In Re: Sanvijay Alloys (P.) Ltd. vs Unknown
2004 Latest Caselaw 556 Bom

ORDER

Anoop V. Mohta, J.

1. The present Company Petition has been filed in the matter of Scheme of Amalgamation of Sanvijay Alloys Pvt. Ltd. and Sanvijay Industries Pvt. Ltd., Sanvijay Steels Pvt. Ltd., with Sanvijay Rolling £ Engineering Ltd.

2. The Petitioners Company are the first Transferor Company having its registered office at 502, Gupta Bhavan, Ahmedabad Street, Carnac Bunder, Mumbai, with effect from 1-12-2003.

3. The Second Transferor Company are Sanvijay Industries Pvt. Ltd. having its registered office on the same address of 1st transferor company.

4. The third transferor company is Sanvijay Steels Pvt. Ltd., having its registered office at 504, Raghav Ratna Tower, Chirag Ali Lane, Abidas, Hyderabad 500 001 (A.P.). All these Companies therefore, hereinafter referred as "Transferor Companies".

5. The transferee Company Sanvijay Rolling and Engineering Ltd., having its registered office at 502, Gupta Bhavan, Ahmedabad Street, Carnac Bunder, Mumbai-09 (Maharashtra).

6. The details of the respective share capital have been incorporated in the Scheme, as well as, in the petition. The Transferee Company hold 37020 equity shares representing 92.5 per cent equity share capital of Second Transferor Company, i.e., Sanvijay Industries Pvt. Ltd. The transferee Company hold 28,60,400 equity shares representing 90 per cent equity share capital of Sanvijay Steels Pvt. Ltd., i.e., third Transferor Company. The transferee Company hold 1,38,000 equity shares, representing 93 per cent equity capital of Sanvijay Alloys Pvt. Ltd., i.e.t first transferor Company.

7. The Scheme of Amalgamation (for short "scheme") is based on various synergies between the transferor companies and transferee company, which includes operational, technical, and marketing. This Scheme has further objectives to remove the Corporate barriers, the technical expertise, human resources and other resources will be utilised fully and it will give organizational strength to all the companies. All the workers of the transferor companies will be taken over by the transferee company at their present or better terms of employment without any break in the services or loss of past service. From the effective date, there will be transfer of undertaking, debts, liabilities, and employees. From the appointed date, exchange ratio is also fixed. All the transferor companies will be dissolved without being wound up. The word "undertaking", as per the scheme covers and shall mean and include all the assets and properties, debts, liabilities, duties and obligation of transferor companies, reserves movable and immovable properties and other right, title privileges, interest etc.

8. All the companies will follow the due procedure and will have to comply with the provisions of law. There are no investigation proceeding going on or pending against the companies under Sections 235 and 251 of the Companies Act.

9. By order dated 23rd January, 2004 in Company Application No. 15/ 2004, this Court has dispensed with the holding of meeting of the shareholders, in view of the consent letter, given by the shareholders, 99 per cent equity shares of the company petitioners. The meeting of the creditors was also dispensed with, in view of the averments, made in para 24 of the petition in respect of the summons for direction. The petitioners company undertook to issue the notice of the date of the hearing of the petition to all such creditors.

10. The present petition was filed on 30th January, 2004.

11. The petition was admitted on 13th February, 2004 and fixed for hearing on 25th March, 2004. To prove the service of the notices and publication and issue of notice to the creditors, and affidavit dated 12th March, 2004 is part of the record.

12. The Official Liquidator, by its common report, dated 19th April, 2004 in Company Petition Nos. 78, 79 of 2004 connected with Company Application Nos. 15 and 16 of 2004, after considering the auditors report, endorsed that the affairs of the transferor company namely Sanvijay Alloys Pvt. Ltd. and Sanvijay Industries Pvt. Ltd. have not been conducted in a manner prejudicial to the interest of its members or public interest

13. The Regional Director, Western Region, Department of Company Affairs, has also filed its affidavit dated 21st of April, 2004 in Company Petition Nos. 78 to 80 of 2004 connected with Company Application Nos. 15 to 17 of 2004 and also endorsed that the scheme is not prejudicial to the interest of the creditors and shareholders based on the report signed by the concerned Registrar of Companies.

14. Heard parties. The statements were made that they have not received any objection in the present petition. Considering the merit, object and purpose of the scheme, and as, all the necessary and requisite formalities have been compiled with based on material and documents on record as required under the law and as there is no illegality or unreasonableness, have been pointed out and as the scheme is fair, just and reasonable based on the commercial need and demand, I see there is no reason to refuse the sanction as prayed.

15. The objection in Company Petition No. 80/2004 connected with Company Application No. 17/2004 by one Vimal Alloys Pvt. Ltd. who claimed to be the creditor of Sanvijay Alloys Pvt. Ltd., that itself in no reason to disapprove the scheme. The claim of the creditors is disputed and alleged to have been false and baseless. This dispute in question cannot be gone into at this stage. By an affidavit dated 6th April, 2004 in Company Petition No. 80/2004, after considering the merit of the creditors objection and even on merit it was pointed out there is no amount due and payable to the said Virnal Alloys Pvt. Ltd. Apart from the affidavit, the detailed statements have been placed on record, as of dated 24th March, 2004 referring to accounting year 1998-2000. The claim of the objector is of 31st of March, 2000 of amount of Rs. 1,77,036. Therefore, argued that such claim is false and baseless and is time-barred. No notice of any suit or proceeding has been received by Sanvijay Alloys Pvt. Ltd. There is a positive averment made that neither the Sanvijay Rolling and Engineering Ltd. nor any of the Transferor Companies are making any compromise or settlement with any of the creditors. The interest of the creditors of the petitioners company or of the transferor companies will not be affected. All the assets and liabilities of the transferor companies are proposed to be taken over by the Sanvijay Rolling and Engineering Ltd., on its book value, as on the appointed date. The full opportunity was given to the objectors to raise their objection. However, in spite of this no one appeared to oppose the present petition at the time of hearing.

16. Shri Parikh, Counsel for the petitioners Company has relied on Mayfair Ltd. and Zodiac Clothing Co. Ltd., In re and relied on which is reproduced as under :

"8. I hasten to all that I do not and should not be construed to have said that in every case, before sanctioning of the scheme under Sections 391 to 394 the objecting creditor must either be paid off or be sufficiently secured. It must be remembered that the petition for a sanction of a scheme under Section 391 of the Companies Act is not a tool in the hands of the creditor to recover the debt or to coarse the company to pay, especially when the debt is not admitted. The objecting creditor must show to the Court that the scheme is not admitted. The objecting creditor must show to the Court that the scheme is mala fide or fraudulent and is likely to adversely affect him or the creditors or the class of creditors to whom he belongs. This has been my view which I have already expressed in the case of In the matter of Scheme of Amalgamation of Zee Interactive Multimedia Ltd., 2002 (4) Bom. Cr. R. In order to get any relief, the objecting creditor must show :

(i) that there is a debt due to him and the debt is either admitted by the company or the Court prima facie comes to the conclusion that the debt is due.

(ii) that the creditor would be adversely affected by sanctioning of the scheme.

(iii) the scheme is unjust and unfair to the creditors or any class of creditors to whom the objecting creditor belongs." (p. 677)

17. In the present ease also, the principle laid down, as reproduced above, applies and as the creditors or objectors amount is not admitted and there is controversy and disputes, which according to me cannot be gone into at this stage of sanctioning of the scheme like this. The provisions of Sections 391 to 394 cannot be utilised or permitted to recover disputed debt or money. Such creditors, have other remedy to pursue and recover their amount dues. There is no gross cases or illegalities have been pointed out by the said objectors in his affidavit that the scheme is mala fide or prejudicial and unfair by the such creditors or any such class of creditors to whom the objector or creditors belong to. There is no material to show that the amount due, as claimed by the objector, is an admitted liability to be paid by the companies. It is not the case on record that the Companies arc not sound and/or would not be able to pay its debt. In the present case, the balance sheet on record shows that the transferee company is financially sound. All the companies are financially sound. Nothing on record to show that the creditors like present objectors would affect, if the scheme as such, is sanctioned.

18. There are no other objections on record.

19. The commercial exigencies and need of particular company and its shareholders and reason for the respective decisions or Resolutions, in absence of any serious objection or prejudice to anybody, the Court will not sit over to reassess the wisdom of the Scheme. The scope of judicial review in such matters is very limited and definitely is not as that of an Appellate jurisdiction, unless whole scheme is unfair, unreasonable, contrary to law and public policy.

20. In view of the above, the scheme is sanctioned as per prayer clauses (a) to (j) with liberty.

21. Costs of Rs. 2,500 each to the Regional Director and as well as the Official Liquidator to be paid by the petitioner within four weeks from today.

Parties concerned to act on a simple copy of this order, duly authenticated by the Court Stenographer/Company Registrar of this Court.