IN THE HIGH COURT OF HIMACHAL PRADESH SHIMLA Company Petition No.1 of 2011. Date of decision: 14.03.2011. JHS Svendgaard Hygiene Products Ltd. … …Transferee Company Versus Waves Hygiene Products & Another … …Transferor Companies. Coram The Hon’ble Mr.Justice Dev Darshan Sud,J. Whether approved for reporting ?1 No. For the Petitioner: Mr.Rahul Mahajan, Advocate. For the Respondents: Dev Darshan Sud,J. This petition has been instituted under Sections 391 and 394 of the Companies Act, 1956 (hereinafter referred to as the `Act’) and Rule 9 of the Companies (Courts) Rules, 1959 (hereinafter referred to as the `Rules’). 2. The averments made in the petition are that JHS Svendgaard Laboratories Limited (Transferee Company) was incorporated on 8th October, 2004 under the provisions of the Act registered with the Registrar of Companies Punjab, Himachal and Chandigarh. Its registered office is situated at Trilokpur Road, Kheri (Kala-Amb), Tehsil Nahan, District Sirmour. The 1 Whether the reporters of Local Papers may be allowed to see the judgement? Yes. 2 authorized capital of the Company as on 31.03.2010 is Rs.180,000,000/- divided into 18,000,000 equity shares of Rs.10/- each. The issue, paid-up and subscribed capital of the Transferee Company is Rs.144,500,070 divided into 14,450,007/- equity shares of Rs.10 each. The objects of the Company as incorporated in the Memorandum of Association filed and summarized in the petition inter alia are:- 1. To carry on business of manufacturer, exporters, importers, traders, buyers, and sellers of Oral Hygiene Products (including tooth brushes & tooth paste) whether raw, semi finished or finished. 2. To manufacture basic drugs, herbal remedies, Ayurvedic medicines/ preparations, Medicines of all kinds of chemicals and intermediaries used in manufacture of medicines. 3. The petition also details the assets and liability of the Company in a summarized form with a detailed balance sheet Annexure P-2 which has been filed with the petition. 4. It is pleaded that the Board of Directors of this Company by its meeting held on 7.7.2010 at the Corporate Office at B-1/E-23, Mohan Cooperative Industrial Area, Mathura Road, New Delhi, approved and adopted the Scheme of Amalgamation Annexure P-18 by which JHS Svendgaard Hygiene Products Limited (hereinafter referred to as Transferor Company-1)and 3 M/s.Waves Hygiene Products (Transferor Company-2) are proposed to be amalgamated with the Transferee Company. A copy of the Resolution of the Board of Directors of the Transferee Copy, Annexure P-3, approving and accepting the scheme, has been filed with this petition. 5. The Transferee Company has a total number of 6228 equity shareholders as on 30.9.2010 to whom 14,550,007 equity shares of Rs.10/- each have been issued. The summarized detail of the shareholders has been appended in Annexure P-4. It is a Company which is registered with the Bombay Stock Exchange and National Stock Exchange and `No Objection Certificates’, as required under clause-24(f) of the listing agreement from both the exchanges, have been filed as Annexure-5 with this petition. The National Stock Exchange of India Limited, states in his communication dated 18th November, 2010 that it has perused the draft Scheme of Arrangement and the documents submitted including the confirmation of the Company Secretary that the Scheme so submitted does not in any way violate, over-ride or circumscribe the provisions of Securities Laws or the Stock Exchange requirements. Accordingly, `no objection’ was granted in the following terms:- “Accordingly, we do hereby convey to you our `no objection’ with limited reference to those matters having a bearing on listing/delisting/continuous listing 4 requirements within the provisions of the Listing Agreement, so as to enable you to file the scheme with the Hon’ble High Court. The company is required to comply with clause 24(h) of the listing agreement which inter-alia states that “the company agrees that in the explanatory statement forwarded by it to the shareholders u/s 393, it shall disclose the “fairness opinion” obtained from an independent merchant bankers on valuation of assets/shares done by the valuer for the company and unlisted company”. The company is also requested to obtain in-principle approval as per clause 24(a) of the listing agreement from the Exchange, before issuing further shares or securities.” 6. To similar effect is the `No Objection Certificate’ issued by Bombay Stock Exchange Limited by stating that the Exchange while granting the “No- objection” does not express its opinion on the fairness or otherwise, of the valuation of the entities concerned or the exchange ratio proposed in the said scheme of arrangement. The letter ends with the reservation that the exchange would reserve its right to withdraw its No-objection approval at any later state if the information submitted to the Exchange is found to be false or misleading. 7. Out of the two Transfer Entities, the first one which is incorporated on 15th December, 1999 with its registered office at B-1/E-23, Mohan Cooperative Industrial Area, Mathura Road, New Delhi, it was 5 originally incorporated in the name of Sunehari Dental Care Private Limited, lateron the name was changed to Niviken Personal Care Products Private Limited, subsequently converted into a Public Limited Company. A copy of the Memorandum and Articles of Association of this Company has been annexed herewith this petition as Annexure P-8 and its shareholders pattern has been summarized in the petition. The basic business carried out by this Company relates to manufacture of tooth brushes, other dental care and oral hygiene products, beauty care and health items etc. A copy of the Resolution of the Board of Directors of Ist Transferor Company held on 7.7,2010, approving the amalgamation with the Transferee Company, has been placed on record as Annexure P-10. 8. So far as the second entity is concerned, it is a partnership firm registered in accordance with the provisions of the Indian Partnership Act, 1932. The approval of the partners to the Amalgamation Scheme has also been placed on record as Annexure P-15. It is pleaded that the Scheme of Amalgamation will be benefited to the shareholders and creditors of the company providing them with better opportunity utilized their resources in a more optimum and economic manner. It is pleaded that the Scheme envisages that after merger, the resultant entity would be having larger resources additional capital base and better capacity of raising funds etc. to undertake increased 6 manufacturing activities, enhance marketing capabilities, optimize operational, technical and marketing operations, streamline its management and economize working. The petitioner also submits that amalgamation will not result in financial loss to any of the shareholders/creditors of the entities. 9. Learned counsel has referred a decision of the Delhi High Court in Co.Appl.(M) No.202 of 2010, dated 17th January, 2011, holding that there is no bar to the amalgamation of a partnership firm with a limited company for which purpose the reliance was placed on the judgment of the Bombay High Court in Kirtilal Kalidas Diamonds Exports P.Ltd., In Re.,(2009) 148 Comp Cas 607 (Bom). 10. A prayer is made for convening the meeting of the equity shareholders, and a dispensation is sought for the meeting of secured and unsecured creditors of the Transferee Company. Individual consent letters issued by the secured and unsecured creditors of the transferee Company have been annexed as Annexure P-20 with the petition. The first letter is dated 21st October, 2010, addressed by the ICICI Bank to the Board of Directors of the Transferee Company giving its consent in the following manner:- “We wish to inform you that we have No Objection to the Amalgamation of M/s JHS Svendgaard Hygiene Proeducts Limited (Transferor Company) and Waves Hygiene Products (Transferor Firm) with JHS 7 Svendgaard Laboratories Limited (Transferee Company) as a “Going Concern” by virtue of the Scheme of Amalgamation as may be sanctioned by the Hon’ble High Court of relevant jurisdiction with/without modification.” 11. The second letter has been addressed by the Advent Advisory Services (P) Ltd. again stating:- “Further, we have No Objection, if the holding of the meeting of the Secured/Unsecured Creditor is dispensed with the approval of the Hon’ble High Court of relevant jurisdiction.” 12. Third ‘No Objection Certificate” has been filed by Shri Nikhil Nanda in the same manner. It is in this context that the meeting of the equity shareholders is convened. 13. I have heard learned counsel for the petitioner and have gone through the documents appended with the petition. 14. Prima facie from the averments made and the documents attached, I find it is a fit case where the petitioner is granted permission to hold the meeting of its equity shareholders for the purposes of considering the Scheme Annexure P-18. It is, therefore, directed:- a) The meetings of the equity shareholders of the Company will be held on 21st May, 2011 at 11.00 A.M. in the registered office of the Transferee Company at Trilokpur Road, Kheri 8 (Kala-Amb), Tehsil Nahan, District Sirmaur, H.P. b) For the purpose of conducting the meeting, Shri Praneet Gupta, Advocate is appointed as the Chairman and his remuneration is fixed at Rs.1,00,000/- (Rs.one lac only). Shri Sunil Mohan Goel, Advocate will be the alternate Chairman. His remuneration is fixed at Rs.75,000/- (Rs.seventy five thousand only). Since the number of shareholders is large, S/Shri Rajiv Roi, Paresh Sharma and Paras Doegar, Advocates, are also appointed to assist in the conduct of this meeting. Their individual remuneration is fixed at Rs.30,000/- (Rs.thirty thousand only) each. c) The petitioner shall provide them free transportation from Shimla to the venue of the meeting and back. For this purpose, the petitioner is directed to make adequate arrangements including boarding and lodging. The petitioner shall also provide them all the records required as also secretarial services. In addition, pocket expenses incurred by them shall be reimbursed by the petitioner. d) Advertisement informing the date, time and place of aforesaid meeting of all the Shareholders of Transferee Company will be published separately by the petitioner in accordance with the Companies (Court) Rules, 1959 in the 9 news papers, namely, “Economic Times” having its circulation throughout India, “The Tribune” English Edition published from Chandigarh and “Divya Himachal” Hindi Edition, published from Chandigarh. Notices of this meeting will also be affixed on the notice board of the Transferee Company at its Registered Office as also Corporate Office. The notices/ advertisements shall state in clear and in unequivocal terms the date, time and venue of the meeting and that the copy of the proposed Scheme of Amalgamation and that of the explanatory statement required to be furnished under Section 393 of the Act, can be obtained free of cost or charge from the registered office of the petitioner Company. e) A notice of 21 clear days will also be sent to each Shareholder of Transferee Company by post/e-mail, at their respective last known addresses. f) The Quorum for the meeting of Equity shareholders shall be determined by the Chairman/ Alternate Chairman of the meeting in accordance with the Article of Association of the Company. The method of voting shall also be determined by them, including the procedure for voting by proxy as provided in the articles or otherwise. g) On the conclusion of the meeting, Chairman/Alternate Chairman shall 10 submit their report to the Court along with result of the meeting within seven days of the conclusion of the meeting. The report shall be duly supported by respective affidavits of the Chairman/Alternate chairman. h) The Scheme shall be open for inspection by the shareholders of any category as also the creditors at the Registered and Corporate Office of the Company on all working days between 10.00 A.M. to 5.00 P.M. 15. The Chairman and Alternate chairman of the meeting have been appointed as desired by the petitioner through his application. 16. List the matter on 30th May, 2011. In the meantime the affidavits of the Chairman/Alternate Chairman be filed. Co.Application No.4 of 2011. Allowed in view of the fact that Annexure P- 20, being `No Objection Certificates’ filed by the secured creditors, namely, ICICI Bank, Advent Advisory Services Pvt.Ltd. and Nikhil Nanda, has been filed on the record. The meeting of the secured creditors is, therefore, dispensed with. Dasti copy on usual terms. March 14, 2011 (Dev Darshan Sud) (aks) Judge.