TMI Blog2004 (5) TMI 312X X X X Extracts X X X X X X X X Extracts X X X X ..... ers company s authorized, issued, subscribed and paid up share capital is referred in para 4, which is reproduced as under; Authorized 100,000,000 equity shares of Rs. 10 each fully paid up, Rs. 10,000 lakhs. Cumulative Redeemable preference shares 5,00,000 shares of Rs. 100 each. Rs. 5,000 lakhs. Issued, subscribed and paid up 51,77,372 Equity Shares of Rs. 10 each fully paid up, Rs. 517.74 in lakhs. 9,000,000 Equity Shares of Rs. 10 each, 4 paid up, Rs. 36 lakhs. Total Rs. 553.74 lakhs. The petitioner company holds 100 per cent equity shares of the transferor company. The Transferor company is wholly owned subsidiary of the petitioner company and all the shares of the Transferor company are presently held by the petitioner company, in its own name or in the name of its nominees. The assets of the petitioner company, as described in para 20 are similarly, the Assets of the petitioner Company are in the sum of Rs. 2,012,417,658, as against liabilities of Rs. 1,204,143,847. Assets are far more than the liabilities, as on 31-3-2003. Secured loans Rs. 837,889,147 Fixed Assets (Net) Rs. 590,473,828, Unsecured loans-Nil, Capital work in progress investments Rs. 15,358,401. Current liabi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... titioners company is sound, as the petitioners company have assets, in excess of the liabilities. 6. Company Application No. 438/2003, wherein order dated 8-10-2003, was passed, to convene the meeting of equity shareholders, and to pass Special Resolution for confirming the utilization of share premium account. 7. The meeting of secured and unsecured creditors were dispensed with, in view of the averments made in para 20 of the affidavit in support of Company Application No. 438/2003. The notices of meeting were sent to individuals with copy of the scheme and a form of proxy, as per law and accordingly, it was advertised also. The affidavit in support of the same is also filed on the record. The meeting was held on 22-11-2003, accordingly, in the Chairmanship of Mr. A.P. Kothari. The Majority shareholders voted in favour of the scheme of arrangement. In the said meeting the special resolution confirming utilization of share premium account was passed. The resolution as recorded in the petition, has been approved by the requisite majority. The Chairman s report dated 12-12-2003 is placed on the record. 8. Both the companies are not registered under the monopolies and Res ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g to the appellants, after the merger between DAIL and NIC, they supplied tobacco to TABAC or DAIL on the basis of an understanding or arrangement that DAIL would be responsible for payment for the supplies. It was not obviously an admitted position. In other words, it would be necessary for the appellants to prove their alleged claim. The Court below having held against the appellants, the question for decision in this appeal was whether, on the facts, the appellants were entitled to invoke power of the Court under section 392 to release the said alleged debt. Held:- The provisions of section 392 of the Companies Act, 1956, may be invoked strictly to ensure effective working of the compromise and/or arrangement. Indeed the High Court has been conferred power of widest amplitude to monitor and effect the purpose. It is significant that, in this case, there was no allegation by the appellant that the sanctioned scheme was not properly working, or that the scheme should be set aside. The appellants have merely sought, in these proceedings, to release an alleged debt, attempting those the provisions of section 392 of the Act, as a lever, which, it must be held, as futile and fri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... upra ), this scheme of arrangement should also be rejected. The meeting of such creditors is necessary. The majority of the creditors are kept in the dark of the proposed scheme of arrangement and therefore, this is not in consonance of the object and purpose of the provisions of the Companies Act. The majority decision of the creditors and/or its approval, as per the law, is necessary and therefore, this scheme of arrangement should also be rejected. Mr. Kadam, Counsel, appearing for the petitioner referred the Division Bench Judgment, as in Kaveri Entertainment Ltd. s case ( supra ), whereby the Division Bench of this Court has reversed the said Judgment as relied by the creditor, intervener i.e., Kaveri Entertainment Ltd. s case ( supra ). The relevant para of the said Judgment is reproduced as under: "We find that the learned Single Judge has totally misdirected himself in passing the impugned order. It is further to be seen here that in any case the learned Single Judge was not at all justified in dismissing the petition. Even if it is assumed that the learned Single Judge was justified in holding that order dispensing with individual notices to the creditors below Rs. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... no reason now to direct the parties to issue fresh individual notices or held meeting of such creditors again. I am considering the scheme of arrangement in question that it is fair, reasonable, sound and not contrary to the public interest or public policy. It may be mentioned here that except the objectors, interveners, who appeared through their respective advocates, made above submissions, as recorded, no one appeared and objected the scheme. No claim appeared or submitted in submission in support of their opposition on behalf of M/s. Freeman Products (India), Ludhiana and M.R. Malpani, Subhash Chowk, Parli-Vaijnath. Mere sending their representation, objection on the record of the court or to the petitioner Company that itself is not sufficient. The practice and procedure of the Company Court is well known. The objections are not in the format and are not sent at appropriate time. Even otherwise, after, considering, the merits of these two objections and as contended by the petitioner s Counsel, mere bald statement and without supporting any evidence in support of their objections and/or claim, this Court cannot adjudicate or even decide such objections or pass any order on s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... osition and contended that the demand of Rs. 15,68,223 and interest of 19 per cent is not correct. In fact the settled amount and dues have been paid by Jalgaon Unit on 19-3-2004, and the same was communicated vide letter dated 31-3-2004. The petitioner company have placed on record the necessary documents to support the same. The petitioner company have also taking steps to reconcile the account, so far as, Thane Unit is concerned. However, they have denied the amount, as claimed, as the same is exaggerated and the demand is made with ulterior purpose and to mislead this Court. The statements and the claim made by the objectors are baseless and are false and are with a view to extract exaggerated amount from the petitioner in the circumstances. The Objectors, interveners have made this application with a mala fide intention by suppressing true and correct facts and the facts that they had received the amount due by the Jalgaon Unit of the petitioner company. The petitioners have pointed out the certificate of C.A. dated 7-4-2004 to demonstrate the positive networth of EMCO Limited and subsidiary company, as on 31-12-2003. In view of this, company, submitted that the intervener ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mpany. The reference is also made that there are creditors worth Rs. 2.60 crores inclusive of small scale industrial undertaking. Therefore, all the liabilities and dues and obligations of the transferor company will be taken over by the transferee company, transfer of assets of the transferee company should be made subject to the charges. The objection is also that the transferor company is not at all concerned with the nature of the business of the transferee concerned and it is proposed to run the business without any knowledge of the same. If the employees of the transferor company become employee of the transferee company, the wage burden of the transferor company, as well as, all other dues liabilities of the transferor company will be absolved, from paying. No provisions whatsoever has been made to meet the liability of unsecured creditors. The petitioner is not going to benefited from the proposed amalgamation and will be of loss and will ensure to the detriment of the creditors. The Petitioner s Counsel in view of the submissions, made in the petition, as well as, statement and chart re- corded of their assets, rights and the liability, again pointed out that this objectio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d 10-4-2004. In view of this, the application and objection of Ujwal Udyog is not fair. In my view, also in view of above affidavit, statement made by the parties, this objection is also rejected. 20. Considering, the over all view of the scheme of the arrangement in question, as well as the affidavit filed to oppose the objection as raised by the respective creditors and even after considering, the merit of the objection raised by the creditors, I am convinced that such creditors cannot object the sanctioning of the arrangement in question. In my view also if liabilities or dues are in dispute and unless those disputes or liabilities are settled, in appropriate Court or forum pending those proceedings, sanction of such scheme of arrangement cannot be haulted or stopped or delayed. All creditors or parties are free to take appropriate steps to recover those amounts, if those amounts were settled or crystallized by appropriate forum or Court. I am not considering at this stage, the case of any undisputed amount between the creditors and company. In the present case, petitioner s affidavit, as well as, material placed on record are sufficient to demonstrate, that the petitioner c ..... X X X X Extracts X X X X X X X X Extracts X X X X
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