Gujarat High Court
Sintex vs Respondent(S) on 29 July, 2008
Author: C.K.Buch
Bench: C.K.Buch
Gujarat High Court Case Information System
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COMA/426/2008 6/ 8 ORDER
IN
THE HIGH COURT OF GUJARAT AT AHMEDABAD
COMPANY
APPLICATION No. 426 of 2008
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SINTEX
INDUSTRIES LTD - Applicant(s)
Versus
.
- Respondent(s)
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Appearance
:
MR
MIHIR THAKORE, SINGHI & CO for
Applicant:
None for Respondent(s) :
1,
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CORAM
:
HONOURABLE
MR.JUSTICE C.K.BUCH
Date
: 29/07/2008
ORAL
ORDER
Heard Mr. Mihir Thakore, learned Sr. Advocate appearing for the applicant company.
In this Company Application, the applicant has prayed for holding a meeting of the Equity Shareholders of the applicant company for the purpose of considering and, if thought fit, approving with or without modification, the arrangement embodied in the Scheme of Arrangement between Sintex Industries Limited and its Equity Shareholders and for issuing appropriate directors incidental for holding of such meeting.
By the present Scheme of Arrangement there would be reduction of Securities Premium Account pursuant to the utilization of Securities Premium Account of the applicant company to create International Business Development Reserve. The said reduction is an integral part of the Scheme of Arrangement and the applicant company has prayed for dispensing with following a separate procedure for the said reduction.
Upon hearing Shri Mihir Thakore, learned Senior Advocate and upon perusal of the application and supporting affidavit 27.7.2008 filed by Shri Laxmiraj Mansinhji Rathod and the annexures referred to therein [Annexure-C being the copy of the Scheme of Arrangement], it is directed as under:-
A meeting of the Equity Shareholders of the applicant company shall be convened and held at the registered office of the applicant company at Near Seven Garnala, Kalol [N.G.], Gujarat-382 721, India, on Monday, the 15th day of September, 2008 at 11.30 a.m. [1130 hrs] or immediately after the conclusion of the Annual General Meeting of the members of the applicant company [whichever is later] for the purpose of considering, and if thought fit, approving with or without modification, the arrangement embodied in the Scheme of Arrangement between Sintex Industries Limited and its Equity Shareholders.
At least, 21 clear days before the day appointed for the meeting to be held as aforesaid, an advertisement convening the said meeting indicating the day, the date, the place and time aforesaid and stating that copies of the said Scheme of Arrangement, the statement required to be furnished pursuant to Section 393 of the Companies Act, 1956 and Form of Proxy can be obtained free of charge at the registered office of the applicant company or at the office of its advocates, i.e. M/s. Singhi & Co., 7-8 Premchand House Annexe, Ashram Road, Old High Court Way, Ahmedabad-380 009, be inserted once in Indian Express, Ahmedabad Edition and Sandesh, Ahmedabad Edition. Publication of the advertisement in the Gujarat Government Gazette is dispensed with.
In addition, at least, 21 clear days before the date of the meeting to be held as aforesaid, a notice convening the said meeting, indicating the day, the date, the place and time aforesaid, together with a copy of the said Scheme of Arrangement, a copy 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 prepaid letter post under Certificate of Post addressed to each of the Equity Shareholders of the applicant company at their respective registered or last known addresses. The Notice shall be sent to the Equity Shareholders of the applicant company with reference to the list of persons appearing on the record of the applicant company and its register as on 8th August, 2008.
The setting and/or approval of the advertisement, the form of Notice and the Statement to accompany the Notice by the Registrar of this Court is dispensed with.
Mr. Dinesh B. Patel, Director of the applicant company and in his absence Mr. Ashwin Lalbhai Shah, Director of the applicant company shall be the Chairman of the aforesaid meeting to be held on Monday, the 15th day of September, 2008 and in respect of any adjournment or adjournments thereof.
The Chairman appointed for the aforesaid meeting do issue the advertisement and send out the notices of the meeting referred to above. The Chairmen are free to avail the services of the applicant company or their officers or servants or agents or any other agency for carrying out the said direction. It is further directed that the Chairman of the meeting shall have all powers under the Articles of Association of the applicant company and under the Companies [Court] Rules, 1959 in relation to conduct of meeting including an amendment to the aforesaid Scheme of Arrangement or resolutions, if any, proposed at the aforesaid meeting by any person[s] and to ascertain the decision of the aforesaid meeting on the poll.
The quorum for the meeting of the Equity Shareholders shall be 5 persons in person.
The voting by the proxy be permitted, provided that the proxy in the prescribed form duly signed by the person entitled to attend and vote at the meeting, is filed with the applicant company at its registered office at Near Seven Garnala, Kalol [N.G.] Gujarat-382 721, India, not later than 48 hours before the meeting.
The value of each Equity Shareholders shall be in accordance with the books of the applicant company and where the entries in the books are disputed, the Chairman shall determine the value for purposes of the meeting and his decision in that behalf shall be final.
It is further directed that the Chairman do report to this Court the result of the said meeting within 14 days of the conclusion of the meeting, and the said report shall be verified by his affidavit.
Mr. Thakore, learned Senior Advocate submits that the meeting of the Creditors of the applicant company is not required to be called for as there is no compromise offered to any of the Creditors and neither any liability of the creditors under the Scheme is being reduced or extinguished. Mr. Thakore, learned Senior Advocate also stated that as per the Audited Balance Sheet as on 31.3.2008, there is an excess of assets over liabilities of about Rs. 1510.50 crores in the case of the applicant company. Mr. Thakore relied upon the order dated 31.1.2003 passed by this Court in Company Application No. 30 of 2003 to the effect that when the interest of the creditors was in no way affected by the Scheme of Arrangement, it is neither obligatory nor desirable to call a meeting of the creditors to obtain their views on the Scheme.
Mr Thakore submitted that there would be reduction of Securities Premium Account which shall be affected as an integral part of the Scheme itself by way of a composite order from this Court. Mr. Thakore has further submitted that the Equity Shareholders of the applicant company are to consider the Scheme in the meeting which includes the said reduction. As the procedure under Section 101 read with Section 78 of the Companies Act, 1956 being para materia with the present proceedings, no separate procedure for reduction of Securities Premium Account is required to be followed. Mr. Thakore has referred to Section 100 and 101 of the Companies Act, 1956 and submitted that reduction contemplated in the Scheme does not involve either diminution of liability in respect of unpaid share capital or payment to the Shareholders of paid up share capital and does not in any manner affect the interest of creditors and no meeting of creditors is required. Mr. Mihir Thakore has relied upon the order dated 31.1.2003 passed by this Court in Company Application No. 30 of 2003 wherein this Court has dispensed with the following of a separate procedure for reduction of capital.
Upon hearing the submissions of Mr. Thakor and upon considering the judgment and order cited by him, I am of the view that the meeting of the creditors for considering the aforesaid scheme which includes reduction is not required. I hold that no separate procedure is required to be followed for reduction of Securities Premium Account, as the same is part and parcel of the said Scheme of Arrangement.
The present company Application is disposed of accordingly.
[C.K. BUCH, J.] pirzada/-Top