THE HONOURABLE SRI JUSTICE N.V. RAMANA Company Petition Nos.174 and 175 of 2009 COMMON ORDER: The petitioners, namely M/s. GSR Products Limited (hereinafter referred to as ‘the first petitioner Company’), and M/s. Indo International Fertilizers Limited (hereinafter referred to as ‘the second petitioner Company’), which are registered under the provisions of the Companies Act, 1956 (hereinafter referred to as ‘the Act’) in the State of Andhra Pradesh, have filed these Company Petitions under Sections 391 and 394 of the Act, praying to sanction the Scheme of Arrangement, as approved by their respective shareholders. The first petitioner Company was incorporated on 23.07.2003 and its registered office is situated at Plot No.61, Nagarjuna Hills, Punjagutta, Hyderabad - 500 082. The authorized share capital of the first petitioner Company is Rs.23,00,00,000/- divided into 2,00,000 equity shares of Rs.10/- each and 2,28,00,000 0.1% preference shares of Rs.10/- each. Its present issued, subscribed and paid up capital is Rs.18,37,47,600/- divided into 1,93,000 equity shares of Rs.10/- each fully paid up and 1,81,81,760 0.1% preference shares of Rs.10/- each. . The first petitioner Company has been incorporated with the main objects of carrying on the business of manufacturers of and dealers in chemicals, chemical compounds (organic and inorganic) in all forms, and chemical products of any nature and kind whatsoever, and all by-products and joint products thereof, etc. The second petitioner Company was incorporated on 06.09.2007. Its registered office is situated at Plot No.1, Nagarjuna Hills, Punjagutta, Hyderabad- 500 082. The authorized share capital of the second petitioner Company is Rs.1,00,00,000/- divided into 10,00,000 equity shares of Rs.10/- each. Its present issued, subscribed and paid up capital is Rs.5,00,000/- divided into 50,000 equity shares of Rs.10/- each. The main objects of the second petitioner Company are to manufacture and deal in fertilizers and manures, to carry on the business of manufacturing or producing, refining, importing and exporting, mixing or preparing, mining or otherwise acquiring, trading and dealing in and with any and all classes and kinds of fertilizers, manures, their mixtures and formulations, derivatives and compounds thereof and deal in all kinds of chemicals, preparations, products, processes arising from or required in the manufacture or production or refining of any kind of fertilizers, manures, their mixtures and formulations, etc. The Scheme of Arrangement provides for de-merger of Investment Division of M/s. Siltex India Limited, which is incorporated under the provisions of the Act and having its registered office at Mumbai, into first petitioner company, and also de-merger of Chemical Business Undertaking of first petitioner company into second petitioner company. The Scheme is proposed for segregation and consolidation of the businesses so as to separate the businesses into separate silos i.e. investment business and manufacturing business and achieve managerial and operational efficiency, and the same would benefit the companies, their respective shareholders, creditors and employees. The Board of Directors of the petitioner companies in their respective meetings held on 22.07.2009 have approved the proposed Scheme of Arrangement between the companies and their respective shareholders, to be effective from 01.04.2009, subject to approval of the shareholders and confirmation by the Court. The first petitioner Company has only one unsecured creditor namely M/s. Siltex India Limited and it has no secured creditors. The second petitioner Company has no secured and unsecured creditors. This Court, taking into consideration the affidavits filed by the respective shareholders of the petitioner companies and also the letter of the unsecured creditor of the first petitioner Company, expressing their ‘no objection’ to the Scheme of Arrangement, dispensed with the convening of the meeting of the respective shareholders and secured/unsecured creditors of the petitioner companies, by common order dated 14.09.2009 passed in C.A. Nos.1113 and 1114 of 2009. Thereafter, the petitioners filed the present Company Petitions, praying to sanction the Scheme of Arrangement, as approved by their shareholders to be binding on all their members, creditors and employees. It is relevant to mention here that M/s. Siltex India Limited, whose registered office is situated at Mumbai, has also filed Company Petition in C.P.No.762 of 2009 before the High Court of Bombay, seeking sanction of the Scheme, and the said Company Petition was allowed on 16.10.2009, sanctioning the Scheme. On 11.11.2009, this Court, while admitting the Company Petitions, issued notice to the Regional Director, Ministry of Corporate Affairs, Chennai, and the Official Liquidator, and ordered publication of the notice of admission of the Company Petitions in “Business Standard” and “Andhra Bhoomi” of Hyderabad editions. The petitioners took out notices, as ordered by this Court, and also caused paper publication and filed memo of proof of service into Court. The notices having been served, the Registrar of Companies, Andhra Pradesh, Hyderabad, filed common affidavit and the Official Liquidator filed reports, bearing OLR Nos.2 and 3 of 2010 in C.P.Nos.175 and 174 of 2009 respectively. In his common affidavit, the Registrar of Companies, Andhra Pradesh, Hyderabad, stated that the Regional Director, Ministry of Corporate Affairs, Chennai, who is the competent authority on behalf of the Central Government, examined the scheme carefully with reference to the material papers made available to him and upon such examination, it was decided not to make any objection to the Scheme of Arrangement and to leave the matter to be decided by this Court on merits. In the report bearing OLR No.2 of 2010 filed in C.P.No.175 of 2009, the Official Liquidator stated that, upon verification of material papers and records made available to him by the second petitioner Company, the affairs of the second petitioner Company do not appear to have been conducted in a manner prejudicial to the interests of its members or to the public interest. However, in the report bearing OLR No.3 of 2010 filed in C.P.No.174 of 2009, he stated that, as per the balance sheet of the first petitioner Company as at 31.03.2009, the first petitioner Company has availed unsecured loan to the tune of Rs.12,63,20,010/- and M/s. Siltex India Limited is stated to be its only unsecured creditor, who has given consent for the proposed Scheme of Arrangment, however, for an amount of Rs.9,22,88,266/-, which is shown as outstanding amount in the un-audited balance sheet as at 31.07.2009, and except that, the affairs of the first petitioner Company do not appear to have been conducted in a manner prejudicial to the interests of its members or to the public interest. Answering the said objection raised by the Official Liquidator with regard to the unsecured loan amount availed by the first petitioner Company, learned counsel for the petitioners submits that M/s. Siltex India Limited is the lone unsecured creditor of the first petitioner Company and it has given its consent for the Scheme of Arrangement, by letter dated 25.08.2009, which is filed along with C.P.No.174 of 2009 filed by the first petitioner Company. He further submits that M/s. Siltex India Limited is also a party to the Scheme of Arrangement and it obtained sanction of the Scheme from the High Court of Bombay. Heard the learned counsel on record and perused the Scheme of Arrangement. As noted above, the shareholders of both the petitioner companies and the unsecured creditor of the first petitioner Company have consented to the Scheme of Arrangement as proposed and resolved by the Board of Directors of the respective companies, providing for de-merger of Investment Division of M/s. Siltex India Limited into first petitioner company and de-merger of Chemical Business Undertaking of first petitioner company into second petitioner company. Though the notice of admission of the Company Petitions was taken out by way of paper publications, no objections whatsoever have been received by this Court from any quarter, and the Regional Director, Ministry of Corporate Affairs, Chennai, also reported no objection for sanctioning the Scheme. The Scheme, which is already sanctioned by the High Court of Bombay, is not opposed to any provision of law or public interest, apart from being in the best interest of the companies and their respective shareholders, creditors and employees. Hence, I am of the considered opinion that this Court also should not have any objection to the sanction of the Scheme of Arrangement. Hence, this Court hereby sanctions the Scheme of Arrangement, as approved by the shareholders of both the companies, and hereby declares that the same is binding on all the shareholders, creditors and employees of both the companies. The parties to the 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 Scheme of Arrangement. The petitioner companies shall pay the costs of these petitions set at Rs.3,000/- each to the learned Assistant Solicitor General, and that the petitioner companies do file with the Registrar of Companies a certified copy of this order within 30 days from this date. The Company Petitions are allowed accordingly. ___________________________ JUSTICE N.V. RAMANA 19th February, 2010. IBL