1 csp360-11.doc IN THE HIGH COURT OF JUDICATURE AT BOMBAY ORDINARY ORIGINAL CIVIL JURISDICTION COMPANY SCHEME PETITION NO.360 OF 2011 WITH COMPANY SUMMONS FOR DIRECTION NO.316 OF 2011 In the matter of the Companies Act, 1956; and In the matter of Sections 391 to 394 of the Companies Act, 1956; and In the matter of the Scheme of Arrangement among; 1] Reliance Retail Ltd., 2] Reliance Agri Products Distribution Limited; 3] Reliance Food Processing Solutions Ltd., 4] Reliance Home Store Limited; 5] Reliance Hypermart Limited 6] Reliance Integrated Agri Solutions Limited 7] Reliane Lifestyle Holdings Ltd. 8] Reliance Supply Chain Solutions Limited 9] Reliance Wellness Limited 10] Retail Concepts & Services (India) Ltd; and 11] Reliance Fresh Limited Reliance Retail Limited .. Petitioner company Mr.Virag Tulzapurkar, Senior Advocate with A.S.Doctor i/b. Junnarkar & Associates for petitioners Ms.S.I.Shah for secured creditor (Central Warehousing Corpn) Ms.Rachana Kapasi i/b. Pimenta Kapasi & Co. for Royal Electric 2 csp360-11.doc Co. Mr.Gaurav Agarwal for Sony Music Entertainment Mr.N.D.Sharma for ROC CORAM : S.C.DHARMADHIKARI, J. 14th October 2011. P.C.: 1] This is a company petition seeking approval of this Court to the scheme of arrangement among several entitles whose names are enlisted in the petition. The jurisdiction of this Court under section 391 to 394 of the Companies Act, 1956 has been invoked by the petitioner. The details in relation to the company, its memorandum of association and the details of its share capital have been set out. Equally, details in relation to the transferee company have also been set out. It is stated that the Board of Directors held a meeting and has approved the scheme of arrangement. Audited balance sheet and Profit and Loss account for the year ended 31st March 2010 and provisional balance sheet dated 31st March 2011 along with Profit and Loss account of the petitioner company, transferor company and 3 csp360-11.doc transferee company are annexed to the petition. The respective board of directors of the transferor company and board of directors of the transferee company have convened respective meetings and approved the scheme of arrangement which provides for merger of the transferor company with transferee company whereby entire business, without any further act, deed, matter or thing, be transferred to and vested in or be deemed to be transferred to in the transferee company, on a going concern basis. The scheme with its salient features is referred to the petition and a copy thereof has been duly annexed. The petition sets out as to how compliance with each of the statutory requirements has been made by the petitioner. In addition, it is stated that the circumstances/ reasons set out in the petition and the scheme have necessitated the arrangement made. The scheme and its benefits are also set out. 2] It has then pointed out as to how the scheme will not be prejudicial to the interest of creditors, shareholders and general public. The de-merger is for reduction of cost and improving administrative and operational efficiency. The compliances are 4 csp360-11.doc referred to in paras 14 to 19 of the petition and, thereafter, it has been set out as to how the creditors of the company are in no way affected as there is no reduction in the amount paid to any of them. A special resolution has also been referred to in para 23 and 24 of the petition. 3] From a reading of the petition and the annexures thereto I am satisfied that the scheme as proposed does not contravene the interest of any shareholders, creditors or general public. The same is to minimise cost and improving administrative and operational efficiency. It has no adverse effect on the interest of shareholders and creditors because the liabilities of the creditors are not in any way being curtailed or reduced. In these circumstances and when all declarations and statements have been made on oath, this is a fit case where the scheme should be approved. 4] Even the Regional Director has stated that he has no objection to the scheme being sanctioned and approved by this Court. There are, however, two objectors, one of which is a 5 csp360-11.doc statutory corporation, i.e. Central Warehousing Corporation. Mrs.Shah appearing for the said Corporation submits that the Corporation has a claim against the petitioners. The said claim has not been secured although admitted. Mr.Tulzapurkar, learned Senior Counsel appearing for petitioners on instructions makes a statement that the claim of the Central Warehousing Corporation in the books of accounts of petitioner is to the tune of Rs.96 lakhs and the petitioner is ready and willing to furnish a bank guarantee for that sum, drawn in favour of Prothonotary & Senior Master/ Registrar (OS) of this Court. All that he submits that this Bank Guarantee should be kept alive for a limited period within which the Central Warehousing Corporation should establish and prove its claim by institution of appropriate proceedings. If the appropriate proceedings are instituted, the bank guarantee then shall abide by the orders and directions therein. 5] Mrs.Shah states that the claim of Rs.96 lakhs as stated in any event is admitted sum and ought to have been paid by the petitioner in full. Therefore, the bonafides having been 6 csp360-11.doc demonstrated by the petitioner, this Court should consider the objection of the Statutory Corporation as the dues which are to be recovered are public dues and money. 6] After hearing both sides on this aspect I am of the view that in the light of the statements made by Mr.Tulzapurkar, without prejudice to the rights and contentions of respective parties, of furnishing bank guarantee of Rs.96 lakhs, in favour of Prothonotary & Senior Master, it sufficiently secures and protects the claim, if any, of the Statutory Corporation. These are not proceedings in which the claim can be adjudicated and the amounts due and payable, determined and decided. The Corporation even if it is statutory, would have to adopt appropriate proceedings to recover money outstanding or allegedly due and payable. For the present, it is directed that petitioner shall furnish bank guarantee in the sum of Rs.96 lakhs, which bank guarantee shall be kept alive for a period of four months. Within this period, the said Corporation shall institute appropriate proceedings and then apply for interim reliefs therein. Needless to state that the if within this period the 7 csp360-11.doc Corporation does not initiate any legal proceedings for recovery, the bank guarantee shall be returned to the petitioners, duly discharged. 7] There is another claim which is stated to be settled and Mr.Tulzapurkar states that the claim of that partnership firm has already been satisfied. However, the learned Counsel for the said firm viz., M/s.Royal Electric Company states that till date the settled and agreed amount has not been received. Mr.Tulzapurkar submits that the very sum shall be remitted to this firm within one week from today. This statement on instructions is accepted. 8] As far as the objections which have been raised by one Babu Moomar, residing in the State of Kerala, is concerned, it is abundantly clear that a civil suit has been filed by the said creditor in the competent court in the State of Kerala and Mr.Tulzapurkar states that the said claim is contested by filing a written statement. In the light of the pending suit and the unsecured creditor being free to apply for such reliefs, as 8 csp360-11.doc permissible in law, no order or direction in relation to this claim need be issued. 9] In the light of the aforesaid, I am satisfied that the petitioners have demonstrated their bonafides and the scheme is neither prejudicial to the interest of creditors or share holders nor to the general public. In these circumstances, the company petition is made absolute in terms of prayer clauses (a) to (k). 10] In addition to the above order Judge's Order is also signed separately. WITH COMPANY SCHEME PETITION NOS.361 TO 369 OF 2011 1] For the reasons and discussions made above, these company petitions are made absolute in terms of prayer clauses (a) to (j). WITH 9 csp360-11.doc COMPANY SCHEME PETITION NO.370 OF 2011 1] For the reasons and discussions in the order above, this Company Scheme Petition is made absolute in terms of prayer clauses (a) to (k). (S.C.DHARMADHIKARI, J)