Gujarat High Court
Digjam vs Respondent(S) on 7 March, 2012
Author: K.M.Thaker
Bench: K.M.Thaker
Gujarat High Court Case Information System
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COMA/93/2012 10/ 10 ORDER
IN
THE HIGH COURT OF GUJARAT AT AHMEDABAD
COMPANY
APPLICATION No. 93 of 2012
=========================================================
DIGJAM
LIMITED - Applicant(s)
Versus
.
- Respondent(s)
=========================================================
Appearance
:
MR
SAURABH SOPARKAR, SENIOR COUNSEL WITH SINGHI & CO
for
Applicant(s) : 1,
None for Respondent(s) :
1,
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CORAM
:
HONOURABLE
MR.JUSTICE K.M.THAKER
Date
: 07/03/2012
ORAL
ORDER
Heard Mr. Soparkar, learned Senior Counsel, for the applicant company. In this Company Application, the applicant company, Digjam Limited, has prayed for holding a meeting of the Equity Shareholders (alongwith Preference Shareholders having voting rights in terms of Section 87 of the Companies Act, 1956) of the applicant company for the purpose of considering and, if thought fit, approving with or without modification(s), the arrangement embodied in the Scheme of Arrangement between the applicant company and its shareholders and for issuing appropriate directions incidental for holding of such meeting.
The applicant has also prayed for dispensing with the meetings of the Creditors either Secured or Unsecured of the applicant company in light of the fact that the rights and interest of the creditors of the applicant company are not affected by the Scheme of Arrangement. By the present Scheme of Arrangement there would be effected as an integral part of the Scheme of Arrangement to which the applicant company has prayed for dispensing with following a separate procedure for reduction of Preference Share Capital. In the circumstances, the applicant company has prayed that no meeting of the creditors of the applicant company is required to be called for. The applicant company has also prayed for dispensing with the separate meeting of the Preference Shareholders in view of the consent affidavits to the Scheme of Arrangement received from all the Preference Shareholders.
In the affidavit made by the Executive Vice President (Legal) and Company Secretary Mr.G.K.Sureka it is declared and stipulated that:
"The Scheme has been approved, in principle, by the Board of Directors of the applicant company on 9th January, 2012. Further, the Committee of the Board of Directors of the applicant company approved the Scheme in the meeting held on 18th January 2012. Copy of the Board Resolution dated 9th January 2012 and the Resolution of the Committee of the Board of Directors dated 18th January 2012 is annexed hereto and marked as Annexure-E (Colly).
9. No investigation proceedings have been instituted and/or pending in relation to the applicant company under Sections 235 to 251 of the Act. To the knowledge of the applicant company, no winding up proceedings have been filed and are pending against the applicant company.
13. It is submitted that there are 7 Preference Shareholders of the applicant company as on date who are holding the entire paid up 8% Cumulative Redeemable Preference Shares of Rs.100/- each. One of the Preference Shareholders is also holding the entire paid up 8% Non-Cumulative Redeemable Preference Shares of Rs.10/- each. A copy of the list of the Preference Shareholders of the applicant company as on 1st March 2012 duly certified by the Chartered Accountant is annexed hereto and marked as Annexure-F. All the Preference Shareholders of the applicant company have already given their consents and approvals to the Scheme in the form of Affidavits. Original consent affidavits received from all the Preference Shareholders of the applicant company approving the Scheme along with the copy of the board/governing body resolutions of the Preference Shareholders which are company/society are annexed and marked as Annexure-G(Colly). Under the circumstances, it is submitted that convening and holding of the meeting of the Preference Shareholders of the applicant company to consider and approve the Scheme would be only an unnecessary and empty formality resulting in unnecessary, avoidable expenditure and waste of time and energy. It is under these circumstances that the applicant company prays for direction from this Hon'ble Court dispensing with the publishing of advertisement and convening and holding of the meeting of the Preference Shareholders of the applicant company and also to dispense with the publication in the Gujarat Government Gazette.
14. Under the Scheme of arrangement and/or compromise is offered to any of the Creditors of the applicant company and neither any liability of the Creditors under the Scheme is being reduced or extinguished. Under the circumstances the meetings of the Creditors of the applicant company is not required to be called for as the interest of the Creditors is in no way affected by the present Scheme. It is, therefore, submitted that the meetings of the Creditors of the applicant company be dispensed with in light of the fact that the rights and interests of the Creditors of the applicant company are not affected by the Scheme.
15. Under the Scheme there shall be reduction of Preference Share Capital. It is submitted that the reduction of Preference Share Capital is an integral part of the Scheme. It is further submitted that the reduction of Preference Share Capital does not involve either the diminution of any liability in respect of unpaid share capital or the payment to any shareholder of any paid up share capital. The creditors of the applicant company are in no way affected by the proposed reorganization of the Share Capital as there is no reduction in the amount payable to any of the Creditors, no compromise and/or arrangement is contemplated with the Creditors and also there is no reduction in the securities which the Creditors may have in the assets of the Applicant Company. Further, the proposed reorganization would not in any way adversely affect the ordinary operations of the applicant company or the ability of the applicant company to honour its commitments or to pay its debts in the ordinary course of business.
17. In terms of Clause 24 of the Listing Agreement, the applicant company has received no objection letters dated 1st March 2012 and 22nd February 2012 from BSE and NSE, respectively, where its shares are listed, for filing Scheme with the Hon'ble High Court. Copy of the letters dated 1st March 2012 and 22nd February 2012 of BSE and NSE is annexed hereto and marked as Annexure-H (Colly)."
Having gone through the application and the supporting affidavit of Shri Gopal Krishna Sureka dated 3rd March 2012 and the Annexures therein referred to (Annexure-'D' being a copy of the Scheme of Arrangement) and having regard to the declaration and stipulations made in the affidavit heard Mr. Soparkar, learned Senior Counsel for the applicant company, following order is passed:
1. That the convening and holding of the separate meeting of the Preference Shareholders of the applicant company, seeking approval to the Scheme of Arrangement is dispensed with in view of the consent affidavits given by all the Preference Shareholders of the applicant company which is annexed at Annexure-G (Colly) to the affidavit in support of the Summons for directions.
2. That a meeting of the Equity Shareholders (along with Preference Shareholders having voting rights in terms of Section 87 of the Companies Act, 1956) of the applicant company shall be convened and held at the Registered Office of the applicant company at Aerodrome Road, Jamnagar-361 006, Gujarat, on Wednesday, the 11th day of April 2012 at 10.00 a.m. (1000 hours), for the purpose of considering, and if thought fit, approving with or without modification(s), the arrangement embodied in the Scheme of Arrangement between the applicant company and its shareholders.
3. That 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 and of 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 Advocate, i.e. M/s. Singhi & Co., 7-8 Premchand House Annexe, Ashram Road, Old High Court Way, Ahmedabad - 380 009, be inserted once in each of "Indian Express", Ahmedabad and Rajkot Editions and "Sandesh", Ahmedabad and Rajkot Editions. Publication of the advertisement in the Gujarat Government Gazette is dispensed with.
4. That, 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 ordinary post addressed to each of the Equity Shareholders and Preference Shareholders (having voting rights in terms of Section 87 of the Companies Act, 1956) of the applicant company at their respective registered or last known addresses. The notice shall be sent to the Equity Shareholders and Preference Shareholders (having voting rights in terms of Section 87 of the Companies Act, 1956) of the applicant company with reference to the list of persons appearing on the record of the applicant company and its register as on 2nd March 2012.
The petitioner shall prepare a list containing the names and addresses of the shareholders to whom the Notices are being dispatched and shall get the said list certified by the officer in-charge of the Post Office and the list shall be placed on record along with affidavit of compliance.
5. That Mr. A.C.Mukherji, the Director of the applicant company, and in his absence Dr.G.Goswami, the Director of the applicant company and in his absence, Mr.C.L.Rathi, Managing Director of the applicant company, shall be the Chairman of the aforesaid meeting to be held on Wednesday, the 11th day of April 2012 and in respect of any adjournment or adjournments thereof.
6. That the Chairman appointed for the aforesaid meetings do issue the advertisement and send out the notices of the meeting referred to above. The Chairmen are free to avail the service of the applicant company or any 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 meetings including an amendment to the aforesaid Scheme of Arrangement or resolution, if any, proposed at the aforesaid meeting by any person(s) and to ascertain the decision of the aforesaid meeting on the poll.
7. That quorum for the meeting of the Equity Shareholders (along with Preference Shareholders having voting rights in terms of Section 87 of the Companies Act, 1956) shall be 20s persons whether Equity Shareholders and 5 Preference Shareholders present in person.
That the voting shall be by ballot and not by merely show of hands.
8. That voting by 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 Aerodrome Road, Jamnagar-361 006, Gujarat not later than 48 hours before the meeting.
9. That the value of shareholding of each member 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.
10. It is further ordered 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.
11. Mr. Soparkar, learned Senior Counsel, submits that the meeting of the Creditors of the applicant company is not required to be called for as there is no compromise or arrangement offered to any of the Creditors and neither any liability of the Creditors under the Scheme is being reduced or extinguished.
12. Mr. Soparkar, learned Senior Counsel, submits that there would be a reduction of the Preference Share Capital which shall be effected as an integral part of the Scheme itself from this Court. Mr. Soparkar further submitted that the Equity Shareholders (alongwith Preference Shareholders having voting rights in terms of Section 87 of the Companies Act, 1956) of the applicant company are to consider the Scheme in the meeting which includes reduction of Preference Share Capital. As the procedure under Section 100 of the Companies Act, 1956 being para materia with the present proceedings no separate procedure for reduction of Preference Share Capital is required to be followed. Further, Mr. Soparkar, learned Senior Counsel submitted that the reduction of Preference Share Capital does not in any manner affects the interests of the Creditors of the applicant company as such reduction does not involve either diminution of liability in respect of unpaid Share Capital or payment to the shareholder of Paid-up Share Capital. In this regard, Mr. Soparkar referred to Sections 100 and 101 of the Companies Act, 1956. Mr. Soparkar relied upon the order dated 31.01.2003 passed by this Court in Company Application No.30 of 2003 and the order dated 29.07.2008 passed by this Court in Company Application No.426 of 2008, wherein this Court has dispensed with the following a separate procedure for reduction of capital.
13. Hearing the submissions of Mr. Soparkar and the orders cited above, I am of the view that meeting of the creditors for considering the aforesaid Scheme of Arrangement which includes reduction of Preference Share Capital is not required to be called for as the rights of the creditors of the applicant company are in no manner affected by the Scheme. Further, I hold that no separate procedure is required to be followed for reduction of Preference Share Capital as the same is part and parcel of the Scheme of Arrangement.
This Company Application is disposed of accordingly.
(K.M.THAKER, J.) jani Top