1 IN THE HIGH COURT OF JUDICATURE AT BOMBAY ORDINARY ORIGINAL CIVIL JURISDICTION COMPANY SCHEME PETITION NO.148 OF 2010 CONNECTED WITH COMPANY SUMMONS FOR DIRECTIONS NO.148 OF 2010 Gnex Entertainment Limited ....Petitioner Company Mr.Janak Dwarkadas, Senior Counsel with Mr.Sharan Jagtiani and Ms.Renuka Shetty i/b M/s.Crawford Bayley & Co. for the Petitioner. Mr.Shyam Mehta for the Regional Director. CORAM : S.J. VAZIFDAR, J. DATE : 9TH JUNE, 2010. P.C. :- 1. The Petitioner seeks an order sanctioning a scheme of arrangement between itself and its shareholders and creditors. The entire procedure has been complied with. There has been no objection from anyone to the scheme being sanctioned. There was no opposition to the scheme even at the statutory meetings. 2. However, the Regional Director has filed an affidavit dated 5.5.2010 stating inter-alia that save and except as stated in paragraphs 6 (a), (b) and (c), it appears that the scheme is not prejudicial to the interest of the shareholders and the public. 3. Three objections have been raised in paragraph 6. Mr.Mehta, the learned counsel appearing on behalf of the Regional Director stated that the objections raised in paragraphs 6(b) and (c) do not survive as they 2 have been complied with subsequently by the company. 4. The objection in paragraph 6(a) of the said affidavit is well founded. Clause 4 of the scheme is as under :- “4. RE-ORGANISATION AND CAPITALREDUCTION 1. Upon the Scheme being effective and with effect from the Appointed Date, the Securities Premium Account of the Company without any further Orders, directions, act, instrument or deed shall stand re- organised to the extent that on and from the Appointed Date, Rs.55,00,00,000/- (Rupees Fifty Five Crores only) shall be credited to Business Re-Organisation Reserve Account from Securities Premium Account on or before the Effective Date.” Mr.Mehta, the learned counsel appearing on behalf of the Regional Director submitted that the appointed date as stipulated in clause 1.2 of the scheme is 1.4.2009. Whereas the share premium account came into existence on 10.2.2010. 5. In that event it is not possible for the the books of account of the company to reflect the share premium account as having been debited/adjusted on a date prior thereto as provided in clause 4.1. The appointed date is 1.4.2009 prior to the share premium account coming into effect. The Business Re-organization Reserve Account (BRRA) is proposed to be credited by virtue of the scheme itself. Thus the BRR account would come into existence on 1.4.2009 i.e. the appointed date. If clause 4.1 is permitted to stand, it would amount to crediting the BRR account with effect from 1.4.2009 from and out of the amounts credited to the share premium account which was not event in existence on that date. 6. It is not possible to amend the date of the share premium 3 account by providing that it came into existence on a date prior to the date on which it actually came into existence. However, I find force in Mr.Mehta’s submission that the only method by which the scheme can be made workable is by providing in clause 4.1 that the BRR account should be deemed to have come into existence only on 10.2.2010 simultaneously with the creation of the share premium account. Accordingly clauses 4.1, 4.2 and 4.5 are modified/amended as under :- i) In clause 4.1, the words “the Appointed Date” appearing twice are substituted with “10.2.2010”. ii) `In clause 4.2, the words “the Appointed Date” are substituted with “10.2.2010”. iii) In the first sentence of clause 4.5 the word “clause” is substituted with the word “clauses”. iv) In clause 4.5 after “clauses 4.3” add “and 4.4”. The Petition is made absolute in terms of prayers (a) to (h). However, clause 4 of the scheme shall stand amended as noted above. 7. The costs of the Regional Director fixed at Rs.10,000/- shall be paid within eight weeks from today. 8. All concerned parties to act on an ordinary copy of this order duly authenticated by the Company Registrar of this Court. Certified copy expedited.