Gujarat High Court
Troikaa Pharmaceuticals Limited vs Respondent(S) on 9 March, 2016
Author: Abhilasha Kumari
Bench: Abhilasha Kumari
O/COMP/17/2016 ORDER
IN THE HIGH COURT OF GUJARAT AT AHMEDABAD
COMPANY PETITION NO. 17 of 2016
In COMPANY APPLICATION NO. 334 of 2015
With
COMPANY PETITION NO. 18 of 2016
In
COMPANY APPLICATION NO. 333 of 2015
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TROIKAA PHARMACEUTICALS LIMITED....Petitioner(s)
Versus
......Respondent(s)
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Appearance:
MRS SWATI SOPARKAR, ADVOCATE for the Petitioner(s) No. 1
MR KSHITIJ AMIN FOR MR DEVANG VYAS, ADVOCATE for the
Respondent(s) No. 1
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CORAM: HONOURABLE SMT. JUSTICE ABHILASHA KUMARI
Date : 09/03/2016
COMMON ORAL ORDER
1. These petitions are filed by two companies, for the purpose of obtaining the sanction of this Court to a Composite Scheme of Arrangement, in the nature of transfer of the Windmill Undertaking of Troikaa Pharmaceuticals Limited to Troikaa Exports Private Limited, amalgamation of the residue undertaking of Troikaa Pharmaceuticals Limited to Troikaa Exports Private Limited and restructure of the share capital of Page 1 of 14 HC-NIC Page 1 of 14 Created On Wed Apr 06 02:05:52 IST 2016 O/COMP/17/2016 ORDER Troikaa Exports Private Limited, the Transferee Company, proposed under Sections 391 to 394 read with Sections 100 to 103 of the Companies Act, 1956.
2. It has been submitted that both the companies in the proposed Scheme belong to the same group of management viz. Troikaa group. Troikaa Pharmaceuticals Limited, the Transferor Company is mainly engaged in business of manufacturing and sale, trading, and export of various generic drug formulations, manufacture of drugs and pharmaceutical products. It is also engaged in development of medicines in the therapeutic areas of Pain management, Gynecology, Nutraceuticals 85 Nutritional. The company is also engaged in the generation of power through its Windmill Undertaking. Troikaa Exports Private Limited, the Transferee Company, is also incorporated for carrying out almost the same commercial activities for manufacturing, trading and export of drugs and pharmaceuticals. It is yet to commence manufacturing activities. The present Scheme of Arrangement is proposed for synergic benefits. It is envisaged that the proposed reorganization would be beneficial to Page 2 of 14 HC-NIC Page 2 of 14 Created On Wed Apr 06 02:05:52 IST 2016 O/COMP/17/2016 ORDER all concerned parties. The petitions provide the details of the anticipated advantages.
3. It has been submitted that vide order dated 2nd November 2015, passed in Company Application No. 334 of 2015, the meetings of the Equity Shareholders and Preference Shareholders of the Transferor Company were dispensed with in light of the consent letters of all the shareholders being placed on record. The meetings of the Secured Creditors and Unsecured Creditors of the Transferor Company were directed to be convened in order to obtain their approval to the Scheme. Pursuant to the directions issued with regard to the conduct of the meetings, after the due service of individual notices to all the Secured and Unsecured Creditors of the Transferor Company as well as the public notice, the said meetings were duly convened on 21st December 2015. At the said meeting of the Secured Creditors of the Company, several amendments were proposed to the said Scheme by ICICI, one of the Secured lenders. The said amendments, as well as modified Scheme of Arrangement, were duly approved unanimously i.e. 100% in number and 100% in value at the respective meetings of the Secured and Unsecured Creditors of the Page 3 of 14 HC-NIC Page 3 of 14 Created On Wed Apr 06 02:05:52 IST 2016 O/COMP/17/2016 ORDER Transferor Company. The result of these meetings had been placed on record in form of Chairman's reports dated 25th December 2015. In view of the amendments made in the original Scheme, fresh approval from the Equity as well as Preference Shareholders of the Company was sought with regard to the modified scheme and the said consent letters were placed on record with the present petition.
4. It has been submitted that vide order dated 2nd November 2015 passed in Company Application No. 333 of 2015, the meeting of the Equity Shareholders of the Transferee Company was dispensed with, in light of the consent letters of the shareholders, to the extent of 99.98% in value, approving the proposed Scheme as well as proposed restructure of Equity Share Capital, being placed on record. It has been pointed out that there are no Secured Creditors of the Transferee Company. The meeting of the Unsecured Creditors was dispensed with, accepting the contention that the rights and interests of the Unsecured Creditors of the Transferee Company are not likely to be prejudicially affected in light of the strong financial position of the Page 4 of 14 HC-NIC Page 4 of 14 Created On Wed Apr 06 02:05:52 IST 2016 O/COMP/17/2016 ORDER Transferor Company. Fresh approval of the above shareholders was sought to the modified Scheme and the said consent letters were placed on record with the present petition.
5. The attention of the Court is drawn to Clause 8.8 of the Scheme, which pertains to the Reduction of the existing Equity Share Capital of the Transferee Company from Rs.3,00,000/-- to Rs.1,00,000/--. It has been further pointed out that the said reduction is proposed as an integral part of the Scheme. After taking into account the issue of new shares to the shareholders of the Transferor Company as envisaged under clause 8.2 of the Scheme, there will not be Net Reduction of Capital. Considering the said submissions, vide the order dated 2nd November 2015, it has been held that Sections 100 to 103 shall not be attracted. The procedure prescribed under Section 101 (2) of the Act as well as Rules 48 to 65 of the Companies (Court) Rules, 1959 had been dispensed with.
6. The substantive petitions for the sanction of the duly Modified Scheme were filed by the petitioner Page 5 of 14 HC-NIC Page 5 of 14 Created On Wed Apr 06 02:05:52 IST 2016 O/COMP/17/2016 ORDER companies, which were admitted on 15th January 2016. The notice for the hearing of the petitions was duly advertised in the Ahmedabad editions of the English daily newspaper 'Indian Express' and the Gujarati daily newspaper 'Sandesh', dated 28th January 2016. The publication in the Government Gazette was dispensed with, as directed in the said orders. Pursuant to the said publication in the newspapers, no objections were received by the petitioner or its advocate. The said fact has been confirmed vide the common additional affidavit dated 5th March 2016.
7. Notice of the petition has been served upon the Office of the Official Liquidator for the Transferor company. The report dated 7th March 2016 has been filed by the Official Liquidator after taking into account the report of the Chartered Accountant appointed by him out of the panel. It has been observed by the Official Liquidator that the affairs of the Transferor Company have been conducted within its object clauses and have not been conducted in any manner prejudicial to the interest of the members or the public interest; hence the petitioner transferor Page 6 of 14 HC-NIC Page 6 of 14 Created On Wed Apr 06 02:05:52 IST 2016 O/COMP/17/2016 ORDER company may be dissolved without following the process of winding up. However, the Official Liquidator has sought that directions be issued to preserve the books of accounts, papers and records and not to dispose of the same without the prior permission of the Central Government, as per the provisions of Section 396 (A) of the Companies Act, 1956.
8. Accordingly, the Transferee Company is hereby directed to preserve the books of accounts, papers and records of the Transferor Company and shall not dispose of the same without the prior permission of the Central Govt. It is further directed that even after the Scheme is sanctioned, the Transferor company shall comply with all the applicable provisions of law and shall not be absolved from any of its statutory liabilities.
9. Notice of the petitions having been served upon the Central Government, Mr.Kshitij Amin, learned Central Government Standing Counsel has appeared for Shri Devang Vyas, learned Assistant Solicitor General of India, on behalf of the Central Government. A Page 7 of 14 HC-NIC Page 7 of 14 Created On Wed Apr 06 02:05:52 IST 2016 O/COMP/17/2016 ORDER common affidavit dated 25th February 2016 has been filed by Mr. Shambhu Kumar Agarwal, the Regional Director, North--Western Region, Ministry of Corporate Affairs, whereby some observations are made.
10. The attention of this Court is drawn to the common Additional Affidavit dated 5th March 2016 filed by Mr. Achyutkumar D. Patel, the Authorised Signatory of the petitioner companies, whereby the said issues have been dealt with.
11. This Court has heard Mrs. Swati Soparkar, learned advocate for the petitioners and Mr.Kshitij Amin, learned Central Government Standing Counsel appearing on behalf of Mr.Devang Vyas, learned Assistant Solicitor General of India.
12. The observation made vide para 2 (c), pertains to obtaining approval from the regulatory body for business of power generation. In this regard, it has been submitted that the Transferor company had obtained requisite permissions and licenses to carry on the said activity. However, they being general Page 8 of 14 HC-NIC Page 8 of 14 Created On Wed Apr 06 02:05:52 IST 2016 O/COMP/17/2016 ORDER licenses, upon the Scheme being effective, the Transferee company shall do the needful to either obtain such licenses and other regulatory approvals, or amend the respective licenses, as required under the applicable laws from the respective regulatory authority and the power generation activity shall be undertaken by the Transferee company in compliance with the respective regulatory laws.
13. Vide para 2 (d) of the affidavit, it has been observed by the Regional Director that Change of Name of the Transferee Company as envisaged under clause 10
(c) of the Scheme, should be done by following the requisite procedure and payment of necessary fees. It has been clarified that the concerned Transferee Company shall apply to the Registrar of Companies to confirm the availability of name and shall pay the requisite fees for the same. However, as envisaged in clause 10.5, since the Scheme has already been approved by all its shareholders, it shall not be necessary to pass the Special Resolution in this regard. It has also been further clarified that upon the Scheme being effective, the transfer of assets of Page 9 of 14 HC-NIC Page 9 of 14 Created On Wed Apr 06 02:05:52 IST 2016 O/COMP/17/2016 ORDER the Transferor Company shall be effected after payment of the requisite stamp duty as per the applicable provisions of the Stamp Act.
14. The observations of the Regional Director made Vide para 2(e) pertain to the letter dated 1st February 2016 sent by the Regional Director to the Income Tax Department, inviting their objections, if any. It has been pointed out by the Regional Director that a reply has been received from the Income Tax Department with regard to the pending demands against the De--merged /Transferor Company. In this regard, it has been submitted that appeals have been filed against the said demands, which are pending at different stages before the appellate authorities. Clause 7.7 and clause 13 of the Scheme specifically deal with the issues pertaining to outstanding tax liabilities as well as the pending legal proceedings by, or against, the Transferor Company. It has already been envisaged that such pending legal proceedings shall be undertaken by the Transferee Company. Further, the petitioner Transferee Company has undertaken to fulfill all the liabilities of the Page 10 of 14 HC-NIC Page 10 of 14 Created On Wed Apr 06 02:05:52 IST 2016 O/COMP/17/2016 ORDER Transferor Company as and when the same are finally adjudicated. It has been submitted that since the interests of the Revenue Department are already protected, as envisaged under the Scheme, it is not necessary to issue any further directions in this regard. So far as the Transferee Company is concerned, since the statutory period of 15 days, as envisaged by the relevant circular of the Ministry of Corporate Affairs, is over, it can be presumed that the Income Tax Department has no objections to the proposed Scheme of Arrangement. The petitioner companies have agreed to comply with the applicable provisions of the Income Tax Act and Rules. In View of the same, no further directions are required to be issued to the petitioner companies in this regard.
15. Considering the above facts and circumstances, the contentions raised in the affidavits and counter affidavits, and the submissions advanced during the course of hearing, on behalf of the parties, this Court is of the view that the observations made by the Regional Director, Ministry of Corporate Affairs, do not have been suitably redressed. This Court is of the Page 11 of 14 HC-NIC Page 11 of 14 Created On Wed Apr 06 02:05:52 IST 2016 O/COMP/17/2016 ORDER view that based upon the material on record, it can be concluded that the present Scheme of Arrangement, in its modified form, is in the interest of the shareholders and creditors of all the companies as well as in the public interest, therefore, the same deserves to be sanctioned. Hence the following order:
The prayers in terms of paragraph 21 (a) of Company Petition No.17 of 2016, and paragraph 18 (a) of Company Petition No.18 of 2016 are hereby granted.
16. The petitions are disposed of, accordingly. So far as the costs to be paid to the Central Government Standing Counsel are concerned, they are quantified at Rs. 7,500/-- per petition. The same may be paid to Mr.Devang Vyas, learned Assistant Solicitor General of India. Costs to be paid to the Office of the Official Liquidator are quantified at Rs. 7,500/-- per petition, payable only by the Transferor Company. The same may be paid to the Office of the Official Liquidator.
17. The petitioner companies are further directed to lodge a copy of this order, the schedule of immovable assets of the Windmill Undertaking being transferred and that of the remaining undertaking of the Page 12 of 14 HC-NIC Page 12 of 14 Created On Wed Apr 06 02:05:52 IST 2016 O/COMP/17/2016 ORDER Transferor company, being transferred to Transferee Company, as on the date of this order and the Scheme duly authenticated by the Registrar, High Court of Gujarat, with the concerned Superintendent of Stamps, for the purpose of adjudication of stamp duty, if any, on the same within 60 days from the date of the order.
18. The Petitioner companies are directed to file a copy of this order along with a copy of the Scheme with the concerned Registrar of Companies, electronically, along with INC28 in addition to physical copy as per relevant provisions of the Act.
19. Filing and issuance of drawn up order is hereby dispensed with.
20. All concerned authorities to act on a copy of this order along with the Scheme duly authenticated by the Registrar, High Court of Gujarat. The Registrar, High Court of Gujarat shall issue the authenticated copy of this order along with Scheme as expeditiously as possible.
Page 13 of 14 HC-NIC Page 13 of 14 Created On Wed Apr 06 02:05:52 IST 2016 O/COMP/17/2016 ORDER (SMT. ABHILASHA KUMARI, J.) piyush Page 14 of 14 HC-NIC Page 14 of 14 Created On Wed Apr 06 02:05:52 IST 2016