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TMI Blog2013 (4) TMI 508X X X X Extracts X X X X X X X X Extracts X X X X ..... tioning of the Scheme. Consequently this Court accords its sanction to the Scheme which is at Annexure V to the petition. As pointed out by the RD, upon the sanctioning of the Scheme, in terms of Sections 391 and 394 of the Act, all the properties, rights and powers of BSMCL will be transferred to and will vest in PSPL without any further act or deed. BSMCL will be taken to be dissolved without winding up and without any formal petition being filed for that purpose. The necessary intimation will be filed with the ROC within 21 days. However, this order will not be construed as an order from making exemption from payment of stamp duty or taxes or any charges, if payable in accordance with law or any permission required under any other law, or permission/compliance with any other requirement which may be specifically required under any law. The learned Senior counsel for BSMCL has stated voluntarily that upon the Scheme being sanctioned, it would deposit a sum of Rs. 1 lakh with the Common Pool Fund of the OL. The said statement is taken on record. The amount be deposited with the said fund of the OL within three weeks. The petitions are allowed in the above terms, but in the circums ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hile filing their replies at the second motion stage. 6. The present petitions at the second motion stage were filed by BSMCL and PSPL on 4th July 2011. In both the petitions, notice was directed to issue on 12th July 2011 to the RD and the Official Liquidator ('OL'). Soon thereafter Mr. H.K. Chadha filed CA No. 2168 of 2011 in Co. Pet. No. 276 of 2011 seeking to be impleaded as Respondent and also for a direction to the parties to supply him the full set of applications and replies so that he could file his objections. Notice was issued in the said application on 9th November 2011. 7. The RD filed an affidavit/representation on 18th August 2011 where in para 5 it was indicated that till that date the RD had not received any objection from Mr. H.K. Chadha as directed by the Company Court in its order dated 18th May 2011 except a copy of the Company Application No.909 of 2011. In para 5.1 of the affidavit it was mentioned that inspection of the books of account and record of both companies had been conducted in 2008 and various violations of the Act were observed. It was further stated that pursuant to applications made by both the companies, the offences had been compounded by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t disposed of Co. Appl. No. 2168 of 2011 impleading Mr. H.K. Chadha as a Respondent. It was noticed that in Co.A. (SB) No. 74 of 2011, the Court had already held Mr. H.K. Chadha to be a shareholder of BSMCL. Accordingly, the Court directed Mr. H.K. Chadha to file his objections to the Scheme in a concise manner within four weeks. The RD was directed to place on record in a sealed cover a photocopy of the inspection report dated 15th June 2007 by Mr. Dani. BSMCL filed an affidavit on 21st November 2011 in response to the report of the OL filed on 24th October 2011. In particular it is pointed out that Bajaj Hindusthan Ltd. ('BHL') was a secured creditor who had appeared in the Court convened meeting on 12th May 2011 and approved the Scheme. It was left open to BHL to opt for the Zero Coupon Optionally Convertible Preference Shares ('OCPS'). Another affidavit was filed on the same date by BSMCL dealing with the objections raised by Mr. H.K. Chadha. This will be discussed hereafter while dealing with the objections of Mr. H.K. Chadha. Enclosed with the affidavit was an order dated 3rd August 2011 of the Company Law Board ('CLB') in Co. Pet. No. 9/111/2007-CLB which had been filed by M ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tants as statutory auditors for the financial year 2007-2008. When BRS raised an objection that the said meeting was not held in accordance with the Act, the Division Bench observed that it would be a fresh cause of action for the Appellant to challenge the resolution passed in the AGM. Accordingly, the appeal was disposed of as having become infructuous. 13. By a subsequent order dated 5th October 2007, the words "financial year 2007-2008" occurring in two places in the order dated 16th May 2007 were substituted by the Division Bench with the words "till the conclusion of the next AGM". 14. It was submitted further by BSMCL in its affidavit that Mr. H.K. Chadha was engaged in litigation without any bonafide cause and was acting prejudicially to the affairs of BSMCL. Being a shareholder with only 8 shares he could not stall the proceedings for approval of the Scheme under Sections 391 and 394 of the Act. The plea of Mr. H.K. Chadha that he was not a shareholder of BSMCL on account of having sold his shares on 9th April 2001 was denied by referring to the order of the CLB dated 9th September 2011 holding him to be a shareholder which was upheld by the Company Court with the dism ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of BSMCL be able to be determined and it is only then that sanction of the Scheme can be granted under Section 391(2) of the Act. It is submitted that the inspection report dated 15th June 2007 does not term the objections raised in the report dated 9th October 2006 to be baseless. Dr. Sharma alleged that in spite of incorporating the necessary adjustment entries, BSMCL got its accounts audited illegally by another auditor ignoring the binding directions of the Division Bench in its orders dated 16th May 2007 and 5th October 2007. 18. The Court is not impressed with the above submissions of Dr. Sharma. They overlook the fact that BRS was removed as auditor and a new auditor, VKA was appointed at the AGM held on 30th December 2006 as recorded by the Court in its order dated 16th May 2007. BRS, therefore, could not have continued as a statutory auditor of BSMCL. As regards the comments made by the RD in the earlier affidavit dated 17th August 2011, the position stands clarified by the ROC in its report which has been enclosed with the RD's affidavit dated 7th December 2012. Therein the ROC has extracted its earlier report dated 8th December 2011. In its inspection report dated 15t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... AGM. We are informed that the said AGM was held on 30.12.2006 as scheduled. However, in that meeting the members chose to appoint M/s. Vinod Kumar and Associates, Chartered Accounts as the statutory auditors for the financial year 2007-08. The learned counsel for the appellant states that the meeting was not held and/or the business was not conducted in accordance with the provisions of the Companies Act, if that is so, it would be a fresh cause of action to the appellant to challenge the Resolution passed in the said AGM in so far as the appointment of statutory auditors is concerned. It is clear from the aforesaid that in so far as the present appeal is concerned, it has become inficituous (sic. infructuous) in as much as order dated 19.12.2006 passed by the learned single Judge was not given the effect to in view of the order dated 27.12.2006 passed by the Division Bench in this appeal". In this regard, it is not clear as to whether the complainant has taken fresh cause of action in view of the orders of the Hon'ble High Court. It is also not clear by the complainant that what would be the affect of the above allegations in the proposed Scheme of Amalgamation. Further, the comp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... an unrealistically paltry consideration of Rs. 9 crores in favour of a private company owned/controlled by a promoter. BSMCL has vehemently denied the allegation. The Court notes that the transaction took place way back in 2005. There is absolutely no material produced by Mr. H.K. Chadha to show that the value of the property on the date of its sale was more than Rs. 250 crores. No shareholder or creditor has ever objected to the above sale. Even the allegation that two sets of books of accounts were maintained; one maintained for cash facility with Central Bank of India ('Central Bank') for filing fabricated balance sheets and forged signatures of the auditor is unsubstantiated. The Central Bank has not made any such allegations. There is no objection raised in that behalf by either the ROC or the RD. 24. It is then alleged that shares of certain shareholders holding 32% shares in BSMCL were illegally shown as having been transferred to PSPL. This included 9.56% shares held by one Mr. Sudhir Avdhoot who expired on 31st March 2002. It is stated that the wife of Mr. Sudhir Avdhoot had filed a criminal complaint in this regard. Further it is stated that 5.61% of the total equity sh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... se allegations. The minutes of the AGM have been placed on record. 28. As regards the no objection certificate ('NOC') from the DSE, Mr. Amit S. Chadha, learned Senior counsel has pointed out that despite several reminders sent to DSE, they have not responded. He points out that all that Clause 24 (f) of the listing agreement requires is that an NOC is to be obtained from the DSE. Apart from the requirement being only directory, in the facts of the present case where DSE was not responding to the notices, it was not practically possible to obtain an NOC. 29. The above submission of Mr. Amit S. Chadha merits consideration. In Compact Power Sources (P.) Ltd., In re [2005] 125 Comp. Cas. 289/[2004] 52 SCL 139 (AP), in similar circumstances it was held that the requirement of obtaining the NOC from the stock exchange in terms of the listing agreement was not mandatory. All that the listed company was to do was to give a scheme/petition to the stock exchange at least one month before presenting the scheme under Sections 391 and 394 of the Act. As long as that was done, the fact that the stock exchange did not give its no objection, will not prevent the Scheme from being approved. Th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... has been complied with and that the requisite meetings as contemplated by Section 391(1)(a) have been held. 2. That the scheme put up for sanction of the Court is backed up by the requisite majority vote as required by Section 391 Sub- Section (2). 3. That the meetings concerned of the creditors or members or any class of them had the relevant material to enable the voters to arrive at an informed decision for approving the scheme in question. That the majority decision of the concerned class of voters is just and fair to the class as a whole so as to legitimately bind even the dissenting members of that class. 4. That all necessary material indicated by Section 393(1)(a) is placed before the voters at the meetings concerned as contemplated by Section 391 Sub-section (1). 5. That all the requisite material contemplated by the proviso of Sub-section (2) of Section 391 of the Act is placed before the Court by the applicant concerned seeking sanction for such a scheme and the Court gets satisfied about the same. 6. That the proposed scheme of compromise and arrangement is not found to be violative of any provision of law and is not contrary to public ..... X X X X Extracts X X X X X X X X Extracts X X X X
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