Gujarat High Court
Essar vs Respondent(S) on 3 May, 2011
Author: Anant S. Dave
Bench: Anant S. Dave
Gujarat High Court Case Information System
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COMP/50/2011 4/ 4 ORDER
IN
THE HIGH COURT OF GUJARAT AT AHMEDABAD
COMPANY
PETITION No. 50 of 2011
In
COMPANY
APPLICATION No. 248 of 2011
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ESSAR
BULK TERMINAL LTD - Petitioner(s)
Versus
.
. - Respondent(s)
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Appearance :
Mr.
S.N. Soparkar, Senior Advocate with MRS
SWATI SOPARKAR for Petitioner
MR PS CHAMPANERI for Respondent(s) :
1,
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CORAM
:
HONOURABLE
MR.JUSTICE ANANT S. DAVE
Date
: 03/05/2011
ORAL
ORDER
1. This is a petition filed by the petitioner company for sanction of a Scheme of Arrangement for the purchase of its Equity Shares through a Buyback offer as proposed between the petitioner company and its shareholders under section 391 read with Sec. 106 of the Companies Act, 1956 [for short, 'the Act'].
2. It has been submitted that, vide order dated 17th March 2011 passed in the Company Application no. 248 of 2011, filed by the petitioner company, meeting of the Equity Shareholders of the company was dispensed with in view of the written consent letters placed on record. It has been further pointed out that the meetings of the Secured and Unsecured Creditors of the petitioner company were dispensed with accepting the contention that the scheme was only between the company and its shareholders. Further considering the strong financial position of the petitioner company, the rights and interests of the creditors shall not be prejudicially affected by the proposed scheme.
3. The petition filed for obtaining the sanction of the court was admitted vide order dated 30th March 2011. The public notices for the same were duly advertised in the newspapers 'The Indian Express' English daily, Vadodara edition and 'Gujarat Mitra' Gujarati daily, Surat editions dt. 11th April 2011 and the publication in the Government gazette was dispensed with. Affidavit dt. 20th April 2011 confirm the same. No one has come forward with any objections to the said petitions even after the publication. The same has been further confirmed by the additional affidavit dated 30th April 2011.
4. Notice of the petition has been served upon the Central Govt. and Shri P. S. Champaneri, learned Asst. Solicitor General, Senior Standing Counsel appear for the Central Govt. An affidavit dt. 26th April 2011 has been filed by Mr. Uttam Chand Nahta, the Regional Director, North-Western Region, Ministry of Corporate Affairs, whereby the only observation pertain to the compliance with procedure under Sec. 77A of the Companies Act instead of the proposed scheme under Sec. 391. The said issue has been dealt with in detail by the Additional Affidavit dated 30th April 2011 filed by the Authorised Signatory of the petitioner company.
5. Heard Shri Saurabh Soparkar, learned senior advocate appearing with Smt. Swati Saurabh Soparkar, learned advocate for the petitioner company and Shri P. S. Champaneri, the counsel appearing for the Central Govt.
6. It is pointed out that the only observation of the Regional Director pertain to the compliance of the procedure prescribed under Sec. 77 A of the Companies Act, 1956 for the buyback of the shares by the company. As against that Mr. Soparkar, learned senior counsel appearing for the petitioner has submitted that section 77A was not given any overriding effect over the provisions of Section 391. The legislative intention behind the introduction of Sec. 77A is only to provide an alternative method by which the company can buy back its shares. There is no legal bar to propose the buy back under Sec. 391 and the petitioner company has chosen to adopt the said scheme under Sec. 391 of the Companies Act, 1956 and it is well settled that this Hon'ble court has power to sanction such a scheme. Reliance is placed on several decisions of different High Courts viz. the Bombay High Court in the case of SEBI v. Sterlite Industries (India) Limited, reported in (2003) 113 Company Cases 273, the Gujarat High Court in the case of Gujarat Ambuja Exports Limited reported in (2004) 118 Co. Cases 265 as well as the Andhra Pradesh High Court in the case of T.C.L. Industries Limited, reported in (2004) 118 Co. Cases 373.
7. Having regard to the law on the subject and the decisions as above, I am of the opinion that the case of the petitioner satisfies the requirement of following the procedure as envisaged under Section 391 of the Act and on the facts and circumstances of this case, a scheme of arrangement for the purchase of it's equity shares through a buy-back offer as proposed between the petitioner-company and its shareholders under section 391 read with section 106 of the Act where no one has raised any objection for not following provisions of Section 77A of the Act would not render such scheme vulnerable under the Act and, considering overall aspects, the observation of the Regional Director does not survive.
8. Considering the petition, the relevant documents on record, the submissions made at the time of hearing and the law laid down by the decisions referred to in paragraph 6 of the order, I am satisfied that the the scheme of arrangement would be in the interest of the company and its members and creditors. Prayers in terms of paragraph 18 (B) are hereby granted.
9. The petition is disposed of accordingly. So far as the costs to be paid to the Central Govt. Standing Counsel is concerned, the same is quantified at Rs. 7,500/- per petition. The same may be paid to the learned advocate Shri P. S. Champaneri.
(ANANT S. DAVE, J.) (swamy) Top