsel for the parties. 2 2. The sanction of the Court is sought under Sections 391 to 394 of the Companies Act, 1956, to the Scheme of Amalgamation of Godrej ConsumerBiz Limited and Godrej Hygiene Care Limited with Godrej Consumer Products Limited and their Respective Shareholders. 3. 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 filed 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. 4. The Regional Director has filed an affidavit in the above petitions stating that save and except as stated in paragraph 6 thereof that the scheme does not appear to be prejudicial to the interest of the shareholders and the public. 5. The objections in paragraph 6 of the affidavit filed by Regional Director states as under: “That the Deponent further submits that a reading of the explanatory statement attached to the Notice dated 3 19/06/2009 for Court Convened meeting vide para 4.1(d) read with para 4.2(d) give a plain impression that the Transferor Companies have been in the promoter group fold since long and that they have been engaged in the business of household consumer care products and hence, one is lead to believe that the amalgamation of these two entities into Transferee Company would result in synergies and consolidation. However, as per facts on record, these two companies are shell companies and are not doing any business and their one and the only assets is that of respective holdings in Godrej Sara- Lee Limited which were also acquired a few days prior to end of the last financial year as on 31/03/2009. Even during the current year, at least till end of 31/05/2009, they did not do any business in household consumer care business. Thus, the claims that the Transferor Companies are in the business of consumer care business as also depiction that they have been in Godrej group for significant period of time are factually incorrect and misleading to the members of the Transferee Company. On being asked to explain, the Transferee Company and Transferor Companies have furnished their clarification vide its 4 letters dated 15/09/2009 which are annexed hereto and marked as Exhibit ‘E’, ‘E-1’ and ‘E-2’ have claimed that respective Transferor Companies hold equity share in Godrej Sara Lee Limited which is engaged in manufacturing house hold insecticides and other consumer care products and therefore, they are considered to be engaged in the house hold consumer care products business on account of its holding in Godrej Sara Lee Limited, which is in the house hold consumer care products business. However, the Deponent deems that the above explanation as unsatisfactory for the reasons that the Transferor Companies were merely holding investments in the Transferee Company and are not engaged in consumer care business. To give an example, if a company holds investments in a power generating company, the said company does not come to be regarded as power generating company or a power produced company but only an investment company. In view of the above it is clear that the explanatory statement attached to the Notice dated 19/06/2009 for the Court Convened meeting is misleading and therefore the members/shareholders of the Transferee Company, which is a listed entity were mislead to 5 believe that the amalgamation is of the companies engaged in consumer care products companies and the same would be advantageous as synergies are expected to flow out of proposed merger. It is also important to note that the material documents placed before the Court Convened meeting would not be available to a member for reference, if he does not attend the meeting. Basically a member makes a decision to attend the Court Convened meeting only if he is not satisfied with the materials given in the explanatory statement. In this case a plain reading of the explanatory statement would give the impression that the Transferor Companies have been in the Godrej group fold for a significant period and that those have been in the business of consumer care products and therefore, he would not resort to further enquiry by having an inspection of material documents. If he goes through material documents only he would come to know that the Transferor Companies, were merely holdings investments for a very short period and were not engaged in the business of consumer care products as claimed in the explanatory statement. In view of the foregoing, the deponent is of the view that the explanatory statement attached to the notice dated 19/06/2009 of the 6 Court Convened meeting of the members of the Transferee Company, which is a listed company, is factually incorrect and is misleading.” 6. In reply to the affidavit of Regional Director, the transferee Company has filed its reply vide affidavit of Mr. R. Shivshankar, Assistant Manager (Finance), dated 29th day of September 2009. The Learned Senior Counsel for the Transferee Company has submitted that para 13 of the said Affidavit reproduces the point 5 of the Notice & Explanatory Statement dated 19th day of June 2009 sent by the Transferee Company for the Court Convened Meeting of the equity shareholders. The Explanatory Statement as above explains that the First Transferor Company and the Second Transferor Company are 100% subsidiary companies of Godrej & Boyce Manufacturing Company Limited and Godrej Industries Limited respectively and holds 29% and 20% equity stake in Godrej Sara Lee Limited. Further point 5 of Explanatory statement explains that Godrej Sara Lee Limited is a 49:51 unlisted joint venture between the Godrej group and SaraLee Corporation USA, engaged in consumer products business and pursuant to this Scheme, GCPL will hold 49% stake in Godrej Sara Lee Limited. Relying upon Para 18 of the said Affidavit, the Transferee Company submitted that the main objects of both the 7 Transferor Companies is to engage in the business of fast moving consumer products. It is further stated that Godrej Sara Lee Limited is a FMCG joint venture company and that 49% stake collectively held by both the Transferor Companies reflects the strategic interest of Godrej group. 7. The explanation given by the Transferee Company vide affidavit of Mr. R Shivshankar is accepted. Based on the explanations given in the said Affidavit and arguments put forth by the Learned Senior Counsel for the Transferee Company, the information given by the Transferee Company in the Explanatory Statement is satisfactory and cannot be regarded as misleading. 8. The Official Liquidator has filed report in Company Petition Nos.608 to 609 of 2009 stating therein that the affairs of the Transferor Companies have been conducted in a proper manner and that the Transferor Companies may be ordered to be dissolved. 9. Upon perusal of the entire material placed on records, the Scheme appears to be fair and reasonable and is not violative of any provisions of law and is not contrary to any public policy. None of the parties concerned has come forward to oppose the Scheme. Moreover, the Regional Director has stated that save and except as 8 stated in paragraph 5 hereinabove, the Scheme does not appear to be prejudicial to the interest of shareholders and the public and the Official Liquidator has stated that the affairs of the Transferor Companies have been conducted in a proper manner. 10. There is no objection to the Scheme and since all the requisite statutory compliances have been fulfilled, Company Petition Nos. 608 of 2009 and 609 of 2009 filed by the Transferor Companies are made absolute in terms of prayer clauses (a) to (d) and Company Petition No.700 of 2009 filed by the Transferee Company is made absolute in terms of prayer clauses (a) to (c). 11. The Petitioner Companies to lodge a copy of this order and the Scheme duly authenticated by the Company Registrar, High Court, 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. 12. The Petitioners in all the Company Petitions to pay cost of Rs.7,500/- each to the Regional Director and the Petitioners in the Company Petition Nos.608 of 2009 and 609 of 2009 filed by the Transferor Companies to pay cost of Rs.7,500/- each to the Official Liquidator. Costs to be paid within four weeks from today. 9 13. Filing and issuance of the drawn up order is dispensed with. 14. All concerned authorities to act on a copy of this order along with Scheme duly authenticated by the Company Registrar, High Court, Bombay. (S. J. Kathawalla J.) 10