Gujarat High Court
Alembic vs Respondent(S) on 19 January, 2011
Author: Anant S. Dave
Bench: A.S.Dave
Gujarat High Court Case Information System
Print
COMP/45/2006 10/ 10 ORDER
IN
THE HIGH COURT OF GUJARAT AT AHMEDABAD
COMPANY
PETITION No. 45 of 2006
With
COMPANY
PETITION No. 46 of 2006
=========================================================
ALEMBIC
GLASS INDUSTRIES LTD. - Petitioner(s)
Versus
...
- Respondent(s)
=========================================================
Appearance
:
MR SAURABH N. SOPARKAR SENIOR ADVOCATE WITH MRS SWATI
SOPARKAR for petitioner :1,
MR PURVISH
J MALKAN for Respondent(s) :
1,
=========================================================
CORAM
:
HONOURABLE
MR.JUSTICE A.S.DAVE
Date
: 21/07/2006
ORAL
ORDER
1. These are the petitions filed by two petitioner companies for sanction of a scheme of arrangement in the nature of amalgamation of Shreno Limited, the transferor company with Alembic Glass Industries Limited, the transferee company under Section 391 read with Section 394 of the Companies Act, 1956.
2. Both the petitioner companies belong to the same group of management. The transferor company is a closely held limited company engaged in the business of manufacturing of machines suitable for glass bottle making machines and related products. Whereas the transferee company is a listed public limited company, engaged in manufacturing and marketing of all sorts of glass, glassware and other related products. Thus, both the companies are engaged in similar line of commercial activities which are complimentary to each other. Considering the huge contingent liability towards the ONGC, the transferee company had moved the BIFR for declaration of the petitioner company as a sick company. The same was granted to it by an order dated 13-1-2004. The Transferor company being in a stronger financial position, the amalgamation is proposed to enable the amalgamated company to get synergic advantages. The petitions give details of the advantages that would flow by virtue of the arrangement between these companies.
3. Vide the orders dated 28-2-2006 passed in the Company Applications No.79 and 80 of 2006, separate meetings of the Equity Shareholders, Preference Shareholders, Secured Creditors and the Unsecured Creditors of Shreno Limited, the transferor company and Equity Shareholders of Alembic Glass Industries Limited, the Transferee company were directed to be convened on 17th April 2006 and the same were duly convened in accordance with the directions issued and after due notice to the shareholders and creditorss. The notices for the meetings were also published in ?SIndian Express?? in English and the other in ?SLoksatta-Jansatta?? in Gujarati, both in Vadodara editions dated 21-3-2006. At the respective meetings, convened on 17th April, 2006, the proposed scheme was approved unanimously by the shareholders and creditors present at the respective meetings. Pursuant to the approval, the scheme was put for the sanctions of the Court vide the present petitions.
4. After the petitions were admitted, the same were duly advertised in the newspapers ('Indian Express' in English and other in 'Loksatta-Jansatta' in Gujarati, both in Vadodara editions dated 30th May 2006 and the publication in the Government gazette was dispsensed with as directed in the order dated 11th May 2006. No one has come forward with any objections to the said petitions even after the publication.
5. Notice of the petition of the petitioner Transferor company was served upon the Official Liquidator attached to Gujarat High Court. Vide the report dated 20th July 2006, filed by the Official Liquidator, it is observed that the affairs of the Transferor company have not been conducted in a manner prejudicial to the interest of its members or to the public interest.
6. Notice of the petitions has been served upon the Central Government and Shri P.J. Malkan, Standing Counsel appear for the Central Government. Shri Malkan has placed on record an affidavit dated 18th July 2006 filed by Deputy Registrar of Companies alongwith the letter of the Regional Director dated 17th July 2006 whereby certain observations are made by the Regional Director.
7. The first two issues raised by the Regional Director pertain to the compliance of Sections 94/97 and 21/23 of the Companies Act, 1956. The Regional Director seeks a direction to be issued to the petitioner company to comply with the provisions of Section 94 and 97 and 21 and 23 of the Companies Act, 1956.
8. I have heard Shri Saurabh N. Soparkar, learned Senior Advocate appearing with Smt. Swati Saurabh Soparkar, advocate for the petitioner companies. The submissions have been made by him explaining the issues raised by the Office of the Regional Director. It has been submitted that the principle of 'Single Window Clearance' is now extensively accepted by various High Courts including this Honourable Court. Under this principle, it has been held that when the scheme envisages various incidental proposals as an integral part of the scheme, the procedures prescribed under the Companies Act, need not be separately undertaken. In the present case, since the amendment in the Capital Clause and the Object Clause of Memorandum of Association and the Change in the Name of Transferee company are proposed as a part of the scheme, it is submitted that separate procedure is not required to be followed. The certified copy of the order of the Honourable High Court, sanctioning the aforesaid scheme is, as a matter of course, filed with the Registrar of Companies which confirms sanction of all the clauses of the sanctioned scheme. This is to be treated as an intimation to the Registrar of Companies and it has to take note of all the changes proposed and sanctioned under the scheme. On the issue of principle of 'Single Window Clearance', reliance is placed on the following judgments :
PMP Auto Industries Limited (80 Co. Cases 291) Manekchowk and Ahmedabad Mfg. Co. Ltd.
(40 Co. Cases 819) Rangkala Investment Ltd.
(89 Co. Cases 754) ICICI Bank Limited (112 Co. Cases 291) Which have been followed in number of unreported judgments of our High Court.
9. Further attention is also drawn to the clause 12.5 of the scheme which reads as under :
?SUnder the accepted principle of Single Window Clearance, it is hereby provided that all the above referred changes, viz. Change in Object Clause, Capital Clause and Name Clause shall become operative on the scheme being effective by virtue of the fact that the Shareholders of the Transferee company, while approving the scheme as a whole, have also resolved and accorded the relevant consents as required respectively under Section 17, 31, 94, 81(1A) and 21 of the Companies Act, 1956 or any other provisions of the Act and shall not be required to pass separate resolutions as required under the Act.??
10. It is therefore submitted by him that since the scheme specifically provides that the approval to the scheme amount to the special resolution and the scheme has been approved by all the shareholders of both the petitioner companies, it is not necessary to follow separate procedure for the compliance of the said sections.
11. The third issue raised by the Regional Director pertains to furnishing the NOC to the scheme from Stock Exchange before this Court. According to the Regional Director, it is mandatory for the Transferee Company to procure such NOC before the scheme can be sanctioned by this Court. The transferee Company which is a listed public limited company has filed an additional affidavit dated 19th July 2006, in order to explain its contentions that there is no such requirement in law. Reliance is also placed upon the judgments of Andhra Pradesh High Court in the matter of Compact Power Sources P. Ltd. and HBL Nife Power Systems Limited (125 Co. Cases 289) as well as Bombay High Court in the matter of Chemidye Mfg. Co. Pvt. Ltd. (2006 SEBI & Corporate Laws Reporter 10). While dealing with identical submission, the Bombay High Court has, in paragraph No.22 of the judgment referred to Clause 24 (f), (g) and )h) of the listing agreement entered into with the Bombay Stock Exchange (BSE). The Court has come to the conclusion after referring to the provision of Sections 391 and 394 of the Companies Act 1956 that non-compliance with the provisions of Clauses 24 (f), (g) and (h) of the listing agreement does not, by itself, bar a company from seeking sanction of a scheme of amalgamation under Sections 391 to 394 of the Companies Act.
12. So far as the case on hand is concerned, Shri Soparkar, learned Senior Advocate for the petitioner has referred to the additional affidavit filed by Shri Rashesh Shah, the Director of the petitioner company and submitted that in Clause 13 of the explanatory statement sent alongwith notice convening meeting of the equity shareholders, pre-amalgamation share holding pattern of the Transferor company and Transferee company (as on 28th February, 2006) as well as post amalgamation share holding pattern is referred to. Thus, the ratio laid down by Andhra Pradesh High Court in the case of Compact Power Sources Pvt. Ltd. (Supra) and in the case of Chemidye Mfg. Pvt. Ltd. (Supra) by Bombay High Court with regard to absence of any need to furnish the NOC by Regional Director from Stock Exchange is applicable and I consider it proper to reject above objection.
13. Considering the aforesaid affidavit, submissions and the judgments relied upon, I am satisfied that the observations made by the Registrar of Companies do not survive and the scheme of arrangement would be in the interest of the companies and theirembers and creditors. Prayers in terms of paragraph No. 20 (a) in case of Company Petition No.45 of 2006 and Paragraph No.23 (a) in case of Company Petition No.46 of 2006 are hereby granted.
14. The petitions are disposed of accordingly. So far as the costs to be paid to the Central Government Standing Counsel is concerned, I quntify the same at Rs.3,500/- per petition. The same may be paid to the learned advocate Shri P.J. Malkan.
(ANANT S. DAVE, J.) ynvyas Top