Gujarat High Court
Texspin vs Respondent(S) on 30 March, 2011
Author: Anant S. Dave
Bench: Anant S. Dave
Gujarat High Court Case Information System
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COMP/92/2010 5/ 5 ORDER
IN
THE HIGH COURT OF GUJARAT AT AHMEDABAD
COMPANY
PETITION No. 92 of 2010
In
COMPANY APPLICATION No. 91 of 2010
with
COMPANY
PETITION No. 93 of 2010
In
COMPANY APPLICATION No. 92 of 2010
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TEXSPIN
BEARINGS LIMITED - Petitioner(s)
Versus
.
- Respondent(s)
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Appearance :
MRS
SWATI SOPARKAR for Petitioner(s) : 1,
MR PS CHAMPANERI for
Respondent(s) : 1,
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CORAM
:
HONOURABLE
MR.JUSTICE ANANT S. DAVE
Date
: 30/03/2011
COMMON
ORAL ORDER
These are the petitions filed by two companies viz. Texspin Bearings Limited and RMP Bearings Limited, for the purpose of obtaining the sanction of this court to a Scheme of Arrangement in the nature of simultaneous De-merger and Transfer of Treasury Divisions between the two companies and consequential Reduction of capital of both the companies, proposed under section 391 and 394 read with Sections 100 to 104 of the Companies Act, 1956.
It has been submitted that both the companies are closely held limited companies and are engaged in manufacturing of Automotive and Industrial Bearings. They were promoted by and belong to Texspin group and to the same family. Hence there are inter se investments in both the companies. The present scheme of Arrangement proposes simultaneous demerger and transfer of the respective Treasury Divisions of both the De-merged companies to the respective Resulting Companies, with a view to eliminate the cross holdings. The petitions give in detail the advantages that would flow by virtue of the proposed demerger.
Upon the scheme being effective, both the companies propose to adjust the amount representing the surplus of assets over the liabilities on the transfer of the respective demerged undertakings, partly by reducing its Issued, Subscribed and Paid up Equity Share Capital and partly adjusting the same against its Profit and Loss and Reserves & Surplus Account. This will amount to Reduction of Issued, Subscribed and Paid Up Equity Share Capital as per the provisions of Sec. 100 of the Companies Act, 1956. However, this being consequential in nature is proposed as an integral part of the proposed scheme of arrangement.
It has been submitted that vide order dated 12th April 2010 passed in Company Application No. 91 of 2010, the meeting of the Equity Shareholders of the De-merged Company No.1 were dispensed with in light of the consent letters from all of them being placed on record. Similarly, vide order dated 12th April 2010 passed in Company Application No. 92 of 2010, the meetings of the Equity and Preference Shareholders of the De-merged Company were dispensed with in light of the consent letters from all of them being placed on record. It has been further pointed out that vide the aforesaid orders, separate meetings of the Secured creditors and Unsecured Creditors of both the petitioner companies were directed to be convened for the purpose of seeking the approval from the said creditors to the proposed scheme. Pursuant to the directions, issued in this regard, after the due notices to the concerned parties as well as the public notice, the said meetings were duly convened on 1st June 2010 and the proposed scheme was duly approved unanimously at all the meetings respectively by Secured and Unsecured Creditors of both the companies, present and voting at the respective meetings. The result of the said meetings were duly reported to this court vide the report dated 17th June 2010. It has been further pointed out that vide the aforesaid orders dated 12th April 2010, separate procedure for Reduction of Capital and the procedure under Sec. 101 (2) read with Rules 48 to 65 of the Company Court Rules were dispensed with for both the companies.
The substantive petitions for the sanction of the scheme were filed by both the companies which were admitted on 6th July 2010. The notice for the hearing of the petitions were duly advertised in the newspapers being 'Indian Express' dated 17th July 2010 and 'Sandesh', dated 16th July 2010, both Ahmedabad editions and the publication in the Government gazette was dispensed with as directed in the said orders. No one has come forward with any objections to the said petitions even after the publication. The said fact has been confirmed vide the additional affidavit dated 14th March 2011.
Notice of the petitions have been served upon the Central Govt. and Shri Y. V. Waghela, Standing Counsel appear for the Central Govt. An affidavit dated 10th February 2011 has been filed by Mr. Uttam Chand Nahta, the Regional Director, North-Western Region, Ministry of Corporate Affairs, whereby several observations are made. The same pertain to - (a) compliance of Accounting Standard-14 for the accounting entries (b) possibility of fractional entitlements and absence of clarity on the same in the scheme and (c) the absence of details of assets and liabilities of the demerged undertakings in the scheme.
The attention of this court is drawn to the Additional Affidavit dated 14th March 2011, whereby all the above issues have been dealt with as follows:
(a) With regard to the observation of the Regional Director on the issue of Compliance of Accounting standard-14, my attention is drawn to the series of judgments of several high courts including Gujarat High Court in the matter of Gallops Realty P. Ltd. 150 Company cases 596, confirming that the said standard is applicable only to scheme of amalgamation. Since the present petition envisages a scheme of demerger, the same is not required to be complied with. (b) With regard to the second observation, it has been submitted that since both the companies belong to the same family, rounding up of shares can be internally worked out, if needed. (c) With regard to the third observation, it has been pointed out that the details of the assets and liabilities of the de-merged undertaking have been already furnished by petitioners to the satisfaction of the Regional Director and hence the said observations do not survive. I have considered the said submissions and come to the conclusion that the issues raised by the Regional Director have been sufficiently explained and hence the scheme, being in the interest of the shareholders and creditors is required to be sanctioned.
I have heard Smt. Swati Soparkar, Advocate appearing for the petitioner Companies. Prayers in terms of paragraph 24(a) and 24 (b) of the Co. Petition No. 92 of 2010 as well as Co. Petition No. 93 of 2010 are hereby granted. The minutes as under Sec. 103 in terms of Paragraph 20 of Co. Petition No. 92 of 2010 as well as Co. Petition No. 93 of 2010 are also specifically hereby approved.
The petitions are disposed of accordingly. So far as the costs to be paid to the Central Govt. Standing Counsel is concerned, I quantify the same at Rs. 5,000/- per petition. The same may be paid to the learned advocate Shri Y. V. Waghela, the Counsel appearing for the Central Govt.
[Anant S. Dave, J.] *pvv Top