TMI Blog2015 (10) TMI 91X X X X Extracts X X X X X X X X Extracts X X X X ..... 2 of 2014, the scheme was sanctioned. It cannot be said that the affairs of the petitioner's-company were conducted in a manner that is prejudicial to the interest of the public. The Competition Commission of India has approved the scheme. The scheme proposes the hive off the transferred undertaking of the petitioner-company into Enrica, the transferee company, by way of a slump sale on a going concern basis. The same would be in the interest of the creditors of the petitioner-company and its shareholders. The scheme requires to be sanctioned. Hence, the petition is allowed. - Decided in favour of the Petitioner. - CO. PETITION NO. 170 OF 2014 - - - Dated:- 19-2-2015 - RAVI MALIMATH, J. For The Petitioner : Vivek Holla For The Respondent : Smt. Sowbhagya N.A., CGC for the ROC JUDGMENT 1. This petition is filed seeking for sanction of the scheme of arrangement vide annexure A to the petition. The petitioner is the transferor company which was incorporated on March 31, 1999, under the name and style McDowell Spirits Ltd. . The name of the company was subsequently changed as McDowell and Co. Ltd. , vide fresh certificate of incorporation dated April 12, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e company held on November 8, 2013, the scheme of arrangement in terms of annexure F to the petition was approved. The Bombay Stock Exchange, has given no objection for approving the scheme on March 24, 2014, vide annexure H. The National Stock Exchange and the Bangalore Stock Exchange have given their no objection on March 25, 2014 and December 12, 2013, respectively vide annexures J and K. The Securities and Exchange Board of India gave its consent on March 21, 2013, vide annexure P to the petition. The Competition Commission of India has approved the scheme by its order dated December 26, 2013, vide annexure Q. 2. The transferee company has its registered office at No. 9, Old No. 5, Chinnaiah Street, T. Nagar, Chennai-600 017. The company was incorporated on September 6, 1990, with the Registrar of Companies. The name of the company was changed to Enrica Enterprises on November 18, 2017. The registered office was shifted from Andhra Pradesh to Tamil Nadu by a special *Correction carried out in terms of the order dated 02.07.2015 Resolution dated February 28, 2007, which was confirmed by the Company Law Board by its order dated July 27, 2007. The authorised, issued ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bjected as follows :- That the petitioner-company has stated that the petitioner before this court is not for demerger. It is only a hive off by way of a slump sale. The preamble to the scheme provides that the petitioner-company being the transferor company provides for sale of the Poonamallee unit located at Chennai, Tamil Nadu. Therefore in terms of clauses Nos. 5, 6 and 7 of the scheme it is a sale of an undertaking from the transferor company to the transferee company at fair value (market price). The scheme does not have any clause for an exchange ratio for allotting shares to the shareholders of the petitioner-company by the transferee company. The sale of an undertaking is covered under section 293(1)(a) of the Companies Act, 1956, up to September 11, 2013 and with effect from September 12, 2013, under section 180(1)(a) and sub-section (4) of the Companies Act, 2013, which speaks of the restrictions of the powers of the board. Therefore, in terms of section 180 of the Companies Act, 2013, the approval of the board of directors is required. In case a sale of an undertaking required the approval of the hon'ble High Court, then such a condition would exist in section 18 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ioning of the scheme. By the order dated July 31, 2014, in Company Petition No. 2 of 2014 the same was allowed. The scheme was approved subject to approval being granted in the petition to be filed by the transferor company before the High Court of Karnataka. Under these circumstances, it was contended that since the very scheme has already been approved by the High Court of Madras without any objections of the Regional Director none of the objections of the Regional Director could be considered herein. I am of the considered view that only because the Regional Director at Madras has not raised objections, it is inappropriate to hold that the objections of the Regional Director herein should be overruled. The objection of the Regional Director requires to be considered. The provisions of section 293 of the Companies Act, 1956 and section 180 of the Companies Act, 2013, are almost similar. Hence, it is submitted by learned counsel for the Registrar of Companies that the contentions being advanced by her are with reference to section 293 of the 1956 Act as well as section 180 of the 2013 Act. That even though reference is made to section 180 of the 2013 Act, the same should be con ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he statute not forming part and parcel of the code, necessarily the provisions of these sections would have precedence over the other provisions of the Act. The very issue came for consideratio in the case of PMP Auto Industries Ltd, In re and S.S. Minnda Ltd., In re (1994) 80 Comp Cas 289 (Bom), Wherein it was held that once a scheme of arrangement falls within the ambit of sections 391 to 394, the same coould be sanctioned even if it involves doing acts for which the procedure is specified under other sections of the Companies Act The said judgment was followed by the subsequent judgment of the Delhi High Court reported in (2004) 121 Company Cases 861 in the case of 1. HCL Infosystems Ltd., In re (C.P.No.140 of 2003), 2. HCL Infinet Ltd., In re (C.P.No.141 of 2003) 3. HCL Technologies Ltd, In re (C.P.No.142/2003). fOLLOWING the eadier judgment it was held that the provisions under section 293(1)(a) of the Act are not applicable and section 391 to 394 of the Act alone requires to be applied. The aforesaid judgment would indicate that notwithstanding section 293, the same would not be applicable in view of the fact that sections 391 to 394 being a complete code in itself, the sa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ts have held that even in a case of a slump sale, the provisions of sections 391 to 394 stand attracted requiring the approval of the company court. In support of his case he relies on the judgment of the hon'ble High Court of Gujarat in the case of HEALTH PRODUCTS LTD., vs. UNKNOWN reported in 2005 (62) SCL 393(Gujarat). The unreported judgment of this court dated June 16, 2008, passed in Company Petition No. 45/2008 connected with 146/2008 and 147/2010. The unreported judgment of the High Court of Bombay dated January 24th January, 2014 in Company Petition No. 696 of 2013. The judgment of the High Court of Gujarat in Company Cases Nos. 146 of 2010 and 147 of 2010 dated 14-03-2011, in the case of NIRMA LIMITED. I have considered each one of the judgments. Since this is the consistent view that is taken by the majority of the High Courts, I do not find any ground to take a different view. Therefore, I am of the considered view that the same would stand attracted by sections 391 to 394 of the Act requiring the approval of the court. (c) The further objection is with regard to the appointed date. What is proposed is April 1, 2013. It is on the basis of the accounts as on that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hareholders, secured creditors and unsecured creditors of the petitioner-company have approved the scheme by requisite majority. That the proposed scheme will be beneficial to the petitioner-company as well as Enrica. That the transferor company has already filed a petition before the High Court of Madras wherein by the order dated July 31, 2014, in Company Petition No. 2 of 2014, the scheme was sanctioned. It cannot be said that the affairs of the petitioner's-company were conducted in a manner that is prejudicial to the interest of the public. That the Bombay Stock Exchange, the National Stock Exchange and the Bangalore Stock Exchange, have already given their no objections to the scheme. The SEBI had also given its consent. The Competition Commission of India has approved the scheme. The scheme proposes the hive off the transferred undertaking of the petitioner-company into Enrica, the transferee company, by way of a slump sale on a going concern basis. The same would be in the interest of the creditors of the petitioner-company and its shareholders. In pursuance whereof a sum of ₹ 125,07,00,000 (rupees one hundred and twenty-five crores and seven lakhs only) shall ..... X X X X Extracts X X X X X X X X Extracts X X X X
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