COMP/49/2008 1/11 JUDGMENT IN THE HIGH COURT OF GUJARAT AT AHMEDABAD COMPANY PETITION No. 49 of 2008 With COMPANY PETITION No. 50 of 2008 For Approval and Signature: HONOURABLE MR.JUSTICE K.A.PUJ ========================================================= 1 Whether Reporters of Local Papers may be allowed to see the judgment ? 2 To be referred to the Reporter or not ? 3 Whether their Lordships wish to see the fair copy of the judgment ? 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 ? 5 Whether it is to be circulated to the civil judge ? ========================================================= LIGHT PUBLICATIONS LIMITED - Petitioner(s) Versus . - Respondent(s) ========================================================= Appearance : MRS SWATI SOPARKAR for Petitioner(s) : 1, MR HARIN P RAVAL for Respondent(s) : 1, ========================================================= CORAM : HONOURABLE MR.JUSTICE K.A.PUJ Date : 06/05/2008 ORAL JUDGMENT 1. These are petitions filed by two petitioner companies for sanction of a scheme of COMP/49/2008 2/11 JUDGMENT arrangement in the nature of amalgamation of Light Publication Limited, the transferor company with Sierra Investments Ltd., the transferee company and consequential reduction of share capital of the transferee company under Section 391 to Section 394 read with Section 100 of the Companies Act, 1956. 2. It has been submitted that both the petitioner Companies belong to the same group of management. The transferor company is engaged in business of printers and publishers, packing materials and paper products and is a profit making company. The transferee company is a non-banking finance company duly registered with the Reserve Bank of India. It is engaged in investment and finance activities. The amalgamation is proposed for achieving synergic advantages and consolidation of operations. The petition gives details of the advantages that would flow by virtue of the amalgamation of COMP/49/2008 3/11 JUDGMENT these companies. The transferor company holds substantial number of shares of the transferee company, which shall be cancelled upon scheme being effective. This shall result into reduction of the share capital of the transferee company. However, this does not involve either diminution of liability towards unpaid capital or any repayment towards the paid up share capital. Vide the order dated 7.12.2007, passed by this Court, the dispensation was granted with regard to the procedure prescribed under Section 101(2) of the Act and Rules 48 to 65 of the Companies (Court) Rules. 3. The proposed scheme was put for consideration of the equity shareholders and creditors of the transferor company and equity and preference shareholders of the transferee company, at the respective meetings held on 16.1.2008 which were convened pursuant to the directions issued by COMP/49/2008 4/11 JUDGMENT this Court vide orders passed on 7.12.2007 in Company Applications Nos.549 and 550 of 2007 respectively. Some modifications were proposed at the meetings with regard to the optional mode of the consideration in form of preference shares. The said modifications were adopted on being approved unanimously at all the meetings and thereafter the modified scheme was also carried unanimously at all the meetings. The Chairman's reports have been duly filed on 22.1.2008 giving the result of the said meetings. 4. After the petitions were admitted, the same were duly advertised in the newspapers being 'Indian Express' and 'Jansatta-Loksatta' both Vadodara edition of 26.2.2008 and the publication in the Government Gazette was dispensed with as directed in the order dated 18.2.2008. Affidavits dated 5.3.2008 have been filed confirming the said publications. No one has come forward with any objections COMP/49/2008 5/11 JUDGMENT to the said petitions even after the publication. The said fact has been confirmed vide additional affidavits filed on 8.4.2008. 5. Notice of the petition was served upon the Official Liquidator for the transferor company. A report dated 26.3.2008 has been filed by the Official Liquidator and the same confirms that the affairs of the transferor company has not been conducted in a manner prejudicial to the interest of its members, creditors or public interest. 6. Notice of the petition has been served upon the Central Government and Shri Harin P. Raval, learned Asstt. Solicitor General of India, appears for the Central Government. An affidavit dated 3.4.2008 has been filed by Mr. R.K.Dalmia, Dy. Registrar of Companies alongwith the letter from the Regional Director dated 31.3.2008, whereby some COMP/49/2008 6/11 JUDGMENT observations are made with regard to the proposed scheme of amalgamation. The issues so raised have been dealt with vide affidavits dated 8.4.2008 filed by respective Directors of the petitioner Companies. The petitioner companies have placed on record the provisional balance sheets as at 30.9.2007 and it has been categorically confirmed that there is no material change in the financial statements of the petitioner companies since the last audited balance sheet except reflecting the transactions carried on in the normal course of business. Further, it has been submitted by Smt.Swati Soparkar, advocate appearing for the petitioner companies that the issues raised vide the observations pertaining to Clause 11(a) and 11(b) refer to the proposed change in the capital clause and objects clause of the Memorandum and Articles of Association of the Company. The same are covered under the widely accepted principles of Single COMP/49/2008 7/11 JUDGMENT Window Clearance. Since all these changes are proposed to be effected as an integral part of the scheme, the approval granted by the shareholders at the meeting to the scheme as a whole amounts to approval to all such incidental proposals and no separate procedure is required to be followed as envisaged by Sections 17, 31, 94, 97, 81 (1A), 100 and 149 (2A) respectively. It has been pointed out that the same has been specifically provided in Clause 11(c) and (d) of the scheme. It has been further submitted that when this court sanctions the scheme, the scheme is sanctioned as a whole with all its clauses and proposals. The certified copy of the order sanctioning the scheme by this Court, when filed with the Registrar of Companies, shall be treated as intimation to the Registrar of Companies and it shall take note of all the changes proposed and sanctioned by the Court. In view of the same no separate compliances of aforesaid COMP/49/2008 8/11 JUDGMENT provisions of the Companies Act, 1956 are necessary. Reliance is place upon by Mrs. Soparkar on number of decision of this Court and other High Courts in support of the said contention. Considering the said decisions, facts and circumstances and in light of the aforesaid submissions, there is no reason to withhold the sanction to the scheme of arrangement. 7. Shri Harin P. Raval, learned Asstt. Solicitor General of India, appearing for the Central Government was heard at length in Company Petition No.54 of 2008, wherein also issue regarding Single Window Clearance was involved. So far as present petitions are concerned, the Dy. Registrar of Companies in his affidavit dated 31.3.2008 has raised the issue in relation to Clause 11(a) and 11(b) of the proposed scheme of amalgamation proposing changes in the Capital Clause of the Memorandum and Articles of Association of COMP/49/2008 9/11 JUDGMENT the Company. Though Mr.Raval has prayed for some time as he was required in some other Court the Court has not thought it fit to adjourn the matters in view of the fact that the issues are almost similar and Mr.Raval has already made his submissions in Company Petition No.54 of 2008. The Court has dealt with all these submissions in Company Petition No.54 of 2008 and the said petition is disposed of today by separate order of even date. For the reasons stated therein and in view of the various authorities considered by the Court in the said decision, the Court is satisfied that since all these changes are proposed to be effected as an integral part of the scheme, the approval granted by the shareholders at the meeting to the scheme as a whole amounts to approval to all such incidental proposals and no separate procedure is required to be followed as envisaged by Sections 17, 31, 94, 97, 81 (1A), 100 and 149 (2A) respectively. It goes COMP/49/2008 10/11 JUDGMENT without saying that when this Court sanctions the scheme, the scheme is sanctioned as a whole with all its clauses and proposals. The certified copy of the order sanctioning the scheme by this Court, when filed with the Registrar of Companies, shall be treated as intimation to the Registrar of Companies and it shall take note of all the changes proposed and sanctioned by the Court. In view of the same, no separate compliances of aforesaid provisions of the Companies Act, 1956 are, therefore, necessary. 8. Having gone through the petitions and being satisfied that the amalgamation would be in the interest of the Companies and their members and creditors, prayer in terms of para 20(a) of the Company Petition No.49 of 2008 and para 23(a) of the Company Petition No.50 of 2008 including the minutes under Section 103(1) are hereby granted. COMP/49/2008 11/11 JUDGMENT 9. The petitions are disposed of accordingly. So far as the costs to be paid to the learned Asstt. Solicitor General of India is concerned, the same are quantified Rs.3,500/- per petition. The same may be paid to the learned advocate Shri Harin P. Raval. (K. A. PUJ, J.) kks