COMA/564/2007 1/9 JUDGMENT IN THE HIGH COURT OF GUJARAT AT AHMEDABAD COMPANY APPLICATION No. 564 of 2007 IN COMPANY PETITION No. 40 of 2004 WITH COMPANY APPLICATION No. 97 of 2008 IN COMPANY PETITION No. 39 of 2004 For Approval and Signature: HONOURABLE MR.JUSTICE K.A.PUJ Sd/- ==================================== 1. Whether Reporters of Local Papers may be allowed to see the judgment ? YES 2. To be referred to the Reporter or not ? NO 3. Whether their Lordships wish to see the fair copy of the judgment ? NO 4. Whether this case involves a substantial question of law as to the interpretation of the constitution of India, 1950 or any order made thereunder ? NO 5. Whether it is to be circulated to the civil judge ? NO ==================================== SURAT BOTTLING COMPANY PVT. LTD. - Applicant Versus - Respondent ==================================== COMA/564/2007 2/9 JUDGMENT Appearance : MR NAVIN K PAHWA for Applicant. MR JS YADAV FOR OFFICIAL LIQUIDATOR. MR HARIN P RAVAL, ASSISTANT SOLICITOR GENERAL for Central Government. ==================================== CORAM : HONOURABLE MR.JUSTICE K.A.PUJ Date : 08/05/2008 COMMON ORAL JUDGMENT 1. Surat Bottling Company Pvt. Ltd. has filed Company Application No.564 of 2007 in Company Petition No.40 of 2004 seeking dispensation of meeting of shareholders required to be held under Section 391 of the Act as all the shareholders of the applicant have already given their consents in writing. The applicant has also sought permission to substitute the number “10” with “1” and the word “TEN” with the word “ONE” appearing in the last sub-paragraph of Para 8.1 of the Scheme of Amalgamation of Pragati Fruit Drinks Distributors Pvt. Ltd. with Surat Bottling Company Pvt. Ltd. 2. Company Application No.97 of 2008 in Company Petition No.39 of 2004 is also filed by Surat Bottling COMA/564/2007 3/9 JUDGMENT Company Pvt. Ltd., the merged Company in place of Pragati Fruit Drink Distributors Pvt. Ltd. seeking similar relief regarding meeting of Secured Creditors and Unsecured Creditors and also permission to substitute the exchange ratio. Company Petition No.39 of 2004 which was filed for sanction of Scheme of merger of Pragati Fruit Drinks Distributors Pvt. Ltd. with Surat Bottling Company Pvt. Ltd. came to be allowed by this Court vide order dated 15.06.2004. 3. It is submitted by Mr. N. K. Pahwa, learned advocate on behalf of the applicants that in the Scheme submitted for consideration, through inadvertence, the exchange ratio was mentioned as 66:10 instead of 66:1 which was purely a typographical mistake in the Scheme. 4. It is stated that earlier, the applicants had filed Company Application No.373 of 2006 and Company Application No.374 of 2006 seeking modification in the exchange ratio. This Court vide order dated 14.07.2006 issued notice to the Official Liquidator as COMA/564/2007 4/9 JUDGMENT also to the Regional Director. 5. Pursuant to the notice issued to the Official Liquidator, a report dated 4.12.2006 is filed wherein the Official Liquidator has stated that the mistake appears to be typographical. 6. Pursuant to the notice issued to the Regional Director, Western Region, Department of Company Affairs, Shri Harin P. Raval, learned Assistant Solicitor General of India has appeared and has filed affidavit of Assistant Registrar of Companies dated 01.05.2007 along with a copy of letter dated 01.05.2007 addressed by the Regional Director to the Registrar of Companies. 7. A perusal of the letter dated 01.05.2007 would disclose that there were only two observations made by the Regional Director. The first observation pertains to furnishing of the valuation report of the Chartered Accountant. It is stated on behalf of the applicants that Annexure 'A” to Company Application No.564 of 2007 is the copy of share valuation report dated COMA/564/2007 5/9 JUDGMENT 01.01.2004 based on which the share exchange ratio was worked out and submitted in the Scheme. The second observation pertains to obtaining of concurrence of shareholders and the creditors. It is stated on behalf of the applicants that the applicants have already produced the consent letters of shareholders of both the Companies who were shareholders at the relevant point of time and the same are annexed at Annexure 'F' Colly and Annexure 'G' Colly to Company Application No. 564 of 2007. The consent letters of the Unsecured Creditors are also annexed at Annexure 'H' Colly to Company Application No.564 of 2007. There were no other observations of Regional Director. 8. This Court vide order dated 19.09.2007 directed the applicant to publish the advertisement in local daily “Indian Express” Vadodara Edition and “Gujarat Mitra”, Gujarati Daily, Surat Edition stating the gist of the application for alteration of the exchange ratio. The applicant published the advertisement in the aforesaid two local dailies on 25.09.2007 and also filed COMA/564/2007 6/9 JUDGMENT affidavit dated 05.10.2007. A further affidavit dated 05.10.2007 is also filed confirming that apropos to the advertisement published, neither the Company nor the advocate of the applicant Company has received any objection to the proposed modified Scheme. 9. The Official Liquidator has filed further report dated 18.09.2007. The Official Liquidator has also placed on record a copy of the report prepared by Pankaj K. Shah Associates, Chartered Accountants dated 03.09.2007. As per the report, it becomes clear that the correct exchange ratio is 66:1 and not 66:10. 10.Company Application No.373 and 374 of 2006 came to be disposed of vide order dated 19.11.2007 with liberty to undertake a fresh procedure under Section 391 read with Section 392 of the Companies Act for sanctioning of the modified Scheme. 11.In the above circumstance, the present applicants have filed the present applications seeking dispensation of meeting of shareholders in Company COMA/564/2007 7/9 JUDGMENT Application No.564 of 2007 and seeking dispensation of the meeting of shareholders and unsecured creditors in Company Application No.97 of 2008 on the ground that respective shareholders and unsecured creditors have already given their consents in writing to the proposed modification. In Company Application No.564 of 2007 which pertains to original transferee Company, the applicant has produced consent letters of all the shareholders of the applicant at Annexure 'G' to the application. In Company Application No.97 of 2008, consents of all the shareholders and unsecured creditors are produced at Annexure 'C' Colly. It is stated that there are no secured creditors of the applicant in Company Application No.97 of 2008. 12. Considering the fact that all the shareholders in case of transferee Company and in case of Transferor Company, consents of all the shareholders and unsecured Creditors have been obtained to the proposed modification, the meetings as required under Section 391 of the Companies Act for the shareholders in case of applicant of Company Application No.564 of COMA/564/2007 8/9 JUDGMENT 2007 and meeting of shareholders and unsecured creditors in case of applicant of Company Application No.97 of 2008 is ordered to be dispensed with. 13.As regards prayer for seeking substitution / modification of Exchange Ratio is concerned, keeping in view the report of the Official Liquidator and averments made in the application read along with the report of the Regional Director, it appears that the mistake in the mentioning of Exchange Ratio in the Scheme of Amalgamation was through inadvertence and bonafide. The Scheme is accordingly ordered to be modified to the extent of substitution of the number “10” with “1” and the word “TEN” with the word “ONE” appearing in the last sub-paragraph of para 8.1 of the Scheme of Amalgamation of Pragati Fruit Drinks Distributors Pvt. Ltd. with Surat Bottling Company Pvt. Ltd. 14.Both the applications accordingly stand allowed with the aforesaid orders. COMA/564/2007 9/9 JUDGMENT 15.The fees of the Central Govt. Standing Counsel is determined at Rs.3,500/- per Company Application and the same is allowed to be remitted by the applicants directly by drawing cheque in favour of Shri Harin P. Raval. Sd/- [K. A. PUJ, J.] Savariya