AVENUE REAL ESTATE PRIVATE LIMITED v. MIGHTY CONSTRUCTIONS PRIVATE LIMITED

Mr. Rajesh Shah i/b M/s. Rajesh Shah & Co., in both Petitions. Dr. T. Pandian, Official Liquidator, present in the Company Scheme Petition No. 409 of 2011. Mr. C. J. Joy and Mr. N. D. Sharma i/b H.P Chaturvedi for Regional Director in both Petitions. CORAM: S. C. Dharmadhikari, J. DATE: 7th October, 2011 PC:

#1. Heard learned counsel for the parties. 2

#2. The sanction of the Court is sought under Sections 391 to 394 of the Companies Act, 1956, to a Scheme of Arrangement between Avenue Real Estate Private Limited, the Transferor Company and Mighty Constructions Private Limited, the Transferee Company and their Respective Shareholders.

#3. The Counsel appearing on behalf of the Petitioners has stated that they have complied with all requirements as per directions of this Court and they have filed necessary affidavits of compliance in the Court. Moreover, Petitioner Companies undertake to comply with all statutory requirements if any, as required under the Companies Act, 1956 and the Rules made thereunder. The said undertaking is accepted.

#4. The Regional Director has filed an Affidavit in the above Petitions stating therein that save and except as stated in paragraphs 6 (a) to 6 (b) of the said Affidavit, it appears that the Scheme is not prejudicial to the interest of shareholders and public.

#5. The Counsel appearing for the Petitioner has drawn my attention to paragraphs 6(a) to (c) of the Affidavit of the Regional Director in which it is stated that: (a) Clause No 7(v) of the scheme states that the excess / deficit after recording the entries in sub clause 7(i) to 7(iv) of the scheme shall be adjusted against the General Reserve Account of the Transferee Company. In this connection it is submitted that the Reserve arising out of this scheme shall not be utilized for the purpose of declaring dividend by the Transferee Company in future. (b) Clause 5.4 of the scheme states the Transferee Company shall take necessary steps to increase or alter or re-classify, if necessary, its authorized share capital suitably to enable to issue and allot the 3 shares required to be issued and allotted by it under the scheme. In this connection the Transferee Company may be directed to comply with provisions of section 94/97 read with Schedule X of the Companies Act 1956, in respect of filing of necessary forms with the Registrar of Companies after payment of necessary filing fee and stamp duty as applicable on the said forms. (c) The scheme does not provide for specific terms and conditions and redemption period of the preference shares, which may be specified by the petitioner companies.”

#6. In response to the above concerns raised by the Regional Director, the counsel for the Transferee Company has tendered an affidavit in reply dated 5th October, 2011 of one Mr. Rajesh Madhani, Director of the Transferee Company , which is taken on record.

#7. As far as the contents of paragraph 6 (a) of the Affidavit of Regional Director is concerned, the Transferee Company has given undertaking that it will not utilize the General Reserve arising in its books pursuant to the Scheme for the purpose of declaring dividend in future. The undertaking is accepted.

#8. So far as paragraph 6 (b) of the Affidavit of Regional Director is concerned, the Transferee Company undertakes to comply with the provisions of section 94/97 read with Schedule X of the Companies Act 1956, in respect of filing of necessary forms with the Registrar of Companies after payment of necessary filing fee and stamp duty as applicable on the said forms so as to increase or alter or re-classify, if necessary, its authorized share capital suitably to enable to issue and allot the shares required to be issued and allotted by it under the scheme. The undertaking is accepted. 4

#9. So far as paragraph 6 (c ) of the Affidavit of Regional Director is concerned, the Transferee Company in its aforesaid Affidavit has given an undertaking to issue Preference Shares pursuant Clause

5.1 of the Scheme under the following terms and conditions: Dividend rate Accumulation of dividend Payment dividend Period Listing Redemption Conversion 10% p.a Cumulative The Preference Shares will qualify for preferential payment of dividend at the rate set out above from the date of allotment up to the date of redemption. 20 years The Preference Shares will not be listed on any Stock Exchange. The preference shares may be redeemed any time prior to 20 years at a price to be determined by independent vauler at the time of redemption. The Board of directors of the Company may also convert each Preference shares into 1(one) equity shares of Rs. 10 each any time prior to 20 years from the date of issue. The undertaking is accepted.

#10. The Official Liquidator has filed his report in Company Scheme Petition No.409 of 2011 stating therein that the affairs of Avenue Real Estate Private Limited have been conducted in a proper manner and Avenue Real Estate Private Limited may be ordered to be dissolved.

#11. From the material on record, the Scheme appears to be fair and reasonable and is not violative of any provisions of law and is not contrary to public policy. None of the parties concerned has come forward to oppose the Scheme.

#12. Since all the requisite statutory compliances have been fulfilled, Company Scheme Petition No.409 of 2011 filed by the Transferor 5 Company is made absolute in terms of prayer clauses (a) to (d) and Company Scheme Petition No.410 of 2011 filed by the Transferee Company is made absolute in terms of prayer clauses (a) to (d).

#13. The Petitioner Companies to lodge a copy of this order and the Scheme, duly authenticated by the Company Registrar, High Court, Bombay with the concerned Superintendent of Stamps, for the purpose of adjudication of stamp duty payable, if any, on the same within 60 days from the date of the Order.

#14. Petitioners are directed to file a copy of this order alongwith a copy of the Scheme of Amalgamation with the concerned Registrar of Companies, electronically, along with E-Form 21 in addition to physical copy within 30 days from the date of issuance of the order by the Registry.

#15. The Petitioners in both the Company Scheme Petitions to pay costs of Rs.10,000/- each to the Regional Director, Western Region, Mumbai, and the Petitioner in the Company Scheme Petition No.409 of 2011 to pay costs of Rs.10,000/- to the Official Liquidator, High Court, Bombay. Costs to be paid within four weeks from today.

#16. Filing and issuance of the drawn up order is dispensed with.

#17. All concerned authorities to act on a copy of this order along with Scheme duly authenticated by the Company Registrar, High Court, Bombay. (S. C. Dharmadhikari J)