1 mss CSP548-49 IN THE HIGH COURT OF JUDICATURE AT BOMBAY ORDINARY ORIGINAL CIVIL JURISDICTION COMPANY SCHEME PETITION NO. 548 OF 2011 CONNECTED WITH COMPANY SUMMONS FOR DIRECTION NO. 438 OF 2011 Piramal Life Sciences Ltd. (PLSL or the demerged company or transferor company) And Piramal Healthcare Ltd. (PHL or the resulting company or transferee company) and Their respective shareholders Piramal Life Science Ltd. .. Petitioner company WITH COMPANY SCHEME PETITION NO. 549 OF 2011 CONNECTED WITH COMPANY SUMMONS FOR DIRECTION NO. 439 OF 2011 Piramal Life Sciences Ltd. (PLSL or the demerged company or transferor company) And Piramal Healthcare Ltd. (PHL or the resulting company or transferee company) and Their respective shareholders 2 mss CSP548-49 Piramal Health Care Ltd. .. Petitioner company Mr. Ravi Kadam, Advocate General a/w Ashish Kamat i/b (Chitnis & Co.) for petitioner. Mr. H. P. Chaturvedi, G.P. For R.D. Mr. Bhupendra Champalal Gandhi, Objector present CORAM: S.C.DHARMADHIKARI, J. DATED: 25/11/2011 P.C. The 1st petition is by the transferor company whereas the 2nd petition is by the transferee. 2. These petitions invoke powers of this court under Section 391 to 394 together with other relevant provisions of the Companies Act, 1956 seeking conformation and approval to the Scheme of Arrangement between the transferor and transferee and their shareholders. 3. In the first petition of the transferor company it has been stated that it is engaged in the business of research and development of New Chemical Entities and other Pharmaceutical and herbal products as well as in new 3 mss CSP548-49 drug delivery systems. The requisite statements of accounts including the provisional statement of account as on 30th June, 2011 are attached. There is also a reference to the aims and objects and the relevant details. It is stated that pursuant to a Scheme of Arrangement which was devised the Board of Directors vide their Resolution dated 6th May, 2011 approved the Scheme of Arrangement. The salient features of the scheme and the rationale behind the same is set out in the petition and subsequently its material provisions are set out. 4. After reference to the material provisions what has been pointed out is that a summons for directions was moved and the court directed the petitioner to convene a meeting of its shareholders. Accordingly the meeting came to be convened and prior thereto all compliances were made with regard to dispatch of notices. The meeting was duly convened on 9th of August, 2011 at Mumbai. Shri Ajay G. Piramal, Chairman of the petitioner acted as Chairman of the meeting of the members and thereafter the proceedings were taken up. The report of the Chairman indicates according to the petitioner, that the overwhelming percentage of members present and voting were 99 representing in value, constituting 95.96% in number and representing 99.99% in value, present and voting in person or 4 mss CSP548-49 by proxy or by authorized representative voted in favour of the Scheme of Arrangement. 4 members holding 29 equity shares of Rs.10/- fully paid-up, representing in value the sum of Rs.290/- constituting 4.04% in number and representing 0.01% in value, present and voting in person or by proxy or by authorized representative voted against the Scheme. Thus what has been pointed out is that the requisite meetings have been convened. There are other compliances made including filing of the Chairman’s report and intimations to the Stock Exchanges. It is stated that the sanctioning of the scheme of arrangement is for the benefit of the company and the shareholders. It would enable the companies to carry on their operations efficiently and smoothly. The base of the companies being pharmaceutical preparations and business also being identical it is stated that the scheme is mutually beneficial to both companies and their respective shareholders. It is based on these compliances that the petition has been placed for hearing and final disposal. 5. The Regional Director has filed an affidavit and has invited attention of this court to the features of the scheme and has stated that the requisite compliances have been made. Further the affidavit filed states that there is no violation of any provisions of the requisite and relevant statutes and 5 mss CSP548-49 enactments. It is stated that save and except clause 6.1 which requires amendment in terms of paragraph 6 of the affidavit and the proposed reorganization of capital structure of Demerged company being given effect to before giving effect to the scheme as set out in paragraph of the affidavit of Regional Director dated 4th November, 2011 the scheme is not prejudicial to the creditors, shareholders and general public. 6. Mr. Kadam, learned Advocate General appearing for the petitioner states that the petitioner in Company Petition No. 548 of 2011 would comply with the requirements that are stipulated in the affidavit of Regional Director and amend clause 6.1 in terms thereof, so also, give effect to the scheme in the manner suggested by the Regional Director. He, therefore, submits that there being no other objection raised by the Regional Director that this court should proceed to grant sanction and approve the scheme. 7. The sole objector, who is appearing and has filed an affidavit is Mr. Bhupendra Champalal Gandhi. In his affidavit he has raised certain issues and particularly that the statements made in the petition and the submissions before this court does not reflect the correct position with regard to the objections of the shareholders, who have spoken at the meeting. He states 6 mss CSP548-49 that he received the notice and he attended the meeting, spoke there at and also voted. However, the transferee company Piramal Healthcare Limited is a profit making company, which is now going to takeover a loss making venture. That would prejudicially affect the shareholders and their benefits and advantages would go down considerably. 8. My attention is invited to paragraph 8 and 9 of this affidavit and it is contended that the minority shareholders would be affected as the company Piramal Life Science Limited is in losses. Its accumulated losses are enormous. In such circumstances and when the Chairman’s report reflects the correct position with regard to the objections and the value of those objectors’ shareholding, this court should not approve the scheme. 9. After hearing the learned Advocate General and the counsel appearing for the Regional Director and the sole objector appearing in person, I am of the opinion that going by the stand of the members the scheme has to be approved and sanctioned. It is not for this court to substitute its view with that of the shareholders. The commercial wisdom and the business decisions which have been taken by the shareholders at a duly convened meeting need not be interfered with except for the reasons 7 mss CSP548-49 that are pointed out by the Hon’ble supreme Court in the case of Miheer H. Mafatlal v. Mafatlal Industries Ltd., reported in AIR 1997 SC 506. 10. Similarly, merely because some objectors have appeared before the court to object the scheme on the ground that there objections have not been accepted is also no ground to interfere with the scheme. The majority shareholders have given their approval. The minority who is appearing before this court raised their concerns and were given opportunity to speak at the meeting as well. They have also voted at the meeting. 11. In these circumstances, none of the grounds that have been stated before me on affidavit by the sole objector would enable me to withheld the sanction or approval to the scheme. This is not a case where the exceptions carved out by the Hon’ble Supreme Court would come into play or are attracted. 12. For all these reasons the petitions are allowed and they are made absolute in terms of prayer clauses (a) to (e). 13. The Transferee Company to lodge a copy of this Order and the 8 mss CSP548-49 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. 14. The Transferee Company to lodge a copy of this Order along with a copy of the Scheme of Arrangement with the concerned Registrar of Companies, electronically, along with E-form 21, in addition to physical copy within 30 days from the date of issuance of the order by the Registry. 15. The petitioners in both the Company Scheme Petitions to pay costs of Rs.10,000/- each to the Regional Director, Western Region, Mumbai. Costs to be paid within four weeks from today. 16. Filing and issuance of the drawn up order is dispensed with. 17. All authorities concerned to act on a copy of this Order along with Scheme duly authenticated by the Company Registrar, High Court, Bombay. (S. C. DHARMADHIKARI, J.)