Gujarat High Court
Essar vs Blank on 12 July, 2011
Author: Anant S. Dave
Bench: Anant S. Dave
Gujarat High Court Case Information System
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COMA/248/2011 3/ 3 ORDER
IN
THE HIGH COURT OF GUJARAT AT AHMEDABAD
COMPANY
APPLICATION No. 248 of 2011
=========================================================
ESSAR
BULK TERMINAL LTD - Applicant(s)
Versus
Blank
Name - Respondent(s)
=========================================================
Appearance :
MRS
SWATI SOPARKAR with MR SURABH N SOPARKAR for Applicant(s) : 1,
None
for Respondent(s) :
1,
=========================================================
CORAM
:
HONOURABLE
MR.JUSTICE ANANT S. DAVE
Date
: 17/03/2011
ORAL
ORDER
Leave to amend by adding a clarificatory Para 8(a) to the Affidavit in support of the Judges' Summons.
The present application is moved by the Applicant for consideration of the proposed Scheme of Arrangement for purchase of Equity Shares through a Buyback Offer as proposed between the Applicant Company and its shareholders, under Section 391 read with Section 106 of the Companies Act, 1956.
My attention is drawn to amended para 8(a) of the Affidavit in support of the Judges' summons. It has been submitted that there are only 9 Equity Shareholders. All these shareholders have given their written consent in writing approving the proposed Scheme. The certificate obtained from the Chartered Accountant confirms the present status as well as the receipt of the said consent letters. In view of the same, the meeting of the Equity Shareholders as envisaged under Section 391(2) is not required to be convened and is hereby dispensed with.
Vide Para 9 and 10 of the affidavit in support of the Judges' Summons it has been contended that the proposed scheme is arrangement only between the company and its Equity Shareholders and the same does not affect the rights and interests of its creditors. In support of the said contention, it has been pointed out that considering the latest audited balance sheet of the Applicant Company it is apparent that it is financially strong, profit making enterprise, which is in a position to pay off all its unsecured debts, when due. The Applicant Company had a turnover of more than Rs.8 Crores and a profit after tax of more than Rs.3 Crores during the last financial year ended on 31st March, 2010. It had built up reserves and surplus of more than Rs.3 crores and net fixed assets of more than Rs.93 Crores with capital work in progress of more than Rs.960 Crores. Considering the above, it is respectfully submitted that the proposed scheme shall not have any adverse effect on the rights and interests of any of its creditors. Considering the aforesaid averments and submissions, it is not necessary to convene the meeting of the creditors of the company and the same is hereby dispensed with.
It has been further submitted that the proposed Buy Back of the Equity Shares and cancellation of the same does not affect the overall capital structure of the Applicant Company as the consideration is being paid in the form of the Compulsorily Convertible Cumulative Participating Preference Shares of the Applicant Company to the said Equity Shareholders. Thus, in spite of the cancellation of the Equity Share Capital, it does not result into the Reduction of Capital so as to attract the compliance under Sec. 100 of the Companies Act, 1956. In any case, it does not result into diminution of liability to pay any unpaid share capital or into the repayment of any paid up share capital and hence does not attract the procedure to be followed under Sec. 101(2) of the Companies Act, and does not call for the procedure to be followed under Rules 48 to 65 of the Company Court Rules, 1959. Accepting the said averments, it is hereby held that it is not necessary to follow the separate procedure under Sec. 100 or 101(2) of the Companies Act, 1956 and procedures under Rules 48 to 65 of the Company Court Rules is also hereby dispensed with.
The application is hereby disposed of.
Sd/-
(Anant S. Dave, J.) Caroline Top