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COMP/92/2010 5/ 5 ORDER
IN
THE HIGH COURT OF GUJARAT AT AHMEDABAD
COMPANY
PETITION No. 92 of 2010
In
COMPANY APPLICATION No. 91 of 2010
with
COMPANY
PETITION No. 93 of 2010
In
COMPANY APPLICATION No. 92 of 2010
=================================================
TEXSPIN
BEARINGS LIMITED - Petitioner(s)
Versus
.
- Respondent(s)
=================================================
Appearance :
MRS
SWATI SOPARKAR for Petitioner(s) : 1,
MR PS CHAMPANERI for
Respondent(s) : 1,
=================================================
CORAM
:
HONOURABLE
MR.JUSTICE ANANT S. DAVE
Date
: 30/03/2011
COMMON
ORAL ORDER
These are the
petitions filed by two companies viz. Texspin Bearings Limited and
RMP Bearings Limited, for the purpose of obtaining the sanction of
this court to a Scheme of Arrangement in the nature of simultaneous
De-merger and Transfer of Treasury Divisions between the two
companies and consequential Reduction of
capital of both the companies, proposed under section 391 and
394 read with Sections 100 to 104 of the Companies Act, 1956.
It has been
submitted that both the companies are closely held limited companies
and are engaged in manufacturing of Automotive and Industrial
Bearings. They were promoted by and belong to Texspin group and to
the same family. Hence there are inter se investments in both
the companies. The present scheme of Arrangement proposes
simultaneous demerger and transfer of the respective Treasury
Divisions of both the De-merged companies to the respective
Resulting Companies, with a view to eliminate the cross holdings.
The petitions give in detail the advantages that would flow by
virtue of the proposed demerger.
Upon the
scheme being effective, both the companies propose to adjust the
amount representing the surplus of assets over the liabilities on
the transfer of the respective demerged undertakings, partly by
reducing its Issued, Subscribed and Paid up Equity Share Capital and
partly adjusting the same against its Profit and Loss and Reserves &
Surplus Account. This will amount to Reduction of Issued, Subscribed
and Paid Up Equity Share Capital as per the provisions of Sec. 100
of the Companies Act, 1956. However, this being consequential in
nature is proposed as an integral part of the proposed scheme of
arrangement.
It has been
submitted that vide order dated 12th April 2010 passed in
Company Application No. 91 of 2010, the meeting of the Equity
Shareholders of the De-merged Company No.1 were dispensed with in
light of the consent letters from all of them being placed on
record. Similarly, vide order dated 12th April 2010
passed in Company Application No. 92 of 2010, the meetings of the
Equity and Preference Shareholders of the De-merged Company were
dispensed with in light of the consent letters from all of them
being placed on record. It has been further pointed out that vide
the aforesaid orders, separate meetings of the Secured creditors and
Unsecured Creditors of both the petitioner companies were directed
to be convened for the purpose of seeking the approval from the said
creditors to the proposed scheme. Pursuant to the directions, issued
in this regard, after the due notices to the concerned parties as
well as the public notice, the said meetings were duly convened on
1st June 2010 and the proposed scheme was duly approved
unanimously at all the meetings respectively by Secured and
Unsecured Creditors of both the companies, present and voting at the
respective meetings. The result of the said meetings were duly
reported to this court vide the report dated 17th June
2010. It has been further pointed out that vide the aforesaid orders
dated 12th April 2010, separate procedure for Reduction
of Capital and the procedure under Sec. 101 (2) read with Rules 48
to 65 of the Company Court Rules were dispensed with for both the
companies.
The
substantive petitions for the sanction of the scheme were filed by
both the companies which were admitted on 6th July 2010.
The notice for the hearing of the petitions were duly advertised in
the newspapers being ‘Indian Express’ dated 17th
July 2010 and ‘Sandesh’, dated 16th July
2010, both Ahmedabad editions and the publication in the Government
gazette was dispensed with as directed in the said orders. No one
has come forward with any objections to the said petitions even
after the publication. The said fact has been confirmed vide the
additional affidavit dated 14th March 2011.
Notice of
the petitions have been served upon the Central Govt. and Shri Y. V.
Waghela, Standing Counsel appear for the Central Govt. An affidavit
dated 10th February 2011 has been filed by Mr. Uttam
Chand Nahta, the Regional Director, North-Western Region, Ministry
of Corporate Affairs, whereby several observations are made. The
same pertain to – (a) compliance of Accounting Standard-14 for
the accounting entries (b) possibility of fractional entitlements
and absence of clarity on the same in the scheme and (c) the absence
of details of assets and liabilities of the demerged undertakings in
the scheme.
The attention
of this court is drawn to the Additional Affidavit dated 14th
March 2011, whereby all the above issues have been dealt with as
follows:
(a) With
regard to the observation of the Regional Director on the issue of
Compliance of Accounting standard-14, my attention is drawn to the
series of judgments of several high courts including Gujarat High
Court in the matter of Gallops Realty P. Ltd. 150 Company cases 596,
confirming that the said standard is applicable only to scheme of
amalgamation. Since the present petition envisages a scheme of
demerger, the same is not required to be complied with. (b) With
regard to the second observation, it has been submitted that since
both the companies belong to the same family, rounding up of shares
can be internally worked out, if needed. (c) With regard to the
third observation, it has been pointed out that the details of the
assets and liabilities of the de-merged undertaking have been already
furnished by petitioners to the satisfaction of the Regional Director
and hence the said observations do not survive. I have considered the
said submissions and come to the conclusion that the issues raised by
the Regional Director have been sufficiently explained and hence the
scheme, being in the interest of the shareholders and creditors is
required to be sanctioned.
I have
heard Smt. Swati Soparkar, Advocate appearing for the petitioner
Companies. Prayers in terms of paragraph 24(a) and 24 (b) of the
Co. Petition No. 92 of 2010 as well as Co. Petition No. 93 of 2010
are hereby granted. The minutes as under Sec. 103 in terms of
Paragraph 20 of Co. Petition No. 92 of 2010 as well as Co. Petition
No. 93 of 2010 are also specifically hereby approved.
The
petitions are disposed of accordingly. So far as the costs to be
paid to the Central Govt. Standing Counsel is concerned, I quantify
the same at Rs. 5,000/- per petition. The same may be paid to the
learned advocate Shri Y. V. Waghela, the Counsel appearing for the
Central Govt.
[Anant
S. Dave, J.]
*pvv
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