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TMI Blog2005 (7) TMI 370X X X X Extracts X X X X X X X X Extracts X X X X ..... nder fresh certificate of incorporation issued by the Assistant Registrar of companies, Gujarat, Dadra Nagar Haveli on 11-12-1998. The transferor company is having its plant and office at Vadodara in the State of Gujarat and it is engaged in the business of manufacture and development of cephalosporins which are the most critical products used in surgical prophylaxis (preventive treatment) and unidentified infections that cause life threatening conditions and has adequate technology to produce its pharmaceutical products. The accumulated losses as on 30-9-2002 stood at Rs. 2,518.81 lakhs which has resulted in erosion of 100 per cent net worth of the Company and has come within ambit of section 3(1)( o ) of the Sick Industrial Companies (Special Provisions) Act, 1985 and during the year, the said Company has submitted a rehabilitation scheme for its revival with the Board for Industrial and Financial Reconstruction (BIFR) and the same is pending before the BIFR. 3. The transferee-Company is a listed public limited company having its primary base in the State of Gujarat. Its equity shares are listed at major stock exchanges in the country at National Stock Exchange and the Stoc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Shareholder and Preference Shareholder of the transferee Company was held on 4-4-2005. The Chairman in his report has observed that 91 Equity Shareholders holding 15,00,52,506 Equity Shares of Rs. 5 each have attended the meeting and voted in favour of the compromise or arrangement being adopted and put into the effect. The Chairman has further observed that 2 shareholders holding 3,00,598 of Rs. 5 each valued Rs. 15,02,990 have attended the meeting and voted against the proposed compromise or arrangement being adopted and carried out into effect. The Chairman has further reported that 2 shareholders holding 496 Equity shares of Rs. 5 each valued Rs. 2,480 have attended the meeting but did not cast their vote either in favour or against the resolution and as such they were treated as invalid. The resolution was, therefore, passed by the requisite majority. With regard to the meeting of Preference Shareholders, the Chairman has observed that barring the members who abstained from voting, the meeting of Preference Shareholders was unanimously of the opinion that the Scheme of Amalgamation should be approved. 6. After the petitions were admitted, the same were duly advertised in t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ty shares as against 790 and 7900 shares. The above recommended ratio is on the basis of valuation done as on 1-3-2004. The reasons for the change in the ratio as above has been explained in the scheme/petition. While meeting with this observation Smt. Swati Soparkar learned advocate appearing for the petitioner has submitted that the report of Chartered Accountant for the valuation of shares is based upon the issued and subscribed capital of transferee Company as on 31-3-2004. It has been pointed out vide para-4 of the Company Petition No. 67/2005 that the Company has issued bonus share in the ratio of 1:1 after that date. The resultantly, the Equity Share capital of transferee company has doubled and consequently, the value of the share has reduced to half. In order to give effect of this, the transferee company is required to issue 2 shares as against 1,580 Equity Shares of transferor Company. The same is put up as one share of transferee Company against 790 Equity Shares of transferor Company. She has, therefore, submitted that the change in the exchange ratio as compared to the valuation Certificate is in proportion of change in the value of shares as on date of application ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of 2005 wherein the same transferee company is there and the Court has taken the view that neither the stamp duty is required to be paid nor registration charges are required to be paid on the increased authorised capital of the transferee Company. 12. The third objection raised by the Regional Director is that the transferee Company is a sick company before BIFR and a scheme of rehabilitation/amalgamation is also pending before BIFR, New Delhi, under SICA. Hence, NOC of BIFR may be required for the proposed scheme. In this connection, Smt. Swati Soparkar has submitted that in the reference of transferor Company registered before the BIFR, no order has been passed to declare it as sick Company. The transferor Company has also informed BIFR about the proposed scheme as well as present proceeding before this Court. She has also placed, the complete record of correspondence, on record of this Court. She has further submitted that similar issue arose before the Bombay High Court in the case of National Organic Chemical Industries Ltd. v. Nocil Employees Union inCompany Petition No. 104 of 2005 with Company Application No. 446 of 2004 and the said petition was decided by the Bom ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion that the provisions of section 22 of SICA have no application to the facts of the present case, Smt. Swati Soparkar has relied on unreported judgment of the Division Bench of the High Court of Himachal Pradesh, Simla in the case of Gountermann- Peipers (India) Ltd. v. Union of India [2005] 126 Comp. Cas. 489 reversing the judgment of the learned Single Judge which has taken the view that by virtue of the provisions of section 22 the proceedings under sections 391 to 394 would stand suspended. The Division Bench has reversed the view taken by the learned Single Judge in the case of Gontermann-Piepers (India) Ltd., In re [2005] 57 SCL 225 (HP). On a plain and simple reading of section 22 of the Act it is clear that the suspension of legal proceedings is only in respect of winding up of the industrial company or for execution or attachment of any of the properties of the industrial company or for appointment of the receiver. Insofar as the guarantors are concerned, the limited protection is granted that is no suit for recovery of money or for enforcement of any security against the industrial company or of any guarantee in respect of any loan granted to the industrial compan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dition precedent and this provision can even operate in cases where the companies are doing quite well and are seeking to rearrange their business for the efficient management or better business prospects and thus seek to amalgamate or emerge their business operation. The Court has, therefore, taken the view that there is no inconsistency between the provisions of section 32 of the SICA and the provisions of sections 391 and 394 of the companies Act and hence there is no question of provisions of section 32 of the SICA being made applicable to the present case. The Court has, therefore, ample power and jurisdiction to grant sanction of the scheme under sections 391 and 394 of the Companies Act, 1956 despite the fact that the transferor company s reference is pending before the BIFR. 15. The fourth objection raised by the Regional Director is that no specific waiver order obtained from this Court in respect of creditors meeting of the transferee Company. In this regard, Smt. Swati Soparkar submitted that it is not necessary to obtain the consent of the creditors of the transferee Company as no compromise is expected from them and the scheme does not affect their rights in any ma ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... view vide its order and judgment dated 12-4-2004 that there was negative covenant in the agreement between the appellants and the respondent company whereby the respondent Company was precluded from filing any such petition without the consent of the appellant. The Court has taken a view that any such clause will be hit by section 28 of the Contract Act, which provides that every such agreement which is in restraint of legal proceed-ings, is void, and the common subscription agreement under which all such financiers are given such particular right by way of negative convenant. The Court has further taken the view that it was not special right given only to the appellant but was available to all the debenture holders and it was further held that such a clause would be hit by section 28 and therefore it should be held as void. 18. Smt. Swati Soparkar has submitted that the above matter was taken before the Apex Court and the Hon ble Apex Court has also confirmed the view taken by the learned Single Judge of the Bombay High Court in the aforesaid case. She has, therefore, submitted that the above clause on which the reliance was placed by CVCFL is null and void and it cannot pr ..... X X X X Extracts X X X X X X X X Extracts X X X X
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