High Court · 2009

Order

The petitioners, namely M/s. Vogel Laboratories Limited (hereinafter referred to ‘the First Transferor Company’), M/s. Dr. Reddy’s Holdings Limited (hereinafter referred to as ‘the Second Transferor Company’) and M/s. Idea2Enterprises (India) Private Limited (hereinafter referred to as ‘the Transferee 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 to 394 of the Act, praying to sanction the Scheme of Arrangement, as approved by the shareholders of the Transferor and Transferee Companies. The First Transferor Company was incorporated on

23.10.1978. Its Registered Office is located at Flat Nos. A4 and A5, 2nd Floor, Eureka Court, Ameerpet, Hyderabad – 500 016.

The authorized share capital of the First Transferor Company is Rs.45,00,000/- divided into 45,000 equity shares of Rs.100/- each. Its present issued, subscribed and paid up capital is Rs. 43,00,000/- divided into 43,000 equity shares of Rs.100/- each fully paid up. The First Transferor Company has been incorporated with the main objects of carrying on the business of chemical manufacturers and wholesale and retail chemists druggists, analytical chemists, dry- salters, oil and colourmen, importers, exporters and manufacturers of and dealers in chemicals, heavy chemicals, drugs, essences, cordials, acids, alkalies, pharmaceuticals, medicinal, chemical etc. The Second Transferor Company was incorporated on

12.07.1994. Its Registered Office is located at 7-1-27, Ameerpet, Hyderabad – 500 016. The authorized share capital of the Second Transferor Company is Rs. 25,00,00,000/- divided into 25,00,000 equity shares of Rs.100/- each. Its present issued, subscribed and paid up capital is Rs. 3,01,68,600/- divided into 3,01,686 equity shares of Rs.100/- each fully paid up. The Second Transferor Company has been incorporated with the main objects of carrying on the business of investment and holding company without prejudice to the generality of the foregoing to buy, underwrite, invest in and acquire and hold, sell and deal in shares, stocks, debentures, debenture-stock, bonds, obligations and securities issued or guaranteed by any company constituted or carrying on business India or elsewhere and debenture-stock, bonds, obligations and securities, is used or guaranteed by any Government, State Dominions, sovereign, Rules, Commissioners, Public Body of authority, supreme, municipal, local or otherwise, firm or persons whether in India or elsewhere etc. The Transferee Company was incorporated on 22.05.2000. Its Registered Office is located at 7-1-27, Ameerpet, Hyderabad – 500

016. The authorized share capital of the Transferee Company is Rs.1,50,00,000/- divided into 15,00,000 equity shares of Rs.10/- each. Its present issued, subscribed and paid up capital is Rs. 1,44,02,100/- divided into 14,40,210 equity shares of Rs.10/- each fully paid up. The Transferee Company has been incorporated with the main objects of carrying on in India or elsewhere the business to act as strategic partner, joint venture partner or incubator of any proprietorship firms, partnership firms, persons, association of persons, body of individuals, companies etc whether incorporated or not for developing potential ideas and commercializing technology startups in the fields of emerging technologies etc., to commence and carry on the business of providing counsel or advice etc., to construct, erect, build, repair, re-model, demolish, develop and carry on the business of builders, developers, contractors etc. and, to acquire real or leasehold estate, and purchase, lease, construct or otherwise acquire or provide in any place offices, warehouses, workshops, etc. The First Transferor Company is having real estate division and pharma bulk drug division. The Second Transferor Company has investment and real estate division. The Transferee Company is engaged in real estate business. Considering the exigencies of the business of the Transferor Companies, and having regard to their interest in real estate and pharma bulk drugs and investments, the Board of Directors of the respective companies felt for greater focus on different activities and to ensure accelerate growth and improved profitability in specific areas of operations, it would be advantageous to re-organize the companies and de-merge the Real Estate Divisions of the Transferor Companies into the Transferee Company. The Board of Directors further felt that the arrangement/re-organization is essential to ensure better business opportunities and focus on accelerated growth of the individual segments in the current scenario in real estate business. Accordingly, the Board of Directors after holding meetings with all concerned, decided to take appropriate steps to carry on effectively and efficiently the business of various divisions in the larger interest of the shareholders, creditors, employees etc. The Board of Directors of the Transferor and Transferee Companies in their respective meetings held on 18.05.2009 have approved the proposed Scheme of Arrangement between them, to be effective from 01.04.2008 subject to approval of the shareholders and confirmation by the Court. This Court taking into consideration the affidavits filed by the shareholders of the Transferor and Transferee Companies expressing their ‘no objection’ to the Scheme of Arrangement, by orders dated

20.07.2009 passed in C.A. Nos. 822, 823 and 824 of 2009, dispensed with the convening of the meeting of their respective shareholders. 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. On 27.04.2009, this Court while admitting the Company Petitions, issued notices to the Central Government, and ordered publication of the notice of admission of the Company Petitions in “Business Standard” and “Andhra Bhoomi” of Hyderabad edition. As ordered, the petitioners took out notices to the Registrar of Companies, Andhra Pradesh, Hyderabad, the Regional Director, Ministry of Company Affairs, Chennai, and also by way of paper publication on 07.09.2009 and filed memo of proof of service into Court. The notices having been served, the Registrar of Companies, Andhra Pradesh, Hyderabad, filed affidavit stating 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, he found that (a) The Transferee Company has to comply with the provisions of Sections 94, 95 and 97 of the Act to enable itself to increase its authorized capital and to issue shares to the shareholders of the Transferor Companies and (b) The First Transferor Company has availed secured loans to the extent of Rs.7,11,461/- and No Objection Certificates are to be produced from the secured creditors. To satisfy the objections raised by the Registrar of Companies, the counsel for the petitioners filed memo stating that upon sanction of the Scheme of Arrangement, the Transferee Company would increase the authorized capital and would comply with the provisions of Sections 94, 95 and 97 of the Act, to enable it to issue further shares. Along with the memo, he also filed “No Objection” letter dated

14.11.2009, issued by M/s. ICICI Bank to First Transferor Company, conveying its no objection to the proposed Scheme of Arrangement. Heard the learned counsel for the petitioners and perused the Scheme of Arrangement. As noted above, the First Transferor Company is having real estate division and pharma bulk division, the Second Transferor Company has investment and real estate division and the Transferee Company is engaged in the business of real estate. With a view to increase the real estate and bulk drug business, to focus on different activities and to ensure accelerated growth and improved profitability in specific areas of operations, and considering the similarity of real estate business, an arrangement/re-organization, which would be in the best interests of the shareholders, creditors, employees etc., was proposed providing for de-merger of the Real Estate Divisions of the Transferor Companies and their merger with the Transferee Company. As the proposed Scheme of Arrangement, is not only beneficial to the shareholders of the Transferor and Transferee Companies, but also to their creditors and employees, the Board of Directors of the Transferor and Transferee Companies in their respective meetings have approved the Scheme of Arrangement. As the shareholders of the Transferor and Transferee Companies have filed affidavits expressing their ‘No Objection’ to the Scheme of Arrangement, this Court dispensed with the convening of their meetings. Pursuant to the notice ordered by this Court, as noticed above, the Registrar of Companies filed affidavit. Satisfying the objections raised by the Registrar of Companies the counsel for the petitioners filed memo stating that the upon the Scheme of Arrangement being sanctioned, the Transferee Company would increase its authorized capital and would comply with the provisions of Sections 94, 95 and 97 of the Act to enable it to issue further shares, and along with the memo, he also filed “No Objection” letter issued by the secured creditor of the First Transferor Company. Though the notice of admission of the Company Petitions was taken out by way of paper publications, no objection whatsoever have been received by this Court from any quarter. Except the objections, as taken above by the Registrar of Companies, as discussed above, which stood complied with by the petitioners, the affairs of the companies, are reported to have not been conducted in a manner prejudicial to the interests of the members or to the general public. The Scheme of Arrangement, apart from being in the interest of its members, secured and unsecured creditors, is also said to be in the interest of the employees, whose employment is protected with same terms and conditions on which they were appointed. In view of the above, and having regard to the fact that the persons interested in the affairs of the companies, namely the shareholders and secured creditors, have consented to the Scheme of Arrangement as proposed and resolved by the Board of Directors of the respective companies, and their shareholders and secured creditors, I am of the considered opinion that this Court also should not have any objection to the sanction of the Scheme of Arrangement. Hence, the Scheme of Arrangement is approved. By reason of approval of the Scheme of Arrangement, the Real Estate Divisions of the two Transferor Companies, shall stand de-merged and merge with the Transferee Company. All the assets and liabilities pertaining to the Real Estate Divisions of the Transferor Companies, shall stand transferred and vested with the Transferee Company from the appointed date. Accordingly, the Company Petitions are allowed. The Transferor and Transferee Companies shall serve a copy of this order on the Registrar of Companies, Andhra Pradesh, Hyderabad, within a period of four weeks from the date of receipt of a copy of this order. The Transferor and Transferee Companies, shall pay to the Assistant Solicitor General, a sum of Rs.3,000/- each towards fee. No costs. Dated: 15th December, 2009. KSR ________________ N.V. RAMANA, J.