CONNECTED WITH COMPANY SUMMONS FOR DIRECTION v. In the matter of the Companies Act

Mr. Hemant Sethi i/b Hemant Sethi & Co. Advocates for the Petitioners in both Petitions. Mrs R.N. Suttar, Asst. Official Liquidator present in Company Scheme Petition No. 554 of 2011. Mr. Rajindra Kumar i/b Mr. H.P. Chaturvedi for Regional Director in both Petitions. Mr. Mimeer Bawerjee, Director of MEKPL present in person. CORAM: S. C. DHARMADHIKARI, J DATE: 25TH November 2011 P.C.:

2. Heard learned counsel for the parties. The sanction of the Court is sought under Sections 391 to 394 read with Section 78 and Sections 100 to 103 of the Companies Act, 1956 to the Scheme of Amalgamation of Schenectady (India) Holdings Private Limited with SI Group – India Limited and their respective shareholders.

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

4. The Regional Director has filed an affidavit inter alia, stating therein that save and except as stated in paragraphs 6 (a) to 6 (d) of the said Affidavit, it appears that the Scheme is not prejudicial to the interest of shareholders and public. In Paragraph 6 of his Affidavit, the Regional Director has stated that: (a) The shares of the Transferor Company are held by foreign body corporate. Hence while giving effect to the scheme, the Transferee Company may be directed to comply with FEMA/RBI regulations as applicable in this regard. (b) The Transferor Company is a Non Banking Finance Company. Hence the Transferor Company may be directed to file a copy of the scheme along with the copy of the order of this Hon’ble Court within 30 day’s from the date of the order, with the RBI. (c) Clause No. 12.6 of the Scheme states that the difference of the amount of net assets taken over by the Transferee Company and the value of consideration issued to the shareholders of the Transferor Company shall be adjusted/credited to the General Reserves Account of the Transferee Company. In this connection it is submitted that the Reserve arising out of this scheme shall be treated as “Amalgamation Reserve” and shall not be utilised for the purpose of declaring dividend by the Transferee Company in future. (d) Clause 12.4 of the scheme states that Statutory Reserves lying in the books of the Transferor Company as on the appointed date shall become General Reserve of the Transferee Company. However, the Transferee Company has to retain the reserves as ‘Statutory Reserve’ till such time it continues with NBFC business on amalgamation.

5. As far as the objection in paragraph 6 (a) of the Affidavit of Regional Director is concerned, the Petitioner through their counsel undertakes that while giving effect to the scheme, the Transferee Company will comply with FEMA/RBI regulations as applicable in this regard. The said undertaking is accepted.

6. So far as the observations made in paragraph 6 (b) of the said Affidavit is concerned, the Petitioner through their counsel undertakes to file a copy of the Scheme along with the copy of the order sanctioning scheme within 30 days from the date of the order, with the Reserve Bank of India. The said undertaking is accepted.

7. So far as the observations made in paragraph 6 (c) of the said Affidavit is concerned, the Petitioners through their counsel undertakes to adjust the difference of the amount of net assets taken over by the Transferee Company and the value of consideration issued to the shareholders of the Transferor Company against the General Reserve Account of the Transferee Company. The Petitioners through its counsel further undertakes that any reserve arising out of the scheme shall be treated as “Amalgamation Reserve” and that the same shall not be utilised for the purpose of declaring dividend. The said undertaking is accepted.

8. As far as the objection in paragraph 6 (d) of the said Affidavit is concerned, the Petitioners through their counsel undertake that the Transferee Company will not continue with NBFC business on Amalgamation, and that the Statutory Reserves lying in the books of the Transferor Company as on the appointed date shall become General Reserve of the Transferee Company. The said undertaking is accepted.

9. Apart from above objections, the counsel for the Petitioner/Transferee Company informs that the Transferee Company has received objections from M/s. Maharashtra Esters & Ketones Pvt. Ltd. claiming to be one of the Unsecured Creditor of the Transferee Company stating that their dues have not been paid.

10. The learned Counsel appearing for the Petitioner states that the purported claim of the said Unsecured Creditor is in dispute and the same has been awarded in favour of the unsecured creditor by the Industrial Facilitation Council, Konkan Division, Thane vide their order dated 28/07/2011.

11. However, this Court vide their Order dated 16/11/2011 passed in a Writ Petition filed by the Transferee Company has set aside the above order and has remanded back the matter to the Industrial Facilitation Council.

12. Further, the learned Counsel appearing for the Petitioner states that the proposed Scheme does not affect the rights of Creditor as there is no Arrangement or Compromise with any of the Creditors and therefore, Unsecured Creditor whose dues are in dispute cannot use the Scheme as tool to recover the same.

13. It will be open to the said Unsecured Creditor to pursue legal remedy as may be advised for recovery of their claim amount.

14. The Official Liquidator has filed his report in Company Scheme Petition No 554 of 2011 stating therein that the affairs of the Transferor Company have been conducted in a proper manner and that the Transferor Company may be ordered to be dissolved.

15. 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 have come forward to oppose the Scheme.

16. Since all the requisite statutory compliances have been fulfilled, the Company Scheme Petition No. 554 of 2011 and Company Scheme Petition No. 555 of 2011 are made absolute in terms of prayer Clause (a) of the respective petitions.

17. The Petitioners to lodge a copy of this order and the Scheme duly authenticated by the Company Registrar, High Court (O.S.), 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 order.

18. Petitioners to file a copy of this order alongwith a copy of the Scheme with the concerned Registrar of Companies, electronically, along with e- form 21 in addition to the physical copy, within 30 days from the date of issuance of the order by the Registry.

19. The Petitioners in both the Petitions to pay costs of Rs.10,000/- each to the Regional Director and Petitioner in Company Scheme Petition No. 554 of 2011 to pay costs of Rs. 10,000/- to the Official Liquidator. Costs to be paid within four weeks from today.

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

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