Gujarat High Court
Mafatlal Denim ... vs . .....Respondent(S) on 8 April, 2013
Author: R.M.Chhaya
Bench: R.M.Chhaya
MAFATLAL DENIM LIMITED....Petitioner(s)V/S. .....Respondent(s) O/COMP/29/2013 ORDER IN THE HIGH COURT OF GUJARAT AT AHMEDABAD COMPANY PETITION NO. 29 of 2013 In COMPANY APPLICATION NO. 374 of 2012 TO COMPANY PETITION NO. 30 of 2013 In COMPANY APPLICATION NO. 375 of 2012 ================================================================ MAFATLAL DENIM LIMITED....Petitioner(s) Versus . .....Respondent(s) ================================================================ Appearance: MR AS VAKIL, ADVOCATE for the Petitioner(s) No. 1 MR.SANDEEP SINGHI FOR SINGHI & CO, ADVOCATE for the Petitioner(s) No. 1 MR B.C.MEENA, OFFICIAL LIQUIDATOR MR M.IQBAL A. SHAIKH, ADVOCATE FOR THE CENTRAL GOVERNMENT ================================================================ CORAM: HONOURABLE MR.JUSTICE R.M.CHHAYA Date : 08/04/2013 ORAL ORDER
1. These are the petitions filed by the two petitioner companies for sanction of the Scheme of Arrangement and Amalgamation of Mishapar Investments Limited and Mafatlal Denim Limited with Mafatlal Industries Limited and their respective shareholders and creditors (Scheme).
2. The Petitioner of the Company Petition No.29 of 2013 i. e. Mafatlal Denim Limited, had filed an application in this Court being Company Application No.374 of 2012 for requisite directions for dispensing with the convening and holding the meetings of the Equity Shareholders, Secured Creditors and Unsecured Creditors of the said Company. This Court vide its order dated 21.12.2012, dispensed with the meeting of the Equity Shareholders in view of the consents and approvals to the Scheme received from all the Equity Shareholders. Further, the Court also dispensed with the meetings of Secured Creditors and Unsecured Creditors of the said Company in light of the fact that the rights and interest of the Secured Creditors and Unsecured Creditors of the said Company were not affected by the Scheme.
3. The Petitioner of the Company Petition No. 30 of 2013 i.e. Mafatlal Industries Limited, had filed an application in this Court being Company Application No.375 of 2012 for requisite directions for the convening and holding the meetings of the Equity Shareholders of the said Company. The said Company had also prayed for requisite directions for dispensing with the convening and holding the meetings of the Sole Preference Shareholder, Sole Secured Creditor and Unsecured Creditors of the said Company. This Court vide its order dated 21.12.2012, inter alia, directed convening and holding the meeting of the Equity Shareholders of the said Company. This Court vide its aforesaid order dated 21.12.2012 dispensed with the meetings of the Sole Preference Shareholder and Sole Secured Creditor of the said Company in view of the consents and approvals to the Scheme received from the Sole Preference Shareholder and Sole Secured Creditor. Further, this Court had also dispensed with the meeting of the Unsecured Creditors of the said Company in light of the fact that the rights and interest of the Unsecured Creditors of the said Company were not affected by the Scheme. This Court also held that no separate procedure was required to be followed for reduction of Share Capital in the form of utilisation of the Securities Premium Account as the same was part and parcel of the Scheme.
4. Notice of meeting was sent individually to the Equity Shareholders of the Petitioner of Company Petition No.30 of 2013 i.e. Mafatlal Industries Limited, pursuant to the Order dated 21.12.2012, together with a copy of the Scheme, the Explanatory Statement required under Section 393 of the Act and the form of proxy. The notice of meeting was also advertised as directed by the Order dated 21.12.2012 in Indian Express , Ahmedabad Edition and Sandesh , Ahmedabad Edition on 03.01.2013. Mr.Hrishikesh A. Mafatlal, the Chairman of the meeting has already filed the requisite affidavit under Rule-76 of the Companies (Court) Rules, 1959 dated 07.01.2013 in respect of service and appearance of advertisements of the said notice. The arrangement embodied in the Scheme was approved with requisite statutory majority by the Equity Shareholders at the meeting held on 01.02.2013.
5. The Petitioners thereafter filed Company Petition Nos. 29 and 30 of 2013, seeking sanction of the Scheme. This Court by its orders dated 08.02.2013 admitted the aforesaid Company Petitions and directed issuance of notice to the Regional Director and to the Official Liquidator in the case of the Mafatlal Denim Limited. This Court also directed publication of notice of petition in Indian Express , Ahmedabad Edition and in Sandesh , Ahmedabad Edition.
6. Pursuant to the order dated 08.02.2013, the Petitioners have published the notice of hearing of the petition in Indian Express , Ahmedabad Edition on 16.02.2013 and in Sandesh , Ahmedabad Edition on 16.02.2013. The affidavits dated, 20.02.2013, on behalf of Mafatlal Denim Limited, and 24.02.2013, on behalf of Mafatlal Industries Limited have been filed confirming the publication of the notice in the newspapers as directed and also the notice of hearing of the petitions being served upon the Regional Director and the Official Liquidator.
7. Pursuant to the notice to the Official Liquidator in respect of Mafatlal Denim Limited, report dated 19.03.2013 is filed by the Official Liquidator in Company Petition No.29 of 2013. In the report at paragraph-14 it is, inter alia, stated by the Official Liquidator that the Petitioner Company has not complied with Section 269 read with Schedule XIII of the Companies Act, 1956 for obtaining the prior approval of the Central Government regarding reappointment and payment of managerial remuneration to Mr.Rajiv Dayal and Mr.Vishad P. Mafatlal.
8. In response to the notice to the Regional Director, Ministry of Corporate Affairs, the Regional Director has filed his affidavit dated 22.03.2013. A perusal of the affidavit of the Regional Director discloses that there are three observations made by the office of the Regional Director. The first observation being with regard to a rehabilitation scheme of Mafatlal Industries Limited being sanctioned by the Board for Industrial and Financial Reconstruction (BIFR) and directing the said company to place the relevant facts on record of this petition. The second observation is with regard to directing Mafatlal Industries Limited to strictly comply with the requirements of AS-14 read with Section 211(3A) of the Companies Act while recording the accounting entries regarding amalgamation in its books and not to adjust the difference in General Reserve Account and also not to declare dividend out of such reserves. The third observation is with regard to directing Mafatlal Industries Limited, being a listed company, to issue the new shares in dematerialized form unless the members request to issue shares in physical form or it is not possible to issue the shares in dematerialized form.
9. Thereafter an affidavit in reply dated 28.03.2013 to the Official Liquidator s Report in Company Petition No.29 of 2013 has been filed by Mafatlal Denim Limited, stating, inter alia, that fresh applications dated 26.10.2012 have been made to the Ministry of Corporate affairs seeking its approval for the reappointment and payment of remunerations and that the same are pending.
10. Pursuant to the affidavit filed by the Regional Director, two affidavits dated 28.03.2013 and 08.04.2013 came to be filed on behalf of the Petitioners, inter alia, stating that the rehabilitation scheme is being monitored by BIFR and the present Scheme nowhere provides for any arrangement and/or compromise in respect of the rehabilitation Scheme sanctioned by BIFR and therefore no directions/orders are required to be issued by this Court. Also, clause-10.1 of the Scheme is in accordance with the AS-14 and therefore also, no directions pertaining to compliance of AS-14 read with Section 211(3A) of the Companies Act are necessary. Mafatlal Industries Limited, by its affidavit dated 08.04.2013, undertook to allot to the shareholders of Mafatlal Denim Limited shares in the dematerialized form.
11. Heard Mr. Sandeep Singhi for Singhi & Co, and Mr.Apurva Vakil, on behalf of the petitioner companies, Mr.M.Iqbal A.Shaikh, appearing for the Central Government and Mr. Ajay Kumar Meena, the Official Liquidator.
12. Having heard Mr.Singhi, Mr.Meena, and Mr. Shaikh, having considered the observations made by the Regional Director, and the observations made by the Official Liquidator and having perused the affidavits filed by the Petitioners, the Court is of the view that the said observations do not have any bearing in the eye of law.
13. Considering the entire facts and circumstances of the case and on perusal of the Scheme and the proceedings, it appears that the requirements of the provisions of Sections 391 to 394 of the Companies Act, 1956 are satisfied. The Scheme is genuine and bonafide and in the interest of the Shareholders and Creditors. I, therefore, accordingly allow the Company Petitions and approve the Scheme. The Scheme is hereby sanctioned. Prayers made in the respective Company Petitions are hereby granted.
14. The petitions are allowed accordingly. Fees of Mr.M.Iqbal A.Shaikh are quantified at Rs.7500/- in each of the petitions and for the Official Liquidator is quantified at Rs.7500/- in the case of Mafatlal Denim Limited. The said fees would be paid by the Petitioner Companies.
(R.M.CHHAYA, J.) Suchit Page 8 of 8