In Re: Morarjee Goculdas Spg. And ... vs Unknown
2004 Latest Caselaw 549 Bom

JUDGMENT

Anoop V. Mohta, J.

1. The present company petition has been filed by the company known as the Morarjee Goculdas Spinning and Weaving Mills Company Ltd., a company deemed to be incorporated under the Companies Act and having its registered office at Administrative Building, Morarjee Mills Compound, Dr. Ambedkar Road, Parel, Mumbai, whereby Sections 391 to 394 of the Companies Act have been invoked for sanctioning the scheme of arrangement whereby the Morarjee Goculdas Spinning and Weaving Company Ltd. (for short 'Morarjee', 'petitioner company' and/or 'transferor company' shall stand demerged or transferred to and vested in Canere Actives and Fine Chemicals (P) Ltd. (for short 'Canere' and/or 'transferee company' as a going concern with effect from 1 December 2003 in terms of the scheme of arrangement (for short 'scheme') without further act, deed, matter or thing pursuant to Section 394 of the Act, and, inter alia, for vesting the Tools Division of the petitioner company without any further act or deed in Canere.

2. The authorised issued and subscribed paid-up capital of the petitioner company passed on the latest audited account and balance sheet of the petitioner company for the year ended 30 September, 2002 and unaudited balance sheet for half year ended 31 March 2003 is as under:

  Authorised Capital                                           Rs. (in lakhs)
4,00,00,000 equity shares of Rs. 10 each fully paid-up          4,000.00
Issued, subscribed and paid-up 1,94,76,900 equity
shares of Rs. 10 each                                           1,947.69
Amount on 1,43,100 shares for feited                                5.54

 

3. The transferee company, Canere, has its registered office at 405-408, Navbharat Estate, Zakaria Bunder Road, Sewree, Mumbai. The authorised, issued, subscribed and paid-up shares of Canere is as under:
  Authorised Capital                                           Rs. (in lakhs)
1,00,00,000 equity shares of Rs. 10 each                         1,000
70,00,000 preference shares of Rs. 10 each.                        700

 

4. The latest audited accounts and balance sheet of Canere for the period ended on 31 December 2003 is annexed to the petition.
 

5. Pursuant to the object of the respective companies as set out in its respective memorandum of association, they have decided to have a scheme of arrangement in question.
 

6. By order dated 12 December 2003 and by further order dated 18 December 2003 in Company Application No. 544 of 2003 -- the court has directed the petitioner company to convey a meeting of its equity shareholders on 15 January 2004. The meetings of the secured and unsecured creditors of the petitioner company were dispensed with by the said orders.

7. The notice of the said meetings were accordingly sent individually to the equity shareholders of the petitioner with the copies of the said scheme of arrangement, the statement required under Section 393 of the Act, the form of proxies. The notice of the said meeting was also advertised, as ordered. The petitioner company accordingly has filed affidavit, proving publication of the notice convening the meetings of the equity shareholders of the petitioner company.

8. As per Clause 24(f) in the listing agreement between the petitioner company and the respective Stock Exchanges (Bombay Stock Exchange and the National Stock Exchange) -- a copy of the scheme was filed by the petitioner company on 28 November 2003 with both the Stock Exchanges. The BSE and NSE have both issued the no objection letters dated 13 January 2004 and 14 January 2004, respectively, to the scheme.

9. On 15 January 2004, meeting of the equity shareholders was held and the scheme of arrangement was submitted for their approval. By overwhelming majority, the scheme in question was passed, as referred to in paragraph 23 of the petition. The terms and implications of the scheme were briefly explained, and, after due consideration, it was approved. The Chairman of the meeting, Mr. Ajayji Piramal, has filed his affidavit verifying the Chairman's report dated 16 January 2004. As per the scheme, the effective date would be from the date of the certified or authenticated copies of the order of this court under Section 391 to 394 of the Act, sanctioning the scheme. There is no investigations pending or have been initiated in relation to the petitioner company under Sections 235 to 251 of the Companies Act.

10. As per the scheme, [under] Clause 5.4, reduction of share premium account is necessary. Therefore, procedure prescribed under Sections 100 to 104 of the Companies Act, read with the rules, has been complied with. A special resolution was accordingly passed with overwhelming majority on 15 January 2004, and the consent of the shareholders of the petitioner company have been recorded under Section 100 read with Section 78 of the Act. Notice was accordingly issued with the Explanatory Statement to the approval of the scheme of arrangement with the special resolution passed.

11. With all the necessary averments and documents, the company petition in question was filed on 16 January 2004, which was reverified on 26 March 2004. The reason for reverification is to add Nicholas Piramal India Limited (for short 'NPIL'), the successor of Canere Actives and Fine Chemicals Ltd., in pursuance of another scheme [see Nicholas Piramal (India) Ltd., In the matter of (2004) 3 Comp LJ 369 (Bom)].

12. By order dated 30 January 2004, the petition was admitted and fixed for hearing on 18 March 2004. The notices were issued to the Regional Director and upon all remaining creditors out of which notices to 188 unsecured creditors have been dispensed with in view of the averments made in paragraphs 3, 4 and 5 of the additional affidavit of Mr. Leonard D'Souza, dated 30 January 2004.

13. The Regional Director, by his common affidavit, dated 7 April 2004, in Company Petition No. 73 of 2004 and Company Petition No. 91 of 2004 after verifying the report of the concerned Registrar of Companies confirmed that the scheme is not prejudicial to the interest of the creditors and shareholders. The petitioner company has also filed affidavit, proving service, dated 23 February 2004.

14. The matter was called out and heard and there are no objections received on record or filed on record by any other parties. Counsel for the petitioner company has also made statement that there are no objections received in this petition, objecting to the scheme. Mr. R.C. Master, learned counsel, appearing on behalf of the Regional Director, has also made a statement that they have no objection if the scheme, as prayed for, is sanctioned.

15. The scheme in question, which is part of the record, takes care of the relevant aspects as required under Sections 391 to 394 of the Companies Act. As referred above, the scheme itself was modified by order dated 12 March 2004 and thereby instead of Canere, the name of NPIL has been added. Therefore, the scheme of arrangement provides and deals with and as [per] the scheme of arrangement, Morarjee Goculdas Spinning and Weaving Company Ltd. and Canere Actives and Fine Chemicals Ltd., now successor as NPIL, i.e., Nicholas Piramal India Limited. Pursuant to the scheme of amalgamation of Canere with Nicholas Piramal India Ltd., whereby Canere in the scheme of amalgamation with Piramal India Limited merged/ amalgamated and resulted into NPIL. It may be noted here that pending sanction of the demerger scheme by this court, Canere and Nicholas Piramal India Ltd. have proposed to enter into an arrangement as embodied in the scheme of amalgamation whereunder Canere undertaking would merge and amalgamate in NPIL with effect from 1 October 2003, being the appointed date under the scheme of amalgamation and, in consideration of NPIL to issue and allow preferential shares credited as fully paid-up to the equity shareholders of Canere as provided in the said scheme of amalgamation and, in the result, Canere should stand dissolved without winding up when the said scheme of amalgamation would become effective pursuant to the order, dated 6 February 2004, in Company Application No. 37 of 2004 filed by NPIL. A meeting of equity shareholders of NPIL was duly conveyed and on 8 March 2004 the said Canere merger scheme had been duly approved unanimously.

16. In this background, the application was moved to modify the above company petition to the effect that the reference to Canere, as transferee company, in the said petition, shall now be the reference to Nicholas Piramal India Limited (NPIL) -- a company into which Canere is proposed to be merged as transferee company and, accordingly, the Tools Division of the petitioner company, i.e., Morarjee Goculdas, which is to stand demerged and transferred and vested in Canere as a transferee company under the said demerger scheme with effect from 1 December 2003, i.e., the appointed date under the said demerger scheme, shall now stand demerged and transferred to and vested in NPIL with effect from 1 December 2003. The NPIL, instead of Canere, shall issue and allot 5% cumulative retainable preference shares credited as fully paid up to the equity shareholders of the petitioner company in the said proportion as stipulated in the demerger scheme, i.e., with [one?] preference share for every 5 equity shares of Rs. 10 each of the petitioner company; all the rights and obligations of Canere as transferee company under the said demerger scheme shall stand transferred to and become those of NPIL as the transferee company. As noted above, by order dated 12 March 2004, the said amendment was allotted and, therefore, under the present scheme, NPIL will be read in place of Canere in view of the merger of Canere into NPIL.

17. The scheme of arrangement considers the basic definitions, share capital, transfer and vesting of the Tools Division of Morarjee, i.e., petitioner in Canere and now NPIL, as a going concern, free from all encumbrances, but subject to the subsisting charges as mentioned in the scheme. The consideration of issue of shares, accounting treatment, conduct of business by Morarjee till effective date, profits division, bonus shares, etc., contract deeds and other instruments, legal proceedings, transfer of employees of Morarjee (Tools Division) have been dealt with in accordance with law. The usual provisions of modification and amendment to the scheme -- conditional or approval or sanction of the scheme, date of taking effect of the operative date has also been dealt with. Considering the scheme as a whole and its purpose, and after hearing the parties, as there is no illegality or any unreasonableness has been pointed out or objected to by anybody, the scheme appears to be sound, fair, reasonable and [within] the framework of law. All the necessary requisite formalities have been complied with. The majority of shareholders, after considering all the material, documents and requisite details have, by overwhelming majority, accepted the scheme of arrangement. In such circumstances, in view of the settled principle of law as referred to in Miheer H. Mafatlal v. Mafatlal Industries Ltd. (1996) 4 Comp LJ 124 (SC): (1996) 87 Comp Cas 792 (SC) and in the judgment passed by this court [Hon. Anoop V. Mohta J.], in Company Petition No. 120 of 2004 connected with Company Application No. 540 of 2003 Larsen & Toubro (2004) 3 Comp LJ 304 (Bom) (dated 22 April 2004), I am of the view that the scheme of arrangement in this case is required to be sanctioned as prayed.

18. In view of the above, the sanction of the scheme, as prayed, is granted. The Company Petition No. 73 of 2004 is made absolute in terms of prayer Clauses (a) to (c) with liberty. Parties to proceed in accordance with law.

19. Costs of Rs. 2,500 to the Regional Director be paid by the petitioner within a period of four weeks from today.

20. Parties to act on an ordinary copy of this order, duly authenticated by the Company Registrar of this court.

21. Certified copy expedited.