Pa?" 1 «Le :18' ewe
V3716: cccfl f, wrJaLp«J
Vioiz Com-a_
c£G\.§~eJ- ,.2_;.:?~;';,;g,,.,,;,g_
" '""x" éflaumiwxu
IN THE man coum OF KARNATAKA AT BAN{.%}tL"C§£§E : f io +4.,» Ste
2 %sri.uday";s§na, 1:-gamed senior oounst-,1 ibr
'~ _ - M--,l_s.I=~IQlla as Advs.,)
'' _' . V __ .. RESPONDENT
(1337 stmior counsel, Addl.Solicitor General
AA f0.r'SmLVecz1a Jadhav for ROG,
--....----.----.---
This petition is filed under Sections 391 to 394 of the
" Companies Act, 1956, praying that for the reasons stated
therein this Hozfblc Court may be phased to sanctien the:
.3-
amended compcsifle Scheme of Arrangement, by
the pctitioncr~o0mp-any so as to 'binding on thew ..
shareholders of the pctitioncr--company. . j L' S . ' V.
G0.P.H0.46[3008
BETWEEN:
Kingfisher Airlines Limited V
UB'I'owcr, Level 12
{.13 City, 24, Vittai mallya , --- .
Bangalore-1 PE*1*m.QNE.:R 3
(By Sri. Uday Holla, sc:9_rVA1ioa*Vr,§<3F¢:I'15A3.éi~f(3r
M/s.Ho1La as Holla, A¢1"§i.',} ' " v
ANI):
Nil - __RESPONDEN'I'
(By Sri AddI.Solicit:or General
1'01: 'Smt.'Vecix;a for RGO,
Txsgis-.p'cw;i:;ia:: ié' Sections 391 to 394 of the
Companies }'.y:t',' 1956,'-._pmymg that for the reasons stated
the:;'efm' this Hdunfblc Court may be pleased to sanction the
V. am§3t:i:ieg1_LV<:t:gmpositc.....g;¢h,cmc of Arrangement, pmpmd by
" 'the jiefitéongrzepompany so as to bind the petitioner-company
£:31(i'tt;ei1ff regptgtsfive shamholders and creditors.
Aviation Limited
35/'2; Cun1.lingham Road
Ba;t1g&Iorc~52 .. PETITIONER
AND:
M/s.HoI1a as Holla, Aclvs.,)
AN D: . V V.
Nil
(By Sri Mflavindran. General
for Smtflvecna Jadhavfor R00, 2 *' V "
Sri M.R.Ravin;1ranat£i¥0bjaé:g:tQr;«.;*ap. Raman, Aciv.,)
This pi:fitie.;3fi,is 'u:;de;aso¢:ig'ns 391 to 394 of the
"$9.735, for the reasons stateci
therein jthis E'-:.x1j':'bie be pleased to sanction the
amendeé' _»S¢:heme'v'--oI' Arrangement, proposed by
the petiti<3nc::.~con1pe:i§£3t' Sc; as binding on the petitioner»
company and shamhalders and creditors.
these jmtfiffiznsvncoming on for ordfirs, this day thc:
- the: fan¢w«§mg':-
ORDER
A””‘Th¢E;”se-éiétitions are filed under Sections 391 ta
H pf Companies Act, 1956, (for short herelxlaftc’ r
to as the ‘Act;’}, for obtaining the sanction of the
VT to the Composite Scheme of Arrangement
V’
..4,.
(hereinafter called as the “scheme”) between
Airlines Limited (Kingfisher), Deccan _
(DCL), and Deccan Aviation Limited (Deocaza-,’~. jg, %
2. DCL, the ‘ ‘ ‘~ ‘ 1: AA
Co.P.No.45/2008 was i11corpV:;1*:zg,tcd ‘ux3′{
the Registrar of Comp_:_-miss,
Aviation Training Limiaéa- % or Kingfisher
Aviation to Deccan
honsequent to change
of naméV'”wai*s. which was issued by
the Rc_g_51str a ;’r-V of Kaxnataka, Bangalore. An
V’ ‘*1.1p~i:;<$:'{l£;t*:c sappy V Of"""i'.":'1V<:': Memorandum and Articles of
is produced at Annexum-A to the
V. Tilfiegistercd Ofiice of D01. is situated at
'I'ea;%£er, Level 12, UB City, No.24, Vittal Mallya
M'
– 5.
3. The authorized share capital of D01. is
Rs.100,000,000/~ comprising of 10,000,000 oijazity
shares of Rs.10/– each. The issuod and
capital of the oompany is Rs. 100,000,000;
of 10,000,000 equity shares of Ifiis.
up and paid capital is ~
5,000,001 equity sharos of 5 up
and Rs.3,999,999.20 equity
shares of Rs. 10/ – paid up,
tomimg, of 000.34 ,
DCL is to own, manage, run
v _ch;.m0r_j handle and operate all types
in air transport for the carriage of
mails and other items on all routes
‘-and B1100 on national and international level subject to
H in force and to act as commission agents,
‘ V’ agents, idonting agents, travel agents, fleet
V’ owners, garage owners, service station owners, cargo
V
-5-
superintendents, cargo owners, leading and
contractors, eouriers, liaisioners, charterers, A’
tour operators, etc.
5. The Board of Directors of.fl:1e-DCL: ‘A 2
and adopted the Scheme of éit”
held on 31.1.2008, by vel:1ieh,–“a’ rt er ‘V ‘
Service Operations Un€3,ertak:zA.’n””gA. ‘Deecafi ‘is
to be transferred to Scheme cf
Arrangfsfiierit the Charter Services
Operatiene into the petifioner-
company uiidet the pifiosiieions of Sections 391 to 394 of
” “the “Af:’t. itjs afipmved by this Court, it will take effect
Appointed Date, i.e., 15* January,
to the petitiimer-company, the Scheme
of is in the interest of the company and its
VA je;@ha1’e};’1o1ders and creditors.
V’
. 7 ..
This Court dispensed with tha convening of
meeting of equity shareholders, secured and
creditors in CA.No.210/2008. Thereafter,
the Co.P.No.45/2008 is filed by the DCL…._!§I§$ic§é.::§f_ mg «
petition was published in 4′
Ka1nataka”on 16.5.2008. .
6. Kingfishc-.rV, th1:. “”‘ in
Co.P.No.46/2008 was%i:1corpai~gLtea§;unA25.7.2oo4 with
the R<7giSh'af::of A taka. Its Registered
Offioe Level 12, UB City, No.24,
Vittal A}3.%af1g:alore~1. An up-to date copy of
V' .Me£ii'bra§1dum of Assidciafion and Artriclcs of Assoc1a.' tion
Vpwd' Anncxureg -A, to the petition.
authorized sh are capital of Kingfisher is
" .f».:Rs';}1..1,$G0,000,000/— comprising of 425,000,000 equity
of Rs. 101- each amounting to Rs.4,250,000,(}OO
" 72,500,000 6% redeemable preference shares of
V5
.3.
Rs.1()0/~ each amountixlg to Rs.7,25{),000,00(}/«. The
issued, subscribed and paid up capital of the
is Rs.4,0{)4,1}. 1,500/ – comprising of 303,4 I
shares of Rs.10/- each fully paid up,”
Rs.3,034,11 1,500/~ and 9,7ceoi,boo «L we
preference shares of Re,,1Q0/-A”-eiaeh,
Rs.970,000,0{)O/~.
8. The main set out in the
czlia is to establish,
mainf33’An” ” transport operations,
inc1uc1in§e,a?i:~ air lines and lines of aerial
‘ _ ee=ij(i:e_’g{;afneee (iI’3e–1–udi11g scheduled passenger air
and lines, and chartered domestic
ii eerviees and lines) for carriage of
baggage, mails, fmight, cargo and
iieiagegfganandise of all and every kind and description
. K jzérhetlner as principals, agents or otherwise and to set up
V’/>
.. 9.
flying servims both as private and public carriers (:11
national and inttz-.rnationa1 routes, etc.
9. 011 31.1.2003, the I~3oard of
Kinfisher approved the Scheme. Thfi .
Scheme of Arrangement pro;’):;’)seE{4′
Commercial Airline Divisign Untiartakjiig. % bf the .
Petitioner-company into 911 ‘$2 é:g:oi:r1g:’f.conoem
basis. The demerger Airline Division
” intc: Deccan on a
going under the provisions of
Sections Act.
V’ ABYZ order dated 20.3.2008, in
this Court has ordared convening the
. shareholders, smured and tmsecurtxl
cmditofs. The advextisement of notice mnvening the
V’:-V was published on 27 .3. 2008 in “Asian Age”
. “Vijaya Karnataka” newspapers, fixing the date of
F”
-19-
meeting as 17.4.2008. Accordingly, en fhe
meeting of preference ‘ :.A_1:~ ,,,,
sharehelders, eeeured and
held. One preference shaxjeigolder’ lee-1ding” ,
redeemable nex1–cumulat1″§?ew.:._V”V’p1;fefei”er§eev’: of
Re. 100/ – each fully’ Ht1″1Je scheme.
Eleven equity eharehelders equity
shares of voted in favour
and The meeting of the
__ theweempany approved the
scheme Six secured creditors, to
wieem Rs.’3x,94() ,’$§28v,:949/~ was due, voted in favour and
‘V eerie «against the scheme. The meeting ef the
of the company approved the scheme
bfreqixieife majority. Twenty unsecured creditors to
V” whemks.1710,00,25,692.29 was due, voted in favour
none veted awinst the scheme. The meeting of the
creditors approved the scheme by requisite
In/*
.1}.
majority. Thereafter C0.P.No.46/2008 is rgai.
Kingfisher on 25.4.2008. Notice of %..’v.–.;;s? ”
published in “Asian Age” “I
newspapers on 16.5.2008.
11. I)eocan.v in
Co.P.Na.47/2003 1995 in the
name of with the
Registrar The name of the
Aviation Limited and
of 1769316 i Ssa,1€d A’aIV1 u14.3.20O5 by the Rcgisuar cf
“”” The Regstemd Ofiioe is
Cunningl1am Road, Ba.ngaloIe-2. The
of Association and Articles of Association
isjprddtfced at Anncxure-A, tn the petition.
A’ The main objects of Deccan under which it is
-Vv-vgalidly entitled to and carries on the business of charter
.13.
and schedulad airlines business are set the
Memorandum sf Association.
12. The authorized shaié 7. AV
Rs.5,000,00(),0OO/ — comprising ._o f .
shares cf R-s.10/- each, ta
and l,O0,00,000 piuigmtiéé of; ~ each
amcunfing Rs. subscribed
and paid «as on 31.5.2008 is
Rs. of 1,358,682.13 equity
up.
T116″ Directors of the company
this” in its meeting held on 31.1.2008,
__which, the Charter Services Opcratifins
the petitioncpconapany is proposed to be
.’ to DCL and the Scheduled Airline Divisian
V of Kingfishar is proposed to be demerged
transferred into the petitiox1e:r-company on a going
f\/5
.13.
concem basis and the goodwill, if any, arising after
giving effect to tha aocountillg treatment as in
para- 13 of the Scheme shall be set ofi_’_.– thé’:
securities premium amount 2008. The reduction of as mentioned above in this $1.3 L'
integral pan of this ‘got separate
process in term$ of to 103 of the
Act as the saiv 41 c__ Visitinlfir chm’ inishing of
liabilifiiegs share capital or any paid
up ii-‘atack Exchange and National
Stqigék conveyed their No Objection to the
this Composite Scheme: of arrangement in
agfient. No objections received
said Stock Exchanges am produced at:
A’A11:;e§ii1rc-H to the petition.
14. It is pI'(}12}()S€d to ccmsolidatc the two
u”S<:hedu1cd Airline business of Kinfisher and the
{A/'
. 34,.
petitioner—company in a single entity to create a more
competitive business, both in scale and of
operations. The proposed consolidation
optimizing cost, revenue and capital
to overall shareholder value i 7. ii
operational synergies. Henoe, tl1e_1’Compos.iteV”So1V1eiile’of L’
Arrangement is proposecl” d_eme1’~*ge’ {he
Airline Division lg :«gffi’I<..':n@sl1ei* into the
petitioner-eorlipany -a basis. The
den:;.erge.AriAirline Division Undertaking
of lungzfi" Q' :_&xe§Vi";ietitioner-company on a going
' is "proposed under the provisions of
to 394 of the Act. The said Scheme will
._ the demerger appointed date, i.e., lst 03"
Kpril; : 2053.
V is l”15. The Composite Scheme of Arrangement also
‘efoposes to transfer the Charter Services Operations
H Undertaking of the petitioner-company into DCL under
r’/’
– 15 ..
the provisions of Section 391 to 394 of the Act end the
same, if approved and sa.I1etioned_ by this
take efieet from the Slump Sale AppoiI1te;i:1a;
of January, 2008. The Charter ” ef _
the petit3’ener–eempa11y, which 2
approximately 2% of the tetal
company is being eff e;”eeparéimen’iE.ity.
16. As per ef Arrangement,
pu1:’rsue1’1t.:’:iv:fgo ef the Charter Services
Opeiaffiens of the petitioner-company into
DCL, aéguxgd of shall be paid by DCL to the
‘ V’ . “pé;ti’i;i-ener-company as eonsideratien. Further, as per
Scheme of Arrangement, pursuant to the
‘A ef the Scheduled Airline Division Undertaking
AA of ‘fiiiigfieher into the petitioner-company on a going
V’ * basis, the petitioner–eempany shall allot equity
shares of the face value ofrs.10/- each credited as fully
paid up in the capital of the petitioner-company, to the
F/\
.. g5 ..
shareholders 01′ Kirlgfisher, whose names appear in the
Register of Members en the Record Date in the
ratio: “3 equity shares of Rs.10/- each in
company shall be issued and
paid up equity shares of V
Kingfisher” and as xegansjs-37:33 fiiefeieaneei
Kingfisher, foflewieg K i be issued
and allotted by to the preference
shareholder’ ef H V ” fiemerger Record
Date: __” up 6% redeemable non-
‘ share of 123.100/~ in the
pefitienez;-ee$:1f§enf§’eha11 be allotted for every 1 (one) 6%
f nemetnnuletive preference share of
. %%’e:2s;1ee{1;+ held in Kingfisher.”
Z This Court by the order dated 20.3.2003 in
‘TCA.bvfe.208/2008 ordered convening the meeting of
shareholders, secured and unsecured creditors.
‘ Accordingly, the advertisement of convening the meeting
W
– 17 .
was published on 27.3.2008 in “Asian Age” and “Vijaya
Karnataka” fixing the date of meerfmg as 17.433008.
Accordmgly, on that day, the meeting was
the Chajrmanstlip of Dr.V1jay Maliya.
13. Ninetyeight ‘
9,2 153,755 equity shares.uf__Rs. in each. x %
voted in favour of the ‘V arid. ‘V’Sh$’1;rehoiders
representing 58 itii” fully paid
UP: ‘?€itéd~- gfigam}, ‘ 6 votes were invalid.
The silareholders of the company
apprgfnved . by requisite majority. Eight
V’ ._ Whom Rs.788,33,72,807/– was due,
and none voted against the scheme. The
the secured creditcrs of the company
AAapp1’oxfé:d the scheme by requisite majority. 18
creditors to whom Rs.26,75,280,389/- was
V. _ flue, voted in favour and name voted against the scheme.
The meefing of the unsacured creditors approved the
M
. £8.
scheme by requisite majority. Themafier,
Co.P.No.4′?/200313 filed by Deccan on 25.4.2OQ’ég ‘.The
notice of the petition was published in “As_iai1’ _
“Vijaya Kaxnataksa” an 16.5.2008, as V.
Court.
19. The Regional = %’
Affairs, Southern R€:giOI1′,.’ ‘=.¢»h<:n1]a ]';_ his
objactions in the ugh Sri
v.c.:)avey,}1;e of'<:omp; mas. Bangalore, in an
thesetxn-cc; in the aftidavit, 5 to 7
Gbjfifififllfifi"Wfi3rEVfai§':d;"'£h€ Assistant Solicitor General of
appeaI;iIig"""OI1 behalf of the Registrar of
to only three objections, submitted
flfit valuation of 125.69 crores, for the sale of
ACha1'taf'Services Operafions Undertaking of "Dccwn" to
as found in Clause 5 of the Scheme, are not gven.
further submitted that the change of name of the
companies causes confusion to the public and therefore
V2
– 19 –
tha procedure as contemplated under Sections 21 and
23 of the Companies Act has to be followed. He fiiither
submitted that the United Breweries (Hoidi:igS}
has; violated tha provisions of Section
in not taking permission by the
while acquiring the shares;
20. One of the “V”<§l'iarehdId:6fs H namei
M.R.Ravincira.na.th, filed an
appiicaticfl ";:§:i'1:i1i3i§i<;1*i' "Ito have his say in the
matte:i*_Aas4'_ he the two shareholders wha
0i3fj)t)S€dV'fi'.1{i% "~.–""i'hc said application is opposed
* _ b3/i_: mtiti<iiiei*s–.–« " However, Sri Ravindranath was
"have his say in the matter. He is
Sri B.V.RamaI1, learned advocate. It is
submiifitd by Sri B.V.Raman that the demcrger may
the interest of workmen, inasmuch as there will
. K desparity of Wages among the workzazien bekmging to
Kingfisher and Deccan. He further submits that in
if/\
.29.
order to avoid the stamp duty, ma
compaznies have planned for the
demcrgcr.
2 1. Clause-5 of the Sfiilgme ”
of Rs.69 crorcs for sa1e ref to
DCL. The by DCL
Within 30 froziaiu “I’7’_¢fl’ect:’tve: Date or
such daié by the Board sf
regard it is contended
by General that the detailed
4′ AI:’e§w:-“~”Lthe sale consideration of Rs.69
is “at, is not forthcoming. The said
V be accepted, inasmuch as M] s.C’xrant
.’ Lilone of the lcadm g Accountants, who have
the charter scrviccs operations/business carfxzd
2 by Deccan at Rs.69.I0 Crores. ‘While doing so, the
Chartered Accountants have taken intc consideration
various relevant factors. T 6’ report contains every
.23..
detaii and is self explanatory. The value of the hr.-:s>iness
is not an exact. science and ultimately
what it is worth to a serious investor or
be Prepared to Pay a substiéntial The »7
valuation of charter business of
is carried out by M/=Tho.;V.’nEo_i_”1
flow method, not aeset oompmable
company market ‘Based on such
valuation. of the charter
33.5931 million, i.e., R859. 10
of M/s.Grant Thornton is
Court. The same was also made
shareholders, creditors for their perusal.
report. was also sent to the Offiee of
Government. They have not raised any
* objecfion for the report till filing of these petitions. Only
1% months after film’ g the petitions, the said’
u ” objection is raised by the (‘entral Government. As
W’
.22.
aforementianed, the said objection cannot be sustained
in View of the fact M/s.Grant Thornton, have’ into
consideration various factors and as
business. More over the va1ua_t;i9I_1 is
all the shareholders and creditdcs
I This Court cannot sit ~
wisdom of the shareho1d¢r«.,{;ne Sections
391 and 394 of the nature of
information ma “furnished to the
meifibgrfi rfifiiiitprs’ befcre taking a decision with
. to of scheme of
<§1§:tzit:;:ge1*.;/aa:ai;§1'§g;a.Iijation. It is not in dispute that such
'V and decumcnts are furnished. When once
._ is taken with requisite majority for
ciemefger; it is not open for one or two members of the
" to abuse of the process of the Court. Thus,
said contention fails.
V
.23.
22. With regard to change of name as
aforementioned, the learned Assistant ‘So1ici’i:§r:.{52-seiaeral
submitted that the change of the name
would cause confusion to the Vi” j x
approval of the Central bee’ ‘
change of name as per’ Sefition “R2 1 . 0&7, There
cannot be any dispuize hesie to take
necessary permissieii.’ .AA(§e1:fra1 Government
under 01′ name. This
I similar situation, has ruled
that as it relates to change of name
beco11ie..Ve; )ere3:.t:ive only after obtaining permission
f Central Government as required under Section
2 ¢:r7£m~_. In View of the same, in this matter also, it
made clear that the change of name will only
” ‘ obtaining approval of the Central Government
required under Section. 2 1 of the Act.
V’
. 34 .
23. The further submissien of the learned
Assistant Solicitor General is that the UriitedV.i3ife’s§7e1ies
(Heldings) Limited, has violated Section 1(}:8’+i’&;it:j_tiid
net take permission (If the
acquiring shares. Thougli it 3 1: :;_ fhe ‘
petitioners that ef
applicable to the facts of course of
arguments, Sri (Jdaya senior counsel
appearing on ‘of submitted that
already. ieflieetged by the Central Government
agaJI1’ ‘awaited (Holdings) fer initiatmg’ action
egriiier of the Act. It is also brought to the
the Court that the said United Breweries
. already replied to the said” notice. 1:” it is
objection does not hold good any more, as
” = proceedings will take place under Section 108«–A
* 4 ii ‘of; the Act.
V
.Q5..
24. Except the aforementioned
no ether objections were raised by H
Solicitor General. Though
raised by the Registrar or u;e’es:fi:atem¢:m sf» %
objections, as the said objections are .x}{GiV’:p1;é§ssed into
during the course ‘fields that
those objections are not? Siifrseqiienfly.
25. is ‘contended by one of
the O’bj’éLt1.5ife that aspect of payment
of is net mentioned in the
scheme. -~ also cannot be sustained,
” ., stamxfl “p~<:iuty is payable only after sanctiorfing
It is net necessary to specify the stamp
scheme. Immediately aiter sanctioning of
Athe sefieme, the valuation report will be prepared and
the petjtieners are liable to my the stamp
iduiy as per law.
V
. 25 –
26. The another objection raised by Sri
Ravindranath is that the interest of the workmen
be safeguarded. Aceording to him,
desparity of wages if a portion of fise “=
company is merged with
statement, it is made elear”by–.j;he over: *
after demerger, the workmcn__i§ifilI__dxa.w .fl*1eT. salary
as they were drawing’ ‘» tier; If it
is so, there wmbc wgrlnnen at all.
More ‘over, 1 has approached this
Court by
3 ‘2?’~.. Via the petitioners, the proposed
V. Scheme will be beneficial for the
{.§_’v’v»petitioners, and creditors and W11’ 1 result in
-V mofe business. The proposed amended
K V’ V’ Scheme of Arrangement will be beneficial
‘ the overall interest of the companies in question
” their respeo °ve Members and Creditors and will
in/3
~27.
facilitate scaling up of operations, full time
attention, appropriate funding as wo11__ :”agV T b
development on a standalonoii
enhance shareholder valuo, toe of V o
amended Composite Schomo said
submission made by «suppoftod by the
sharohoiders, by not
raising any In this
View of to sanction the
amendod ‘ Arrangement proposed
by the Accordingly, the following
order; is m.ado:’¢ .. V’ V’
V ” Composite Scheme of Arrangomont
. {he petitioners-companies is sanctioned.
will be binding on equity shareholders,
creditors and unsecured creditors of the
‘ – –. ” po3;itionors-conxparzics.