Allahabad High Court
Rave Entertainment Private Limited vs Rave Real Estate Private Limited on 25 May, 2007
JUDGMENT S.P. Mehrotra, J.
1. The present Company Application by summons, as provided in Rule 67 of the Companies (Court) Rules, 1959, has been filed under Section 391 read with Section 394 of the Companies Act, 1956 by the following Companies (hereinafter also referred to as "the Applicants/Companies"):
1. RAVE ENTERTAINMENT PRIVATE LIMITED, having its Registered Office at Jagran Building, 2. Sarvodaya Nagar, Kanpur (hereinafter also referred to as "the Demerged Company" or "the Applicant No. 1").
2. RAVE REAL ESTATE PRIVATE LIMITED, having its Registered Office at Jagran Building, 2, Sarvodaya Nagar, Kanpur (hereinafter also referred to as "the Resulting Company" or "the Applicant No. 2").
2. The Company Application is supported by an affidavit of vikram Kothari, stated to be the Director of the Demerged Company as well as the Director of the Resulting Company, sworn on 7.5.2007.
3. It appears that a Scheme of Arrangement is proposed for Demerger of mall-cum-multiplex business of the Demerged Company to the Resulting Company.
4. Copy of the proposed Scheme of Arrangement (Demerger) has been filed as Annexure-3 to the affidavit accompanying the Company Application, and appears at page 46 of the Paper Book of the Company Application.
5. As regards the Demerged Company (RAVE ENTERTAINMENT PRIVATE LIMITED), it is, interalia, stated in the affidavit accompanying the Company Application that the Demerged Company was incorporated on 2.6.1999 under the Companies Act, 1956 as a Private Limited Company; and that the Registered Office of the Demerged Company is situated at Jagran Building, 2, Sarvodaya Nagar, Kanpur which is within the jurisdiction of this Court.
6. It is, interalia, further stated in the affidavit accompanying the Company Application that the Authorized Share Capital of the Demerged Company is Rs. 5,00,00,000/- (Rupees Five Crores only) divided into 50,00,000 (Fifty Lacs) Equity Shares of Rs. 10/- each; and that out of the said 50,00,000 Equity Shares, 30,00,000 Equity Shares of Rs. 10/- each have been Issued and Subscribed and are fully Paid-up.
7. It is, interalia, further stated in the affidavit accompanying the Company Application that the Main Objects of the Demerged Company are set-out in its Memorandum of Association.
8. Copy of the Memorandum and Articles of Association of the Demerged Company has been filed as Annexure-I to the affidavit accompanying the Company Application, and appears at page 13 of the Paper Book of the Company Application.
9. It is, interalia, further stated in the affidavit accompanying the Company Application that Sub-clause 20 of Clause III(B) of the Objects Clause of the Memorandum of Association of the Demerged Company specifically makes provisions for Scheme of Arrangement under Sections 391 and 394 of the Companies Act, 1956.
10. It is, interalia, stated in paragraph 3 of the affidavit accompanying the Company Application that the Demerged Company is engaged in various business including running theatres, restaurants, clubs, banquet hall and shopping complex.
11. It is, interalia, stated in paragraph 14 of the affidavit accompanying the Company Application that the accounts of the Demerged Company have been prepared up to 31.3.2006 for the financial year 2006-07.
12. The Audited Balance-sheet for the financial year ending 31.3.2006 as well as the unaudited accounts for the financial year ending 31.3.2007 in respect of the Demerged Company have been filed and collectively marked as Annexure-4 to the affidavit accompanying the Company. Application and appear at pages 191 and 213 of the Paper book of the Company Application.
13. Composition of the Board of Directors of the Demerged Company has been given in paragraph 19 of the affidavit accompanying the company application
14. As reqards the Equity Shareholders of the Demerged company a list of the Equity Shareholders of the Demerged Company has been filed as Annexure-8 to the affidavit, accompanying the Company Application, and appears at page 235 of the Paper Book of the Company Application.
15. A perusal of the said List of the Equity Shareholders of the Demerged Company shows that there are 14 She. Shareholders of the Demerged company.
16. It is, intralia, stated in paragraph 23 of the affidavit accompanying the Company Application that meeting of the Equity Shareholders of the Demerged Company be Called to consider and approve the proposed Scheme of arrangement (Demerger)
17. Similar prayer has been made in the company application.
18. As regards the creditors of the Demerged Company, a list of the Creditors of the Demerged Company has been filed as Annexure-7 to the affidavit accompanying the Company application and appears at page 233 of the Paper book of the company application.
19. A perusal of the said list of the Creditors of the Demerged Company shows that here are 40 Creditors of the Demerged Company (including the Secured Creditors, the Unsecured Creditors and the Sunday Creditors).
20. It is, interalia, star ad in paragraph 23 of the affidavit accompanying the Company Application that meting of the Creditors of the Demerged Company be called to consider approve the proposed Scheme of Arrangement (Demerger)
21. As regards the resulting Company (RAVE REAL ESTATE PRVATE limited), is, interalia, stated in the affidavit accompanying the company application that the resulting Company was incorporated on 23.3.2007 under the Companies act, 1956 as a private limited Company; and that the Registered office of the resulting Company is situated at Jagran Building, 2, Sarvodaya nagar Kanpur which is within the jurisdiction of this Court.
22. It is, interalia, further stated in the affidavit accompanying the Company Application that the Authorized Share Capital of the Resulting Company is Rs. 5,00,000/- (Rupees Five Lacs only) divided into 50,000 Equity Shares of Rs. 10/- each; and that out of the said 50,000 Equity Shares, 10,000 Equity Shares of Rs. 10/- each have been Issued, Subscribed and are fully Paid-up in cash.
23. It is, interalia, further stated in the affidavit accompanying the Company Application that the Main Objects of the Resulting Company are set-out in its Memorandum of Association.
24. Copy of the Memorandum and Articles of Association of the Resulting Company has been filed as Annexure-2 to the affidavit accompanying the Company Application, and appears at page 29 of the Paper Book of the Company Application.
25. It is, interalia, further stated in the affidavit accompanying the Company Application that Sub-clause 20 of Clause III(B) of the Objects Clause of the Memorandum of Association of the Resulting Company specifically makes provisions for Scheme of Arrangement.
26. It is, interalia, stated in paragraph 8 of the. affidavit accompanying the Company Application that the Resulting Company proposes to act as builders, contractors, developers and lessors and also to carry on business of running restaurants, clubs, banquet hall and shopping complex.
27. Composition of the Board of Directors of the Resulting Company has been given in paragraph 20 of the affidavit accompanying the Company Application.
28. As regards the Equity Shareholders of the Resulting Company, a List of the Equity Shareholders of the Resulting Company has been given at page 236 of the Paper Book of the Company Application.
29. A perusal of the said List of the Equity Shareholders of the Resulting Company shows that there are only 2 Shareholders of the Resulting Company.
30. It is, interalia, stated in paragraph 22 of the affidavit accompanying the Company Application that there are only two Shareholders in the Resulting Company; and that both the Shareholders in the Resulting Company have consented by affidavits to the proposed Scheme of Arrangement (Demerger).
31. Affidavits of the said two Shareholders of the Resulting Company have been filed and collectively marked as Annexure-6 to the affidavit accompanying the Company Application, and appear at pages 230 and 231 of the Paper Book of the Company Application.
32. A perusal of the averments made in the said affidavits of the Shareholders of the Resulting Company shows that they have given their consent to the proposed Scheme of Arrangement (Demerger), as approved by the Board of Directors of the Resulting Company in its meeting held on 4.5.2007.
33. It is, interalia, further stated in paragraph 22 of the affidavit accompanying the Company Application that it is in the interest of justice that holding of the meeting of the Shareholders of the Resulting Company may be dispensed with by this Court.
34. As regards the Creditors of the Resulting Company, it is, interalia, stated in paragraph 22 of the affidavit accompanying the Company Application that there are no Creditors in the Resulting Company as on the date of filing of the Company Application.
35. The objects sought to be achieved by the proposed Scheme of Arrangement (Demerger) have been stated in paragraph 12 of the affidavit accompanying the Company Application.
36. It is, interalia, stated in paragraph 21 of the affidavit accompanying the Company Application that the Scheme of Arrangement (Demerger) shall be effective from 1.4.2007.
37. It is, interalia, stated in paragraphs 13 and 21 of the affidavit accompanying the Company Application that the proposed Scheme of Arrangement (Demerger) was approved by the Board of Directors of both the Demerged Company as well as the Resulting Company at their respective meetings held on 4.5.2007.
38. Copies of the Resolutions passed by the Board of Directors of the Demerged Company and the Board of Directors of the Resulting Company have been filed and collectively numbered as Annexure-5 to the affidavit accompanying the Company Application, and appear at pages 226 and 227, respectively of the Paper Book of the Company Application.
39. It is, interalia, stated in paragraph 15 of the affidavit accompanying the Company Application that the Auditors of the Demerged Company have not disclosed any mismanagement in the affairs of the Demerged Company.
40. It is, interalia, further stated in paragraphs I and 18 of the affidavit accompanying the Company Application that no Petition under Section 397 or Section 398 of the Companies Act, 1956 has, at any point of tin a been filed against either of the Applicants/Companies.
41. It is, interalia, stated in paragraph 16 of the affidavit accompanying the Company Application the subsequent to the aforesaid accounts, there has not been any material change in the affairs of the Applicants Companies except in the normal course of business for which the accounts are under preparation.
42. It is, interalia, stated in paragraph 17 of in, affidavit accompanying the Company Application that the proposed Scheme of Arrangement (Demerger) does not involve any compromise or composition with the Creditor of the Applicants/Companies in any manner whatsoever.
43. It is, interalia, stated in paragraph 18 of the affidavit accompanying the Company Application that the are no proceedings pending under Sections 235 to 251 the Companies Act, 1956 against any of the Applicants Companies.
44. I have heard S/Shri V.K. Upadhya and Ritvik Upadhya learned Counsel for the Applicants/Companies, and perused the record.
45. It is submitted by the learned Counsel for the Applicants/Companies that in view of the facts as disclosed in the Company Application and its accompanying affidavit, the prayers made by the Applicants/Company deserve to be granted.
46. I have considered the submissions made by the learn counsel for the Applicants/Companies.
47. Let us first take-up the case of the Demerged Company (RAVE ENTERTAINMENT PRIVATE LIMITED),
48. As regards convening of the meeting of the Shareholders/Members of the Demerged Company, it evident from the averments made in paragraph 23 of the affidavit accompanying the Company Application as also from the prayer made in the Company Application that the Applicants/Companies have prayed for convening, holding and conducting the meeting of the Shareholders/ Members of the Demerged Company.
49. In view of the facts and circumstances stated above, and in view of the averments made in paragraph 23 of the affidavit accompanying the Company Application, as also the prayer made in the Company Application, I am of the opinion that it is necessary to convene the meeting of the Shareholders/Members of the Demerged Company for consideration of the proposed Scheme of Arrangement (Demerger), as per the requirements of Section 391(1) and (2) read with Section 393 of the Companies Act, 1956.
50. As regards convening of the meeting of the Creditors of the Demerged Company, it is evident from the averments made in paragraph 23 of the affidavit accompanying the Company Application as also from the prayer made in the Company Application that the Applicants/Companies have prayed for convening, holding and conducting the meeting of the Creditors of the Demerged Company.
51. In view of the facts and circumstances stated above, and in view of the averments made in paragraph 23 of the affidavit accompanying the Company Application, as also the prayer made in the Company Application, I am of the opinion that it is necessary to convene the meeting of the Creditors of the Demerged Company for consideration of the proposed Scheme of Arrangement (Demerger), as per the requirements of Section 391(1) and (2) read with Section 393 of the Companies Act, 1956.
52. Let us now take-up the case of the Resulting Company (RAVE REAL ESTATE PRIVATE LIMITED).
53. As regards convening of the meeting of the Shareholders/Members of the Resulting Company, it is evident from the above narration of facts that there are only two Shareholders/Members of the Resulting Company, and they have given their consent to the proposed Scheme of Arrangement (Demerger).
54. In view of the facts and circumstances stated above, particularly in view of the fact that both the Shareholders/Members of the Resulting Company have given their consent to the proposed Scheme of Arrangement (Demerger), I am of the opinion that it is not necessary to call the meeting of the Shareholders/Members of the Resulting Company for consideration of the proposed Scheme of Arrangement (Demerger), as per the requirements of Section 391(1) and (2) read with Section 393 of the Companies Act, 1956.
55. In the requirement for holding the meeting of the Shareholders/Members of the Resulting Company for consideration of the proposed Scheme of Arrangement (Demerger), as per the requirements of Section 391(1) and (2) read with Section 393 of the Companies Act, 1956, is dispensed with.
56. As regards convening of the meeting of the Creditors of the Resulting Company, it is evident from the averments made in paragraph 22 of the affidavit accompanying the Company Application that the Resulting Company has no Creditor.
57. In view of the facts and circumstances stated above, particularly in view of the fact that there is no Creditor in the Resulting Company, I am of the opinion that it is not necessary to call the meeting of the Creditors of the Resulting Company for consideration of the proposed Scheme of Arrangement (Demerger), as per the requirements of Section 391(1) and (2) read with Section 393 of the Companies Act, 1956.
58. In the circumstances, the requirement for holding the meeting of the Creditors of the Resulting Company for consideration of the proposed Schemei of Arrangement (Demerger), as per the requirements of Section 391(1) and (2) read with Section 393 of the Companies Act, 1956, is dispensed with.
59. In the circumstances, it is ordered as follows:
Upon the Joint application of the company RAVE ENTERTAINMENT PRIVATE LIMITED (hereinafter referred to as "the Demerged Company") having its Registered Office at Jagran Building, 2, Sarvodaya Nagar, Kanpur in the State of Uttar Pradesh and the company RAVE REAL ESTATE PRIVATE LIMITED (hereinafter referred to as "the Resulting Company") having its Registered Office at Jagran Building, 2, Sarvodaya Nagar, Kanpur in the State of Uttar Pradesh, by summons presented on the 9th day of May, 2007 seeking approval for the proposed Scheme of arrangement (Demerger) of the Demerged Company with the Resulting Company, and upon hearing S/Shri V.K. Upadhya and Ritvik Upadhya, Advocates, for the applicants, and upon reading the joint application, Exhibits/Annexures thereto, and the affidavit in support thereof (Exhibit/Annexure-3 at page 46 being a copy of the proposed scheme of arrangement).
IT IS ORDERED That for the purpose of considering, and if thought fit for approving, with or without modification, the proposed scheme of arrangement (Demerger), it is necessary to have meeting of the Shareholders/Members of the Demerged Company.
That for the purpose of considering, and if thought fit, for approving, with or without modification, the proposed scheme of arrangement (Demerger), it is necessary to have meeting of the Creditors of the Demerged Company That meeting of the Shareholders/Members of the Demerged Company will be convened and held at the Registered Office of the Demerged Company (namely, Jagran Building, 2, Sarvodaya Nagar, Kanpur) on 29th day of June, 2007 (Friday) at 11.00 O'clock in the forenoon for the purpose of considering, and if thought fit, approving, with or without modifications, the proposed scheme of arrangement (Demerger).
That meeting of the Creditors of the Demerged Company will be convened and held at the Registered Office of the Demerged Company (namely, Jagran Building, 2, Sarvodaya Nagar, Kanpur) on 30th day of June, 2007 (Saturday) at 11.00 O'clock in the forenoon for the purpose of considering, and if thought fit, approving, with or without modifications, the proposed scheme of arrangement (Demerger).
That at least 21 clear days before the day appointed for the meetings of the Demerged Company to be held as aforesaid, a notice convening the said meetings at the place and time aforesaid, together with the copies of the said scheme and of the statement required to be furnished pursuant to Section 393 of the Companies Act, 1956, and the prescribed form of proxy, shall be sent by pre-paid letter post under certificate of posting, addressed to each of the Shareholders/Members of the Demerged Company and each of the Creditors of the Demerged Company aforesaid at their respective registered or last known addresses.
That, in addition, at least 21 clear days before the day appointed for the meetings in respect of the Demerged Company, as aforesaid, separate advertisements convening the said meetings in respect of the Demerged Company, and stating that copies of the said scheme together with the copy of the statement required to be sent under Section 393 of the Companies Act, 1956 and the prescribed form of proxy can be obtained free of charge at the Registered Office of the Demerged Company, shall be published in the daily national newspapers, in English may be published in Hindustan Times published from Lucknow in its Edition having circulation in the district Kanpur, and in Economic Times published from Delhi, and in Hindi may be published in Dainik Jagran published from Kanpur.
That for the purposes of conducting the meeting of the Shareholders/Members of the Demerged Company, the Court hereby appoints Shri Gaurav Kakkar (Mobile No. 9415236814), Advocate, as the Chairman and appoints Shri Ashish Agrawal (Mobile No. 9415348632), Advocate as the alternate Chairman. The Chairman will be paid Rs. 35,000/- plus incidental expenses and the alternate Chairman will be paid Rs. 17,500/- plus incidental expenses, in addition, the expenses of the journey and stay in respectable hotel being taken care of.
That the Chairman appointed for the meeting of the Shareholders/ Members of the Demerged Company will issue the advertisements and send out the notices of the meeting referred to above.
That the quorum for the said meeting of the Shareholders/ Members of the Demerged Company to be held as aforesaid shall be 8 by number and 65% by value of he Shareholders/Members of the Demerged Company present either personally or by proxy.
That voting by proxy shall be permitted, provided that a proxy in the prescribed form duly signed by the person entitled to attend and vote at the meeting, is filed with the Demerged Company at its Registered Office not later than 48 hours before the meeting.
That the value of each Shareholder/Member shall be in accordance with the books of the Demerged Company and, where the entries in the books are disputed, the Chairman shall determine the value for purposes of the meeting.
That for the purposes of conducting the meeting of the Creditors of the Demerged Company, the Court hereby appoints Shri Sameer Sharma, Advocate, as the Chairman and appoints shri Mahesh Narain Singh, Advocate as the alternate Chairman. The Chairman will be paid Rs. 35,000/- plus incidental expenses and the alternate Chairman will be paid Rs. 17,500/- plus incidental expenses, in addition, the expenses of the journey and stay in respectable hotel being taken; care of.
That the Chairman appointed for the meeting of the Creditors of the Demerged Company will issue the advertisements and send out the notices of the meeting referred to above.
That the quorum for the said meeting Of office Creditors of the Demerged Company to be held as aforesaid shall be 10 by number and 85% by value of the Creditors of the Demerged Company present either personally or by proxy.
That voting by proxy shall be permitted, provided that a proxy in the prescribed form duly signed by the person entitled to attend and vote at the meeting, is filed with; the Demerged Company at its registered office not later than 48 hours before the meeting.
That the value of each creditor shall be in accordance with the books of the of the demerged Company and, where the entries in the book are disputed the Chairmen shall determine the value for purposes of the meeting.
And It IS FURTHER ORDERED that the respective Chairman will report to this Court the result of the said meetings within two weeks of the conclusion of the meeting , and the report shall of the conclusion of the meeting, and the report shall be verified by their respective affidavit.
List for orders of 6.8.2007