TMI Blog1991 (11) TMI 212X X X X Extracts X X X X X X X X Extracts X X X X ..... pproving, with or without modification, a scheme of arrangement between the existing company and the new company and their respective shareholders. By an order dated May 30, 1991, directions were given for holding separate meetings of the above-mentioned classes. Individual notices were directed to be given to all the shareholders of the two companies and to the creditors of the existing company in accordance with the rules. On C.A. No. 429 of 1991, however, issue of individual notices to unsecured creditors of the existing company of nominal value of less than Rs. 50,000 and fixed deposit value of less than Rs. 10,000 was dispensed with as the numerical value of such creditors is 3.23 per cent. of the aggregate debt and 7.48 per cent. of the unsecured creditors. Notices of the meetings were directed to be published at least 21 days before the date of the meetings in daily newspapers Hindustan Times and Navbharat Times. Separate chairpersons and alternate chairpersons were appointed for each meeting. They were directed to submit their respective reports within a week after holding the meetings. The coram and the right to vote by proxy was directed to be governed by the memora ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the other meetings show that the scheme of arrangement was passed unanimously by the secured creditors; it was passed by more than a three-fourths majority in value of the unsecured creditors ; and it was also passed unanimously by the statutory creditors present and voting at the respective meetings. Likewise, the amendment to the scheme of arrangement vis-a-vis annexure 'A' was moved at the meeting of the equity shareholders of the new company and it was passed unanimously. The poll results were duly published in newspapers Hindustan Times and Navbharat Times of July 20, 1991, and July 21, 1991, respectively. It was then on August 2, 1991, that the present petition was filed for sanction of the scheme of arrangement between the existing company and the new company in accordance with the scheme of arrangement as amended (annexure "U") so as to be binding upon the shareholders of both the companies as well as the creditors of the existing company. By an order dated August 5, 1991, notice to the Central Government was again issued and directions were given for publication in accordance with the rules to be effected in newspapers in which the earlier application was adverti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d in Noida (U.P.), Dehradun (U.P.), Madras and Dundahera (Haryana). The latest available balance-sheet of the company for the accounting year ending June 30, 1990, is annexure 'C' to the petition. It has entered into a joint venture agreement dated April 2, 1991, with HP Co., inter alia , for the purpose of combining the respective computer manufacturing, marketing, servicing and sales activities in India of the existing company and HP Co. The joint venture agreement contemplates that HP Co. will participate in the existing company where computer, CAD/CAM and peripheral divisions are only to be retained. The residual divisions (consisting of reprographic communication and instrument divisions) together with the investments shall be spun off to the new company in which HP Co. shall not participate. The new company was incorporated on May 15, 1991. The main objects of this company are identical with those of the existing company. It has been formed, inter alia , for the purpose of taking over the residual division of the existing company on the same being spun off in pursuance of the joint venture agreement between the existing company and HP Co. Mr. Shroff, learned counsel for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... creditors and employees in great detail. So far as the Central Government's representation is concerned, Mr. K.M. Gupta has affirmed that the Central Government "has no objection to the scheme of arrangement". This, however, is made subject to two "observations". The first observation is about the "appointed date". This expression is defined in the scheme itself : "The 'appointed date' means the commencement of business of the 'existing company' on the 1st day of July, 1990". This date, Mr. Shroff has explained, has been taken for the identification and quantification of the assets and liabilities of the existing company and the new company consequent upon the proposed spin off. This identification has been done on the basis of the audited balance-sheet of the existing company for the financial year ending June 30, 1990. The "appointed date" is relevant for the purpose of fixation of the share valuation/share exchange rate which HP Co. would offer to the existing shareholders after the bifurcation and spinning off of the divisions as the price is payable per share post-consolidation and reduction. The scheme nowhere seeks transfer artificially of new assets in July, 1990. A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e representation of the Central Government under section 394A of the Act, nothing is found to interdict the petition. At the hearing, no one appeared for the Central Government. Apparently, it was not interested in pursuing the representation. Here, it may be noted that the amendment to the memorandum and articles of association of both the petitioner-companies and inter-change of their names are also envisaged so as to enable effectuation of the scheme. For this purpose, members of both the existing company and the new company have passed the required resolutions at the extraordinary general meeting of each company held on July 16, 1991. Certified copies of those resolutions (annexure "S" and annexure "T") have been placed on record. Hence, it is found that no objections to the proposed scheme of arrangement have been received ; and that the two "observations" made in the Central Government's representation are insignificant. In accordance with section 391(2) of the Act, the requisite majority in number representing three-fourths in value of the creditors and members of the existing company as well as the members of the new company agree to the arrangement. The petitioners hav ..... X X X X Extracts X X X X X X X X Extracts X X X X
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