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IN THE MATTER OF M/S BULK EXPLOSIVES LTD

High Court of Judicature at Allahabad

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In The Matter Of M/S Bulk Explosives Ltd - COMPANY PETITION No. 32 of 2004 [2005] RD-AH 7929 (21 December 2005)

 

This is an UNCERTIFIED copy for information/reference. For authentic copy please refer to certified copy only. In case of any mistake, please bring it to the notice of Joint Registrar(Copying).

HIGH COURT OF JUDICATURE OF ALLAHABAD

Reserved

                               

Company Petition No. 32 of 2004

(arising out of Company Application No. 6 of 2004)

                                           In the matter of

M/s. Bulk Explosives Limited , a company duly incorporated under the provisions of the  Companies Act, 1956, having its Registered office at House no. 45, Gali No.2, Ambedkar Vihar, Near Harijan Basti, Sector -37, Noida.

                                               ......... Petitioner -Transferor Company

                                          And

                                         In the matter of

M/s. Bharat Explosives Limited, a Public Limited Company incorporated under the provisions of the Companies Act, 1956 and having its Registered office at 9 K.M. , Lalitpur Jhansi Raod, Lalitpur- 284403 (U.P.)

Hon. S.P. Mehrotra, J.

The present Company Petition has been filed under Section 391(2) read with Section 394 of the Companies Act, 1956 by M/s. Bulk Explosives Limited , a company duly incorporated under the provisions of the  Companies Act, 1956, having its Registered Office at House no. 45, Gali No.2, Ambedkar Vihar, Near Harijan Basti, Sector -37,Noida             (hereinafter referred to as "the Transferor Company" or "the Petitioner-Transferor Company").

It appears that a Scheme of Amalgamation is proposed for the amalgamation of the Transferor Company with M/s Bharat Explosives Limited ( hereinafter referred to as "the Transferee Company") having its Registered Office at 9 K.M. , Lalitpur Jhansi Road, Lalitpur 284403 ( U.P.). Copy of the proposed Scheme of Amalgamation has been filed as Annexure No.4 to the Company Petition, and appears at page 110 of the Paper Book of the Company Petition.

It is, interalia, prayed in the Company Petition that the proposed Scheme of Amalgamation be sanctioned by this Court to be binding with effect from the effective date on the Transferor Company (M/s Bulk Explosive Limited), and the Transferee Company (M/s Bharat Explosives Limited) and their Shareholders and all concerned.

It is, interalia, stated in the Company Petition that the Transferor Company was incorporated in Kolkata, in the State of West Bengal on 9th July, 1999 under the Companies Act, 1956 as a Private Limited Company ; and that thereafter , the Registered Office of the Transferor Company was shifted from the State of West Bengal to the State of Uttar Pradesh, ; and that the change was duly confirmed by the Company Law Board , E.R. Bench , Kolkata on 25th July, 2003 in C.P. No. 243(17)ERB/2003 , and the same was duly filed with the Registrar of Companies , U.P. and Uttaranchal at Kanpur , pursuant to the provisions of Section 18(3) of the Companies Act, 1956.

It is, interalia, further stated in the Company Petition that the Transferee Company was originally incorporated on 21.8.1962 under the Companies Act, 1956  under the name  Narendra Explosives Limited , which name was subsequently changed as Bharat Explosives Limited, by duly passing the special resolution on 30th September, 1986 in terms of Section 21 of the Companies Act, 1956 and obtaining the necessary fresh Certificate of Incorporation on 7.10.1986, consequent upon the change of name, from the Registrar of Companies , U.P. at Kanpur.

It is, interalia, further stated in the Company Petition that the Registered Office of the Transferor Company is situated at House No. 45 , Gali No. 2, Ambedkar Vihar, Near Harijan Basti, Sector-37, Noida (U.P.).; and that the Authorized Share Capital of the Transferor Company is Rs. 50,00,000/-divided into Five Lakhs  Equity Shares of Rs. 10 each ; and that the Issued, Subscribed and Paid up Share Capital of the Transferor Company as on 31.3.2003 is Rs. 50,00,000/- divided into Five Lakhs  Equity Shares of Rs. 10 each fully paid up; and that as on 20th November, 2003, the entire Share Capital of the Transferor Company is held by the Transferee Company together and jointly with six individual nominees of the Transferee Company, and they together and jointly hold 5,00,000 Shares of Rs. 10 /- each.

It is, interalia, further stated in the Company Petition that consequent upon the entire Share Capital of the Transferor Company being held by the Transferee Company with effect from 20th November, 2003, by virtue of Section 3(1) (iv) of the Companies Act, 1956 , the Transferor Company has become a Public Limited Company; and that accordingly, the Transferor Company has taken all necessary steps to change the name of the Company by removing the word " Private" from its name and the Registrar of Companies , U.P. and Uttaranchal has by fresh Certificate of Incorporation dated 22.1.2004, sanctioned the change of name by deleting the word   " Private" from its name. Copy of the Fresh Certificate of Incorporation has been filed as Annexure no. 1 to the Company Petition, and appears at page 29 of the Paper Book of the Company Petition.

It is, interalia, further stated in the Company Petition that the objects of the Transferor Company are set out in its Memorandum of Association. Copy of the Memorandum and Articles of Association of the Transferor Company has been filed as Annexure No. 2 to the Company Petition, and appears at page 30 of the Paper Book of the Company Petition. The main objects of the Transferor Company have been stated in brief in paragraph no. 7 of the Company Petition.

It is , interalia, further stated in the Company Petition that the objects of the Transferee Company are set out in its Memorandum of Association. Copy of the Memorandum and Articles of Association of the Transferee Company has been filed as Annexure no. 3 to the Company Petition, and appears at page 57 of the Paper Book of the Company Petition. The main objects of the Transferee Company have been stated in paragraph no. 8 of the Company Petition.

It is, interalia, further stated in the Company Petition that the Authorized Share Capital of the Transferee Company is Rs. 20,00,00,000/- ( Rupees Twenty Crores only ) divided into 180,00,000 Equity Shares of Rs. 10/- ( Rupees ten only) each , and 2,00,000 Cumulative Preference Shares of Rs. 100/- each; and that the Issued , Subscribed , Called and Paid up Share Capital of the Transferee Company as on 31st March, 2003 is Rs. 1,171.50 lacs divided into 1,17,15,000 Equity Shares of Rs. 10 /- each fully paid up.

It is, interalia, further stated in the Company Petition that the Company Petition has been filed seeking sanction of this Court in respect of the proposed Scheme of Amalgamation for the amalgamation of the Transferor Company with the Transferee Company. Copy of the proposed Scheme of Amalgamation of the Transferor Company with the Transferee Company, as mentioned above, has been filed as Annexure No. 4 to the Company Petition.

The objects sought to be achieved by the proposed merger/amalgamation have been stated in brief in paragraph no. 13 of the Company Petition.

It is, interalia, further stated in the Company Petition that the merger/amalgamation would be in the best interests of both the Transferor Company and the Transferee Company and all their shareholders and creditors.

It is, interalia, further stated in the Company Petition that Clause III (C) (19) of the Objects of the Transferor Company permits the amalgamation of the Transferor Company; and that Clause III (54) of the Objects of the Transferee Company permits the amalgamation of the Transferee Company.

It is, interalia, stated in paragraph 17 of the Company Petition that the proposed Scheme of Amalgamation of the Transferor Company with the Transferee Company has been approved by the Board of Directors of the Transferor Company in  its meeting held on 3rd January, 2004 as well as by the Board of Directors of the Transferee Company in its meeting held on 31st December, 2003. Copies of the Resolution passed in this behalf by the Board of Directors of the Transferor Company and the Resolution passed in this behalf by the Board of Directors of the Transferee Company have been filed as Annexure no. 5 and 6, respectively to the Company Petition, and appear at pages 117 and 119, respectively of the Paper Book of the Company Petition.

It is, interalia, stated in paragraph 20 the Company Petition that the proposed Scheme of Amalgamation is not intended in any manner to have any beneficial effect on the material interest, if any, of the Directors of the Transferor Company and the Transferee Company, and none of the Shares in the Transferor Company is held by any Director.

The financial position of the Transferor Company as on 31st March, 2003 has been stated in brief in paragraph no. 21 of the Company Petition. Copy of the audited Balance sheet and Profit and Loss Account of the Transferor Company for the financial year ending 31st March, 2003 has been filed as Annexure no. 8 to the Company Petition, and appears at page 124 of the Paper Book of the Company Petition.

The financial position of the Transferee Company as on 31st March, 2003 has been stated in brief in paragraph no. 22 of the Company Petition. Copy of the audited Balance sheet and Profit and Loss Account of the Transferee Company for the financial year ending 31st March, 2003 has been filed as Annexure no. 9 to the Company Petition, and appears at page 155 of the Paper Book of the Company Petition.

It is, interalia, stated in paragraph 24 of the Company Petition that no investigation proceedings have been initiated or are pending in relation to the Transferee Company or the Transferor Company under Section 235 or Section 251 or the like of the Companies Act, 1956.

It is, interalia, stated in paragraph 18 of the Company Petition that the Shares of the Transferor Company are not listed on any Stock Exchange; and that the Equity Shares of the Transferee Company are listed on the Stock Exchanges at Uttar Pradesh and New Delhi ; and that pursuant to the listing Agreement entered into with the aforementioned Stock Exchanges by the Transferee Company , the Stock Exchanges had been duly informed of the proposed Scheme of Amalgamation and their approval  have been received. Copies of the approval of the Stock Exchanges of Uttar Pradesh and Delhi have been collectively filed as Annexure no. 7 to the Company Petition, and appear at pages 123 and 122, respectively of the Paper Book of the Company Petition.

It is, interalia, stated in paragraph 19 of the Company Petition that in terms of Clause 3.1 of the Scheme of Amalgamation, the investment of the Transferee Company in the fully paid-up Equity Share of the Transferor Company shall on the date of the scheme becoming effective stand cancelled and extinguished against the Share capital of the Transferor Company ; and that consequently, there will be no increase in the Share capital of the amalgamated company; and that as the proposed Scheme of Amalgamation does not envisage a further allotment of fresh Shares, no Share Valuation Report is necessary.

It is, interalia, stated in paragraph 25 of the Company Petition that there are no debenture holders or public deposits in the Transferor Company.

Making the aforesaid averments, the Transferor Company filed Company Application No.6 of 2004, interalia, praying that convening of the meeting of the Secured Creditors of the Transferor Company, the meeting of the Shareholders/ Members of the Transferor Company, and the meeting of the Unsecured Creditors of the Transferor Company be dispensed with.

The Court passed the order dated 6.4.2004 on the aforesaid Company Application.

By the said order dated 6.4.2004, the Court, interalia, dispensed with the requirement for holding the meeting of the Secured Creditors of the Transferor Company for consideration of the proposed Scheme of Amalgamation, as per the requirements of Section 391(1) and (2) read with Section 393 of the Companies Act, 1956.

While dispensing with the requirement for holding the meeting of the Secured Creditors, the Court observed as follows in the said order dated 6.4.2004.

"In the said paragraph 27 of the Company Application, as noted above, it has, interalia, been stated that in so far as the secured creditor of the Transferor Company is concerned, it is financed by State Bank of India , Jabalpur Branch, Madhya Pradesh which has given its letter of consent to the proposed Scheme of Amalgamation and has submitted notarized affidavit indicating their no objection to the said Scheme ....................."

"A perusal of the said letter of consent dated 19.2.2004 annexed as part of Annexure No.10 to the Company Application at page no.188 of the paper book shows that it is , interalia, stated in the said letter of consent that the approval for the proposed merger is being given subject to the condition that no dilution takes place in the securities/charges created in favour of the said secured creditor (i.e., State Bank of India), and the interest of the said secured creditor is not affected in any manner upon amalgamation, and that the merger should strictly be as per the scheme submitted to the said secured creditor (i.e., State Bank of India).

"A perusal of the said notarized affidavit submitted by State Bank of India (secured creditor), annexed as part of Annexure no.10 to the Company Application, shows that it is , interalia, stated in the said affidavit that State Bank of India ( secured creditor) shall have no objection in the event of amalgamation of the Transferor Company with the Transferee Company pursuant to the Draft Scheme of  Amalgamation subject to the condition that the charge in favour of the secured creditor is not diluted and continued with the company to be created upon amalgamation; and that the guarantees (personal and corporate), mentioned in the said affidavit, are continued till their substitution by other suitable guarantees acceptable to the Bank; and that the secured creditor (i.e., State Bank of India) shall have no objection if the meeting of secured creditors is waived by this Court.............................."

"As is evident from the averments made in paragraph no. 27 of the Company Application that there is only one secured creditor of the Transferor Company , namely, State Bank of India , Jabalpur Branch, Madhya Pradesh . The said secured creditor has given its aforementioned letter of consent dated 19.2.2004 and has also submitted the aforesaid notarized affidavit. A perusal of the said letter of consent and the said notarized affidavit submitted by the said secured creditor shows that the said secured creditor has given its consent to the proposed amalgamation of the Transferor Company with the Transferee Company subject to the conditions mentioned in the said letter of consent and the said notarized affidavit."

"A perusal of the aforementioned Clauses, namely, 2.1, 2.2,.2.3,.and 2.4 of the proposed Scheme of Amalgamation shows that the conditions mentioned in the said letter of consent and the said notarized affidavit regarding the continuance of the charges in favour of the said secured creditor with the company to be created upon amalgamation is taken care of by said clauses of the proposed Scheme of Amalgamation."

"Further, as submitted by Sri Yashwant Verma, learned counsel for the Transferor Company /Applicant, while filing the Petition for confirmation of the proposed Scheme of Amalgamation, necessary affidavit(s) will be filed containing averments so as to remove any doubt regarding fulfillment of the conditions mentioned in the said letter of consent and the said notarized affidavit ( annexed as Annexure no. 10 to the Company Application) including the conditions regarding the continuance of the personal guarantees and the corporate guarantees given to the said secured creditor."

Further, by the said order dated 6.4.2004, the requirement for holding the meeting of the Shareholders/Members of the Transferor Company for consideration of the proposed Scheme of Amalgamation, as per the requirements of Section 391(1) and (2) read with Section 393 of the Companies Act, 1956 was dispensed with.

Again, by the said order dated 6.4.2004, the requirement for holding the meeting of the Unsecured Creditors of the Transferor Company for consideration of the proposed Scheme of Amalgamation, as per the requirements of Section 391(1) and (2) read with Section 393 of the Companies Act, 1956 was dispensed with.

Having thus dispensed with the requirements for holding the meeting of the Secured Creditors of the Transferor Company, the meeting of the Shareholders/ Members of the Transferor Company and the meeting of the Unsecured Creditors of the Transferor Company, the Court by the said order dated 6.4.2004 disposed of the said Company Application No. 6 of 2004.

The relevant portion of the said order dated 6.4.2004 is as follows:

"In the above circumstances, the Transferor Company /Applicant is permitted to file the petition for confirmation of the proposed Scheme of Amalgamation within two months from today. The Company Application is disposed of accordingly."

Resuming the narration of the averments made in the Company Petition, it is, interalia, stated in paragraph 31 of the Company Petition that the Court by the said order dated 6.4.2004 directed the Transferor Company to submit affidavits of persons having given corporate or personal guarantees to the effect that the aforesaid guarantees given to the aforementioned Secured Creditor of the Transferor Company would continue to remain in operation even after amalgamation.

In paragraph 32 of the Company Petition, it is, interalia, stated that the following guarantees (personal/corporate) have been extended to the aforementioned Secured Creditor of the Transferor Company:

(i) L.N. Chaudhary (Personal Guarantee).

(ii) Altar Investment (P) Limited (Corporate Guarantee).

(iii) Antarctica Investment (P) Limited (Corporate Guarantee).

In paragraph 33 of the Company Petition, it is, interalia, stated that the affidavits of the aforesaid persons, who have extended personal/ corporate guaranties, stating therein that the guarantees given by them shall continue to remain in operation even after amalgamation, have been annexed to the Company Petition, and collectively marked as Annexure-11 to the Company Petition.

A perusal of Annexure-11 to the Company Petition shows that the following affidavits have been filed as part of Annexure-11 to the Company Petition:

(i) Affidavit of the aforesaid L.N. Chaudhary, sworn on 30.7.2004, appearing at page 224 of the Paper Book of the Company Petition.

(ii) Affidavit of Vinay Kumar Mehta, stated to be the Director of the aforesaid Altar Investment (P) Limited, sworn on 30.7.2004, appearing at page 227 of the Paper Book of the Company Petition.

(iii) Affidavit of Ajai Kumar Singhal, stated to be the Director of the Antarctica Investment (P) Limited, sworn on 30.7.2004, appearing at page 230 of the Paper Book of the Company Petition.

It may be mentioned that as the numbering of paragraphs in the aforesaid affidavit of Vinay Kumar Mehta, stated to be the Director of the aforesaid Altar Investment (P) Limited, sworn on 30.7.2004, appearing at page 227 of the Paper Book of the Company Petition, had been incorrectly done, another affidavit of the said Vinay Kumar Mehta, sworn on 16.4.2005, was filed as Annexure-SA-2 to the Supplementary Affidavit (Paper No. A-15), sworn on 19.4.2005, filed on behalf of the Transferor Company during the course of hearing of the present Company Petition. The said affidavit of Vinay Kumar Mehta appears at page 45 of the Paper Book of the said Supplementary Affidavit (Paper No. A-15).

A perusal of the aforesaid affidavits, filed on behalf of the aforesaid persons/guarantors, shows that in each of the said affidavits, it is stated that the respective guarantee given by such person/guarantor will continue after amalgamation and remain in force till it is substituted by other suitable guarantee acceptable by the Secured Creditor, i.e. State Bank of India.

As noted above, by the said order dated 6.4.2004, the Transferor Company was permitted to file Company Petition for confirmation of the proposed Scheme of Amalgamation within two months from the date of the said order, i.e., 6.4.2004.

Pursuant to the said order dated 6.4.2004, the present Company Petition was filed by the Transferor Company in the Registry on 2.8.2004, and the same came up before the Court on 3.8.2004.

As there was delay in filing the present Company Petition for confirmation of the proposed Scheme of Amalgamation, an application under Rules 7 and 9 of the Companies (Court) Rules, 1959, supported by an affidavit, was filed alongwith the present Company Petition, interalia, praying for condoning the delay caused in filing the Confirmation Petition, as required by the said order dated 6.4.2004.

By the order dated 3.8.2004 passed on the said application, the Court enlarged the period for filing the Petition for confirmation of the proposed Scheme of Amalgamation till 3.8.2004, and treated the present Company Petition as having been filed within time.

Relevant portion of the said order dated 3.8.2004 passed on the said application is reproduced below :

"........................................................................................................

Having regard to the facts and circumstances stated in the present application and its supporting affidavit, I am of the opinion that sufficient cause has been shown by the Transferor Company/ petitioner/ applicant for the delay in filing the petition for confirmation, as directed by the order dated 6.4.2004, and it is in the interest of justice that the period fixed by the said order dated 6.4.2004 for filing the said petition for confirmation be enlarged.

Accordingly, the period for filing the petition for confirmation of the proposed Scheme of Amalgamation, as fixed by the order dated 6.4.2004, is enlarged till today, and the Company Petition filed alongwith the present application is treated as having been filed within time."

Further, the Court also passed an order dated 3.8.2004 on the present Company Petition, interalia, directing for issuance of notice fixing 25.10.2004 as the date for hearing of the Company Petition.

Directions were, interalia, given in the said order dated 3.8.2004 passed on the Company Petition for issuance of notices to the Regional Director, Northern Region, Ministry of Company Affairs, Government of India, Kanpur, and the Official Liquidator, U.P., Allahabad, and also for publication of notice of hearing of the Company Petition in the newspapers mentioned in the said order dated 3.8.2004.

The said order dated 3.8.2004 passed on the Company Petition is quoted below:

"On oral prayer made by the learned counsel for the Transferor Company/petitioner, he is permitted to make correction in the cause title by substituting the word "Application" by the word "Petition" in the main petition  as well as in the annexures thereto.

After the above correction is made by the learned counsel for the Transferor Company/ petitioner, the Registry will give appropriate  number to the Company Petition.

Issue notice fixing 25.10.2004 as the date for hearing of the petition.

Notice will be issued to the Regional Director, Northern Region, Ministry of Company Affairs, Govt. of India, 10/499B, Alenganj, Khalasi Line, Kanpur as per the provisions of Section 394A of the Companies Act, 1956.

Notice for hearing of the petition will also be issued to the Official Liquidator, Uttar Pradesh, Allahabad as per the provisions of the Second proviso to Section 394(1) of the Companies Act, 1956.

Besides, notice of hearing of the petition will also be published one in the daily newspaper Financial Express published in English from Delhi and the other in the daily newspaper Dainik Jagran published in Hindi from Meerut having circulation in Gautam Budh Nagar.

The publication in the aforesaid newspapers will be made not less than 10 days before the aforesaid date fixed for hearing of the petition."

It further appears from the ordersheet dated 25.10.2004 that the notices, as directed by the said order dated 3.8.2004, were issued to the Regional Director, Kanpur as well as to the Official Liquidator, U.P., Allahabad.

It further appears that pursuant to the directions given in the said order dated 3.8.2004, notice of hearing of the Company Petition was published in the newspapers mentioned in the said order dated 3.8.2004. An affidavit (Paper No.A-8), sworn by Pankaj Garg on 26.10.2004, was filed in this regard on behalf of the Transferor Company.

Taking note of the said affidavit (Paper No. A-8), the Court passed the following order on 10.3.2005:

"By the order dated 3.8.2004, it was , interalia, directed that the notice of hearing of the petition would be published one in the daily Newspaper " Financial Express" published in English from Delhi and the other in the daily Newspaper " Dainik Jagran" published in Hindi from Meerut having circulation in Gautam Budh Nagar .

An affidavit ( Paper no. A-8), sworn by Pankaj Garg on 26.10.2004, has been filed on behalf of the Petitioner -Transferor Company. Along with the said affidavit, photocopies of the relevant extracts of the Newspapers have been filed indicating that the publication, as directed by the said order dated 3.8.2004, had been made.

Sri Yashwant Verma, learned counsel for the Petitioner -Transferor Company prays for and is granted one week's time for filing copies of the said Newspapers in original.

Office is directed to submit report as to whether any Objection has been received pursuant to the petition having been advertised, as directed by the said order dated 3.8.2004.

Requisite report will be submitted on the next date of listing.

Sri S.K. Saxena, Official Liquidator has filed today Representation / Affidavit of Regional Director , Northern Region, Ministry of Company Affairs , Kanpur under Section 394-A of the Companies Act, 1956 .

Let the same be taken on record.

List this case on 24.3.2005. The case will be listed amongst the cases listed at the top of the cause list of the said date."

Subsequently, as mentioned in the above-quoted order dated 10.3.2005, copies of the relevant extracts of the newspapers, in original, were filed alongwith a Supplementary Affidavit (Paper No. A-14), sworn by Smt. Anita Thakur on 23.3.2005.

By the order dated 24.3.2005, the said Supplementary Affidavit and the original copies of the relevant extracts of the newspapers filed therewith, were directed to be taken on record.

The said order dated 24.3.2005 is as follows:

"Pursuant to the order dated 10.3.2005, the case is listed today.

Sri Yashwant Verma, learned counsel for the Petitioner-Transferor Company has filed today a Supplementary affidavit, sworn by Smt. Anita Thakur on 23.3.2005, annexing thereto, Original copies of the relevant extracts of the Newspapers, as mentioned in the order dated 10.3.2005.

Let the Supplementary Affidavit and the original copies of the relevant extracts of the Newspapers filed therewith, be taken on record.

By the said order dated 10.3.2005, office was directed to submit report as to whether any objection had been received pursuant to the petition having been advertised, as directed by the order dated 3.8.2004.

Office has not submitted the requisite report.

Office is directed to submit report by the next date fixed in the matter.

List this case on 8.4.2005."

It further appears that in response to the notice issued pursuant to the said order dated 3.8.2004 passed on the Company Petition, the aforementioned Regional Director, Kanpur filed his representation/ affidavit (Paper No. A-13), sworn on 10.11.2004, under Section 394-A of the Companies Act, 1956. By the order dated 10.3.2005, quoted above, the said representation/affidavit was taken on record.

In reply to the said representation/ affidavit filed by the aforementioned Regional Director, Kanpur, a counter affidavit (Paper No. A-9), sworn on 2.12.2004, was filed on behalf of the Transferor Company.

It further appears that in response to the notice issued to the Official Liquidator, pursuant to the said order dated 3.8.2004 passed on the Company Petition, the Official Liquidator submitted his Report being Report No. 208 of 2004 (Paper No. A-6).

As already mentioned above, during the course of hearing of the present Company Petition, a Supplementary Affidavit (Paper No. A-15), sworn on 19.4.2005, was filed on behalf of the Transferor Company.

Besides the aforementioned affidavit of Vinay Kumar Mehta, sworn on 16.4.2005, filed as Annexure-SA-2 to the said Supplementary Affidavit, Annual Report for the financial year 2003-04, interalia, containing the last audited Balance Sheet of the Transferor Company was filed as Annexure-SA-1 to the said Supplementary Affidavit (Paper No. A-15).

I have heard Shri Yashwant Verma, learned counsel for the Petitioner - Transferor Company and Shri S.K. Saxena, Official Liquidator, and perused the record.

As noted above, the aforementioned Regional Director, Kanpur has filed his representation/ affidavit, sworn on 10.11.2004 (Paper No. A-13),  under Section 394A of the Companies Act, 1956.

It is, interalia, stated in the said representation/ affidavit that as per Clause 2.10 (a) of Part-II of the proposed Scheme of Amalgamation, all the employees of the Transferor Company shall become the employees of the Transferee Company without any break or interruption in their services upon sanctioning of the proposed Scheme of Amalgamation by this Court.

The said representation/ affidavit of the aforementioned Regional Director, Kanpur further refers to Clause 4.6 of Part-IV of the proposed Scheme of Amalgamation, which is as follows:

"4.6. In the event of any of the approvals or conditions enumerated in Clause 4.5 are not being obtained or complied with on order before 30.06.2004 or with such further period or periods as may be agreed upon by and between BEPL and BEL (through their respective Boards of Directors) the Scheme shall become null and void and in that event no rights or liabilities whatsoever shall accrue to or be incurred inter se between BEPL and BEL."

It may be mentioned that BEPL in the above Clause stands for Bulk Explosives Ltd (i.e., Transferor Company) while BEL in the above Clause stands for Bharat Explosives Ltd. (i.e., Transferee Company), as is evident from the Definition Clause of the proposed Scheme of Amalgamation appearing at page 111 of the Paper Book of the Company Petition.

It is, interalia, stated in the said representation/ affidavit of the aforementioned Regional Director, Kanpur that the matter pertaining to the above-quoted Clause 4.6 of the proposed Scheme of Amalgamation was taken up with both the Transferee Company as well as the Transferor Company; and that the Transferee Company by its letter dated 27.9.2004 has intimated that the Board of Directors of the Transferor Company as well as the Board of Directors of the Transferee Company, in their respective Board Meetings held on 26.5.2004 and 23.6.2004  have passed necessary Resolutions extending the period for sanctioning the proposed Scheme of Amalgamation from 30.6.2004 till such period, the same is approved by the Court and other necessary formalities are complied with; and that it has also been clarified that no application has been moved before this Court to make amendment in Clause 4.6 of Part-IV of the proposed Scheme of Amalgamation.

In reply to the said representation/ affidavit of the aforementioned Regional Director, Kanpur, counter affidavit, sworn on 2.12.2004 (Paper No. A-9), has been filed on behalf of the Petitioner-Transferor Company.

In paragraph 4 of the said counter affidavit, it is, interalia, stated that being conscious of the provisions of Clause 4.6 of the proposed Scheme of Amalgamation, the Board of Directors of the Petitioner-Transferor Company on 26.5.2004 passed a Resolution extending the period for obtaining all approvals from 30.6.2004 till such period as the same is approved by the Court and other necessary formalities are complied with. Certified copy of the said Resolution of the Board of Directors of the Petitioner-Transferor Company passed on 26.5.2004 has been filed as Annexure-CA-1 to the said counter affidavit.

Again, as noted above, the Official Liquidator has submitted his Report being Report No. 208 of 2004 (Paper No. A-6).

It is, interalia, stated in the said Report that on scrutiny of the records of the Transferor Company produced before the Official Liquidator on 16.9.2004, as per the requirements of Section 394 of the Companies Act, 1956, it has been found that the statutory registers have been maintained and the Books of Accounts have been prepared upto-date; and that the Share Application Money of Rs. 87,69,300/- have been returned, and as per the Balance Sheet as at 31.3.2004, the same has been shown as Nil, which was outstanding in the Balance Sheet as at 31.3.2003 as pending Share Application Money.

It is, interalia, further stated in the said Report of the Official Liquidator that the aforementioned Resolution dated 26.5.2004 passed by the Board of Directors of the Transferor Company in view of Clause 4.6 of the proposed Scheme of Amalgamation, is without the consent of this Court as well as the Shareholders and Creditors of the Transferor Company; and that for any amendment in the proposed Scheme of Amalgamation, approval of this Court and at least of the members under Sections 173 and 189 of the Companies Act, 1956, was required.

It is, interalia, further stated in the said Report of the Official Liquidator that the Profit and Loss Account as on 31.3.2004 shows that the Transferor Company has earned net profit. It is, interalia, further stated in the said Report of the Official Liquidator that on scrutiny of the Books and Papers produced before the Official Liquidator on 16.9.2004, it has been found that the affairs of the Transferor Company have not been conducted in a manner prejudicial to the interest of its members or public interest.

It will, thus, be noticed that one of the objections raised by the aforementioned Regional Director, Kanpur as well as by the Official Liquidator pertains to Clause 4.6 of the proposed Scheme of Amalgamation, which has already been reproduced above.

It is submitted by Shri S.K. Saxena, Official Liquidator that as per Clause 4.6 of the proposed Scheme of Amalgamation, in the event of any of the approvals or conditions enumerated in Clause 4.5 of the proposed Scheme of Amalgamation are not being obtained or complied with on or before 30.6.2004, the proposed Scheme of Amalgamation would become null and void, and in that event, no rights or liabilities whatsoever would accrue to or  be incurred inter se between BEPL, i.e., the Transferor Company  and BEL, i.e., the Transferee Company. The proposed Scheme of Amalgamation, the submission proceeds, not having been sanctioned on or before 30.6.2004, the same became null and void in view of the provisions of Clause 4.6 of the proposed Scheme of Amalgamation.

As regards the Resolutions passed by the Board of Directors of the Transferor Company and the Board of Directors of the Transferee Company extending period, as mentioned in the said Clause 4.6 of the proposed Scheme of Amalgamation, it is submitted  by Shri Saxena that such extension of period, as mentioned in the said Clause 4.6, amounted to amendment in the proposed Scheme of Amalgamation, and the same was permissible only with the consent of this Court as well as the Shareholders and the Creditors of the Transferor Company and the Transferee Company.

In reply, Shri Yashwant Verma, learned counsel for the Petitioner - Transferor Company refers to the above-quoted Clause 4.6 of the proposed Scheme of Amalgamation and submits that the said Clause itself contemplates extension of period beyond 30.6.2004 by agreement between BEPL, i.e., the Transferor Company and BEL, i.e., the Transferee Company "through their respective Boards of Directors".

Shri  Verma submits that the Board of Directors of the Transferor Company as well as the Board of Directors of the Transferee Company at their respective meetings have passed Resolutions extending the period, mentioned in Clause 4.6 of the proposed Scheme of Amalgamation, beyond 30.6.2004, and the said extension was in accordance with the provisions of the said Clause 4.6 itself, and, therefore, objections raised in this regard on behalf of the aforementioned Regional Director, Kanpur and the Official Liquidator cannot be sustained.

Shri Verma further refers to Clause 4.2 of the proposed Scheme of Amalgamation, which is as follows:

"4.2. BEPL (by its Directors), and BEL (by its Directors) may, in their full and absolute discretion, assent to the any alteration or modification of this Scheme which the Court and/or other Competent Authority may deem fit to approve or impose and may give such directions as they may consider necessary to settle any question or difficulty arising under the Scheme or in regard to its implementation or in any matter connected therewith (including any question or difficulty arising in connection with any deceased or insolvent shareholder of the respective Companies). In the event that any conditions are imposed by any Competent Authority which BEPL or BEL find unacceptable for any reason whatsoever then BEPL or BEL shall be entitled to withdraw from the Scheme."

As noted above, BEPL in the above Clause stands for Bulk Explosives Ltd. (i.e., Transferor Company) and BEL in the above Clause stands for Bharat Explosives Ltd. (i.e., Transferee Company).

It is submitted that in view of Clause 4.2, BEPL (i.e., Transferor Company) "by its Directors", and BEL (i.e., Transferee Company) "by its Directors" may in their full and absolute discretion assent to any alteration or modification of the proposed Scheme of Amalgamation, which the Court and/or other Competent Authority may deem fit to approve or impose and " may give such directions as they may consider necessary to settle any question or difficulty arising under the Scheme or in regard to its implementation or in any matter connected therewith".

It is submitted by Shri  Verma that in view of the above-quoted Clause 4.2 of the proposed Scheme of Amalgamation also, it is open to the Board of Directors of the Transferor Company and the Board of Directors of the Transferee Company to give such directions as they may consider necessary to settle any question or difficulty arising under the Scheme or in regard to its implementation or in any matter connected therewith.

In view of the wide language of the said Clause 4.2 of the proposed Scheme of Amalgamation, the submission proceeds, the Boards of Directors of the Transferor Company and the Transferee Company were fully empowered to extend the period mentioned in Clause 4.6 by passing Resolutions at their respective Board meetings.

As regards the question of consent of this Court and the question of consent of the Shareholders and the Creditors of the Transferor Company and the Transferee Company, it is submitted that extension of period mentioned in Clause 4.6 does not amount to any amendment in the proposed Scheme of Amalgamation, as such, and, therefore, there was no occasion to obtain consent of this Court or of the Shareholders and the Creditors of the Transferor Company and the Transferee Company. It is submitted that power of extension has been conferred on the respective Boards of Directors of the Transferor Company and the Transferee Company, as per Clause 4.6 of the proposed Scheme of Amalgamation itself. It is in the exercise of the said power given in Clause 4.6 of the proposed Scheme of Amalgamation itself that the Board of Directors of the Transferor Company and the Board of Directors of the Transferee Company have passed Resolutions at their respective meetings extending the period mentioned in the said Clause 4.6. Thus, this was merely an exercise of power conferred under the proposed Scheme of Amalgamation itself, and no amendment of the proposed Scheme of Amalgamation as such was involved requiring any consent, as contended by the Official Liquidator.

It is further emphasized by Shri Verma that the Shareholders as well as the Creditors having full knowledge of the contents of Clause 4.6 of the proposed Scheme of Amalgamation, approved the proposed Scheme of Amalgamation including its Clause 4.6, and as such, there was no occasion for referring the matter pertaining to extension of period, mentioned in Clause 4.6, by the respective Boards of Directors of the Transferor Company and the Transferee Company, for obtaining consent of the Shareholders and the Creditors of the Transferor Company and the Transferee Company.

I have considered the submissions made by Shri S.K. Saxena, Official Liquidator and Shri Yashwant Verma, learned counsel for the petitioner-Transferor Company.

A perusal of various provisions contained in Chapter V of Part

VI of the Companies Act, 1956, consisting of Section 390 to Section 396-A shows that the said Chapter V deals with "arbitration, compromises, arrangements and reconstructions". Rules 67 to 87 of the Companies (Court) Rules, 1959 have been framed with reference to the provisions of Sections 391 to 394 of the Companies Act, 1956.

A perusal of the provisions contained in Sections 391 to 394 of the Companies Act, 1956 and Rules 67 to 87 of the Companies (Court) Rules, 1959 shows that the said provisions, interalia, provide for various aspects of the holding of the meeting of the Creditors or class of Creditors or of the Members or class of Members, as the case may be, of the Company (ies) in question.

Clause 4.6 of the proposed Scheme of Amalgamation, as noted above, provides that in the event of the approvals or conditions enumerated in Clause 4.5  not being obtained or complied with on or before 30.6.2004, the proposed Scheme of Amalgamation would become null and void, and in that event, no rights or liabilities whatsoever would accrue to or be incurred inter se between the Transferor Company (BEPL) and the Transferee Company (BEL). However, the said Clause 4.6 itself contemplates extension of period beyond 30.6.2004. For this, as per the provisions of the said Clause 4.6 itself, agreement between the Transferor Company and the Transferee Company "through their respective Boards of Directors" is required. The proposed Scheme of Amalgamation, as is evident from the narration of the facts above, has received consent of the Shareholders and the Creditors of the Transferor Company. Further, as will be apparent from a perusal of the record of  Company Petition No. 33 of 2004 filed by the Transferee Company, the proposed Scheme of Amalgamation has received consent of the Shareholders and the Creditors (Secured as well as Unsecured ) of the Transferee Company.

Hence, the proposed Scheme of Amalgamation including the said Clause 4.6 has received consent of the Shareholders and the Creditors of the Transferor Company as well as the Shareholders and the Creditors of the Transferee Company.

As noted above, the Board of Directors of the Transferor Company in its meeting held on 26.5.2004 has passed  Resolution extending the period mentioned in the said Clause 4.6 beyond 30.6.2004. The said Resolution, as mentioned above, has been filed as Annexure-CA-1 to the counter affidavit (Paper No. A-9) filed on behalf of the Petitioner-Transferor Company.

Further, a perusal of the record of Company Petition No. 33 of 2004 filed by the Transferee Company, particularly, the counter affidavit (Paper No. A-10) filed on behalf of the Transferee Company in the said Company Petition No. 33 of 2004, shows that the Board of Directors of the Transferee Company in its meeting held on 23.6.2004 has approved the extension of the period mentioned in Clause 4.6 beyond 30.6.2004.

The said Resolution dated 23.6.2004 has been filed as Annexure-CA-1 to the said counter affidavit (Paper No. A-10) filed on behalf of the Transferee Company in the said Company Petition No. 33 of 2004.

It will, thus, be seen that the Board of Directors of the Transferor Company and the Board of Directors of the Transferee Company at their respective meetings have approved the extension of period mentioned in the said Clause 4.6 of the proposed Scheme of Amalgamation beyond 30.6.2004. The said extension has been done by the said Boards of Directors in exercise of power given in the said Clause 4.6 itself.

The proposed Scheme of Amalgamation including its Clause 4.6 having received consent of the Shareholders and the Creditors of the Transferor Company and the Shareholders and the Creditors of the Transferee Company, the respective Boards of Directors of the Transferor Company and the Transferee Company could validly exercise the power conferred under the said Clause 4.6 for extending the period beyond 30.6.2004, and no fresh consent of the Shareholders and/or the Creditors of the Transferor Company and the Shareholders and / or the Creditors of the Transferee Company was required in such a situation.

The submissions made by Shri Yashwant Verma, learned counsel for the Petitioner - Transferor Company, in this regard, in my opinion, are correct.

It is further noteworthy that Clause 4.2 of the proposed Scheme of Amalgamation also gives wide powers to the respective Boards of Directors of the Transferor Company and the Transferee Company, interalia, to "give such directions as they may consider necessary to settle any question or difficulty arising under the Scheme or in regard to its implementation or in any matter connected therewith".

Reading Clause 4.6 with Clause 4.2 of the proposed Scheme of Amalgamation, it is evident that the Board of Directors of the Transferor Company and the Board of Directors of the Transferee Company may agree to the extension of the period mentioned in Clause 4.6 of the proposed Scheme of Amalgamation.

In view of the aforesaid discussion, particularly in view of the provisions contained in Clause 4.6 itself and in view of the wide powers given in Clause 4.2 of the proposed Scheme of Amalgamation , I am of the opinion that it is not necessary for the Transferor Company and the Transferee Company to approach this Court for calling fresh meeting (s) as per the provisions of Section 391(1) and (2) read with Section 393 of the Companies Act, 1956 for extending the period as contemplated in Clause 4.6 of the proposed Scheme of Amalgamation.

It is thus evident that the question raised in the said representation/ affidavit of the aforementioned Regional Director, Kanpur and in the said Report of the Official Liquidator regarding the period mentioned in Clause 4.6 of the proposed Scheme of Amalgamation, has been satisfactorily explained by the Petitioner-Transferor Company.

From the narration of the facts given above, it is evident that the requirement for holding the meeting of the Shareholders/ Members of the Transferor Company, as per the requirements of Section 391(1)  and (2) read with Section 393 of the Companies Act, 1956 was dispensed with by this Court by its Order dated 6.4.2004 passed on the aforesaid Company Application No. 6 of 2004.

Again, by the Order dated 6.4.2004 passed on the aforesaid Company Application No. 6 of 2004, the requirement for holding the meeting of the Unsecured Creditors of the Transferor Company, as per the requirements of Section 391(1) and (2) read with Section 393 of the Companies Act, 1956 was dispensed with.

Again, by the Order dated 6.4.2004 passed on the aforesaid Company Application No. 6 of 2004, the requirement for holding the meeting of the Secured Creditors of the Transferor Company, as per the requirements of Section 391(1) and (2) read with Section 393 of the Companies Act, 1956 was dispensed with.

As noted above, while dispensing with the meeting of the Secured Creditors of the Transferor Company, it was noted that the only Secured Creditor of the Transferor Company, namely, State Bank of India, Jabalpur Branch, M.P. gave its letter of consent dated 19.2.2004 and the Notarized Affidavit wherein the said Secured Creditor gave its consent to the proposed Scheme of Amalgamation subject to the conditions mentioned in the said letter of consent and the said Notarized Affidavit.

In the circumstances, while dispensing with the requirement for holding the meeting of the Secured Creditors of the Transferor Company, the said Order dated 6.4.2004 passed on the aforesaid Company Application No. 6 of 2004 directed that while filing the Petition for confirmation of the proposed Scheme of Amalgamation, necessary affidavit (s) would be filed containing averments so as to remove any doubt regarding fulfillment of the conditions mentioned in the said letter of consent and the said Notarized Affidavit including the conditions regarding the continuance of the personal guarantees and the corporate guarantees given to the said Secured Creditor.

As noted in the earlier part of this judgment, the following guarantees, personal/ corporate, have been extended to the aforesaid Secured Creditor of the Transferor Company :

(i) L.N. Chaudahry (Personal Guarantee).

(ii) Altar Investment (P) Ltd. (Corporate Guarantee).

(iii) Antarctica Investment (P) Ltd. (Corporate Guarantee).

As mentioned above, the aforesaid persons, who have extended personal/corporate guarantees, have given their respective affidavits stating therein that the respective guarantees given by them would continue to remain in operation even after amalgamation.

Thus, the directions given in the said Order dated 6.4.2004, while dispensing with the meeting of the Secured Creditors of the Transferor Company, have been complied with by the Petitioner-Transferor Company.

It is further evident from the narration of facts given above that the Petitioner-Transferor Company has brought on record the Annual Report in respect of the Petitioner-Transferor Company for the financial year 2002-03 containing the audited Balance Sheet and Profit and Loss Account as well as other particulars in respect of the Transferor Company for the year ended on 31.3.2003.

Further, summary of the financial position of the Transferor Company as on 31.3.2003 has been given in paragraph 21 of the Company Petition.

It is further evident from the narration of the facts above that the Petitioner-Transferor Company has brought on record the Annual Report in respect of the Petitioner-Transferor Company for the financial year 2003-04 containing the Audited Balance Sheet and Profit and Loss Account as well as other particulars in respect of the Transferor Company for the year ended on 31.3.2004.

In paragraph 24 of the Company Petition, as noted above, it has, interalia, been stated that no investigation proceedings have been initiated or are pending in respect of the Transferee Company or the Transferor Company under Section 235 or Section 251 or the like of the Companies Act, 1956.

It is, interalia, stated in paragraph 34 of the Company Petition that the proposed Scheme of Amalgamation is not within the purview of the Monopolies & Restrictive Trade Practice Act, 1969.

In paragraph 36 of the Company Petition, it is, interalia, stated that the proposed Scheme of Amalgamation is in the best interest of the Shareholders of the Companies concerned and shall prejudice no person; and that the proposed Scheme of Amalgamation will result in consultation of business and enabling the amalgamated Company to achieve economies of scale, optimum utilization of plant facility and to standardize products specification.

In paragraph 37 of the Company Petition, it is, interalia, stated that the proposed Scheme of Amalgamation is fair, reasonable, just and proper and for the benefit of the Companies, Concerns, their Shareholders and all persons connected therewith.

As noted above, pursuant to the order dated 3.8.2004 passed on the present Company Petition, notice of hearing of the present Company Petition was published in the newspapers mentioned in the said order dated 3.8.2004.

However, despite publication of notice of hearing of the present Company Petition in the said newspapers, no objections appear to have been filed by any one in the matter.

Further, as discussed above, the queries / questions raised by the aforementioned Regional Director, Kanpur and the Official Liquidator have been satisfactorily explained by the Petitioner-Transferor Company.

The Official Liquidator, as noted earlier, has reported in the said Report No. 208 of 2004 that the affairs of the Transferor Company have not been conducted in a manner prejudicial to the interest of its Members or public interest. The said Report of the Official Liquidator is referable to the Second Proviso to Sub-Section (1) of Section 394 of the Companies Act, 1956.

Having regard to the aforesaid, the Court is satisfied that the Petitioner-Transferor Company has disclosed to the Court all material facts relating to the Petitioner-Transferor Company as per the requirements of the proviso to Sub-Section (2) of Section 391 of the Companies Act, 1956. Nothing adverse has been brought to the notice of the Court dissuading it from giving its approval to the proposed Scheme of Amalgamation.

As noted above, the Transferee Company has also filed Company Petition being Company Petition No. 33 of 2004 under Section 391(2) read with Section 394 of the Companies Act, 1956, interalia, praying for sanctioning the proposed Scheme of Amalgamation.

By an order pronounced today on the said Company Petition No. 33 of 2004, the proposed Scheme of Amalgamation has been sanctioned subject to the insertion of the following proviso at the end of Clause 2.4 of the proposed Scheme of Amalgamation:

"Provided however that the proposed acquisition of liabilities of BEPL by BEL shall not however have any adverse effect on the charges of the existing secured creditors on the assets of BEL"

In view of the aforesaid discussion, the proposed Scheme of Amalgamation, annexed as Annexure-4 to the Company Petition, appearing at page 110 of the Paper Book of the Company Petition, is hereby sanctioned, as per the provisions of Sections 391 and 394 of the Companies Act, 1956 subject to insertion of the above-quoted proviso at the end of Clause 2.4 of the proposed Scheme of Amalgamation.

It is further directed that in view of the sanction of the proposed Scheme of Amalgamation in the present Company Petition as also in view of the sanction of the proposed Scheme of Amalgamation by an order pronounced today in the said Company Petition No. 33 of 2004, filed by the Transferee Company, all properties, rights, interest and powers of the Transferor Company and all the liabilities, obligations, duties and engagements of the Transferor Company shall be transferred to and vested in the Transferee Company, as per the terms of the Scheme of Amalgamation, in view of the provisions of Section 394(2) of the Companies Act, 1956.

It is, interalia, further directed that in view of the sanction of the proposed Scheme of Amalgamation in the present Company Petition as also in view of the sanction of the proposed Scheme of Amalgamation by an order pronounced today in the said Company Petition No. 33 of 2004, filed by the Transferee Company, the Transferor Company (M/s Bulk Explosives Limited) will stand dissolved, without winding up, as per the Scheme of Amalgamation.

Let the order be issued in Form No. 42 of the Companies (Court) Rules, 1959.

Certified copy of the order will be filed by the Petitioner-Transferor Company with the Registrar of Companies, Kanpur within 30 days of the issuance of the certified copy of the order, as per the requirements of Section 394 of the Companies Act, 1956.

The Company Petition stands disposed of accordingly.

Dt. 21.12.2005

safi


Copyright

Reproduced in accordance with s52(q) of the Copyright Act 1957 (India) from judis.nic.in, indiacode.nic.in and other Indian High Court Websites

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