IN THE HIGH COURT OF JUDICATURE OF ANDHRA PRADESH AT HYDERABAD (ORIGINAL JURISDICTION) THURSDAY THE EIGHTEENTH DAY OF FEBRUARY TWO THOUSAND TEN PRESENT THE HON’BLE SRI JUSTICE N.V.RAMANA COMPANY PETITION Nos.9, 10 & 11 OF 2009 CONNECTED WITH COMPANY APPLICATION Nos.1427, 1428 & 1429 OF 2008 In the matter of Companies Act, 1956 (1 of 1956) And In the matter of M/s. Virat Crane Industries Limited (Residual Company) And In the matter of M/s. Crane Infrastructure Limited (Resulting Company) And In the matter of M/s. Durga Dairy Limited (Transferor Company) And Their respective shareholders C.P.No 9 of 2009 M/s. Virat Crane Industries Limited a company incorporated under the Companies Act, 1956 having its registered office at D.No.25-2-1, G.T Road, Opp.Mastan Darga, Guntur-522 004 Rep by its Managing Director Sri G.V.S.L Kantha Rao . … Petitioner/ Residual Company. C.P.No.10 of 2009 M/s. Crane Infrastructure Limited a company incorporated under the Companies Act, 1956 having its registered office at D. No.25-2-1, G. T. Road, Opp. Mastan Darga, Guntur – 522 004. Represented by its Director, Sri G. V. S. L. Kantha Rao. … Petitioner/ (Resulting Company). C.P.No.11 of 2009 M/s. Durga Dairy Limited, a company incorporated under the Companies Act, 1956 having its registered office at Gandhi Nagar, Vijayawada. Represented by its Director, Sri G. V. S. L. Kantha Rao. … Petitioner/ (Transferor Company). THE COURT MADE THE FOLLOWING COMMON ORDER ON PETITIONS: M/s.Virat Crane Industries Limited (Residual Company), M/s.Crane Infrastructure Limited (Resulting Company) and M/s.Durga Dairy Limited (Transferor Company) filed these petitions under Sections 391 and 394 of the Companies Act, 1956 seeking sanction of the proposed Composite Scheme of Arrangement among them. It is stated in the accompanying affidavits that the Residual Company is engaged in the business of manufacturers, importers, exporters of betel nut powders, chewing products like pan masala etc., whereas the Resulting Company is engaged in the business of construction and development of infrastructure etc., and the Transferor Company in the business of all kinds of milk and milk products etc. That the proposed Composite Scheme of Arrangement shall combine all the manufacturing activities of the petitioners-companies into one single entity and shall hive off the real estate and infrastructure business to a new entity for achieving maximum utilization of the resources of the Residual Company. That to achieve the object of carrying the business in an efficient manner, it has been decided to reorganize the Residual Company by demerging the real estate business between the two companies having the same shareholders with the same interest inter se as M/s.Crane Industries Limited to be managed and operated independently. That the proposed Composite Scheme of Arrangement would be beneficial to the shareholders, creditors and employees of the companies and would sub-serve their interests with further growth. It is further stated that in view of the advantages of the proposed Composite Scheme of Arrangement, the respective Board of Directors of the petitioners-companies at their Board Meetings, has approved the proposed Composite Scheme of Arrangement, subject to approval of the shareholders, creditors and the Court. The Residual Company filed C.A.No.1427 of 2008 for convening the meeting of its shareholders and also for dispensation with convening the meeting of its unsecured creditors. This Court, through its orders, dated 04.11.2008, while dispensing with convening the meeting of its unsecured creditors, appointed an Advocate Commissioner for convening the meeting of the shareholders of the Residual Company. The Advocate Commissioner so appointed, after conducting the meeting on the appointed date, filed report into the Court reporting that none of the shareholders present at the meeting voted against the proposed Composite Scheme of Arrangement and the said report was taken on record. The Resulting Company as well as the Transferor Company filed Company Application Nos.1428 and 1429 of 2009 for dispensing with convening the meeting of the shareholders of the Resulting Company and the Transferor Company; and convening the meeting of the unsecured creditors of the Transferor Company for the purpose of approving with or without modification the Composite Scheme of Arrangement. This Court, through its order, dated 04.11.2008, ordered the applications as prayed for, in view of the consent letters filed by the shareholders of the Resulting Company and the Transferor Company; and appointed the Advocate Commissioner for convening the meeting of the unsecured creditors of the Transferor Company. The Advocate Commissioner so appointed filed his report on 11.12.2008 reporting that none of the unsecured creditors present at the meeting voted against the proposed Composite Scheme of Arrangement. Thereafter, the petitioners-companies filed the present petitions seeking sanction of the proposed Composite Scheme of Arrangement. This Court, while admitting the company petitions, ordered notice to the Central Government as well as to the Official Liquidator and directed the petitioner to take out notice of hearing of the petitions in ‘The New Indian Express’, English daily, Vijayawada edition and ‘Sakshi’, Telugu daily, Vijayawada and Guntur editions. The petitioners-companies took out notices accordingly. Notices having been served, the Official Liquidator as well as the Central Government filed their reports in the matter. The Official Liquidator initially filed his report raising an objection that no objections letters of the secured letters were not filed and in view of the subsequent affidavit filed by the Managing Director of the petitioner- companies indicating that the secured creditors have given their no objection and the letters of no objection are annexed to the affidavit, the Official Liquidator expressed no objection for the proposed Composite Scheme of Arrangement. On behalf of the Central Government, the Registrar of Companies has filed a common affidavit in the matter raising two objections, namely, (i) the residual company i.e., M/s.Crane Infrastructure Limited, has availed secured loans from two banks and it is not known whether no objection certificate is obtained; and (ii) the resulting and the residual companies have to alter their object clause under Section 17 of the Companies Act, 1956 to suit the business to be transferred to the respective companies before the sanction of the scheme. Answering the objections raised by the Registrar of Companies, the Managing Director of the petitioner-companies filed an affidavit indicating that the secured creditors expressed no objection and their no objection letters are enclosed to the affidavit. With regard to the alterations in the object clauses as per Section 17 of the Companies Act, 1956, it is submitted that the main object clauses of the Memorandum of Association of the resulting company enables it to carry on the activities of real estate and infrastructure, and clause 15 thereof enables it to carry on the business of processing, buying and selling and to deal in candy milks and milk products, sweets and other eatables and by-products etc., that is being carried on by the transferor company. Having heard Sri V.S. Raju, Advocate for the petitioners- companies, and having noticed that no objections of any nature have been received for the proposed Composite Scheme of Arrangement from the public, I am of the considered opinion that this Court should also have no objection for sanctioning of the proposed Composite Scheme of Arrangement. Accordingly, this Court doth hereby sanction the Composite Scheme of Arrangement set forth in paragraph-19 of the petitions herein (Annexure - A7) and the schedule hereto, and doth hereby declare the same to be binding on the creditors and equity shareholders of the above named companies and also on the said companies. That, the parties to the Composite Scheme of Arrangement or other persons interested shall be at liberty to apply to this Court for any directions that may be necessary in regard to the working of the Composite Scheme of Arrangement and that the petitioner-company in C.P.No.11 of 2009, shall pay an amount of Rs.3,000/- each to the learned Counsel for the Official Liquidator, Sri M.Anil Kumar, and learned Assistant Solicitor General, Sri Ponnam Ashok Goud, towards costs. The petitioners-companies in C.P.Nos.9 and 10 of 2009 each shall also pay a sum of Rs.3,000/- to Sri Ponnam Ashok Goud, learned Assistant Solicitor General, towards costs. That the said companies do file with the Registrar of Companies, a certified copy of this order within 30 days from the date of receipt of such copy. These Company Petitions shall stand allowed accordingly. ___________________ N.V. RAMANA, J. Date:18.02.2010 VGB