Allowed

Kaygee Auto Products Pvt. Ltd. v. ---------------------------------------------

Bombay HC27 Jul 2009CP/291/2009

Case brief

AI extract

What is this about?

This judgment sanctions a Scheme of Arrangement under the Companies Act, 1956 involving a demerger and merger of three companies. The Court accepted payment undertakings from objecting creditors, noted pending regulatory inquiries initiated by the Regional Director regarding accounting violations, and directed the Registration of Companies to take penal action separately.

What did the court decide?

Company Petition Nos. 289, 290, and 291 of 2009 were made absolute; Transferee Company directed to lodge copy for stamp duty adjudication; Petitioners to pay costs to Regional Director and Official Li

Kaygee Auto Products Pvt. Ltd. Vs… — Company and Corporate | Bombay HC (2009)

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IN THE HIGH COURT OF JUDICATURE AT BOMBAY

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ORDINARY ORIGINAL CIVIL JURISDICITON

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COMPANY PETIITON NO.289 OF 2009

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CONNECTED WITH

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COMPANY APPLICATION NO.237 OF 2009

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Jaya Hind Sciaky Limited.

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..Transferor/Petitioner

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AND

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COMPANY PETIITON NO.290 OF 2009

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CONNECTED WITH

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COMPANY APPLICATION NO.238 OF 2009

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Kinetic Engineering Limited. ..Transferee/ Petitioner

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AND

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COMPANY PETIITON NO.291 OF 2009

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CONNECTED WITH

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COMPANY APPLICATION NO.239 OF 2009

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Kaygee Auto Products Private Limited.

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..Resulting /Petitioner

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In the matter of Companies Act, 1956 (1 of 1956)

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AND

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In the matter of Sections 391 to 394 read with Section 100 to 103 of the Companies Act, 1956;

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AND

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In the matter of Scheme of Arrangement between Jaya Hind Sciaky Limited and Kinetic Engineering Limited and Kaygee Auto Products Private Limited and their respective shareholders

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Shri Hemant Sethi /by Hemant Sethi & Co. advocates for Petitioner

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Mrs. S.V Bharucha i/b Shri S. K. Mohapatra for the Regional Director

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Shri Chandanamuthu Dy. OL in C.P No.289 of 2009

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Shri Gaurav Joshi with H.N Vakil i/b Mulla & Mulla for Tata Steels Limited. Ms. Raji Radhakrishna i/b India Law Alliance for Travel Corporation of India. Shri Sameer Kumbhakoni for Tru Tek systems Combine Private Limited.

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CORAM : S.J. KATHAWALLA J

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DATE: 27^TH JULY 2009

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P.C

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Heard learned counsel for the parties.

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The sanction of the Court is sought under Section 100, 391 & 394 of the Companies Act, 1956 to a Scheme of Arrangement between Jaya Hind Sciaky Limited and Kinetic Engineering Limited and Kaygee Auto Products Private Limited and their respective shareholders.

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The Scheme of Arrangement is presented for vesting of the Capital Goods Division of Jaya Hind Sciaky Limited, as a going concern, into Kaygee Auto Products Private Limited and then merger of the remaining business of Jaya Hind Sciaky Limited (i.e. Engine Components business and investments) with Kinetic Engineering Limited and reduction of equity share capital of Kinetic Engineering Limited, pursuant to the relevant provisions of the Companies Act, 1956.

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Counsel appearing on behalf of the Petitioner has stated that they have complied with all the requirements as per directions of this Hon’ble Court and they have filed necessary affidavits of compliance in the Court.

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An affidavit dated 1^st July 2009 has been filed by M.K Gyara, Senior Manager, legal on behalf of Tata Steels Limited, one of the objecting creditor. In the said affidavit it is stated that the claim of Rs.864027/- is due and payable by Kinetic Engineering Limited, who are Petitioner in Company Petition No.290 of 2009. The counsel appearing on behalf of the Petitioner states that out of the aforesaid amount, a sum of Rs.72002.25 has already been paid and the Petitioner in Company Petition No.290 of 2009 undertakes to ensure balance payment of Rs.792024.25 within a period of three months by demand draft. The said undertaking is accepted. In view thereof the counsel appearing for Tata Steels Limited withdraws objection.

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Mr. Sameer Kumbhakoni appears for Tru Tek systems Combine Private Limited also one of the unsecured creditor and states that his client has to recover sum of Rs.42 laks approx. The counsel appearing on behalf of Petitioner on instruction states that as per books of accounts of Kinetic Engineering limited a sum of Rs,.1406285/- is only due and payable to the said objecting creditor. It is further stated that the said sum of Rs.1406285/- will be paid off in six equal monthly installments. The first installment will commence from 20^th August 2009. It is further clarified

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that it will always be open for the objecting creditor to initiate/adopt appropriate proceedings for any disputed portion in accordance with law.

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Ms. Raji Radhakrishna appears for TCI and states that a sum of Rs.9 lakhs approx. is due and payable by Kinetic Group. The counsel appearing for Petitioner states that as per the books of accounts for Kinetic Engineering limited, a sum of Rs.4,15,659/- is only due and payable. It is further stated that the objecting creditor is seeking to recover amounts from other group companies who are not party to the present proceedings. The learned counsel for the Petitioner further states that the said sum of Rs.4,15,659/and Rs.20,883/- of Jaya Hind Sciaky will be paid in 6 monthly installments commencing from 20^th August 2009 by Kinetic Engineering.

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The Regional Director has filed his affidavit in reply and has stated in para 6(a), (b) and (c) that it is observed from Note 29(A) of Schedule 16 of Balance Sheet as at 31.12.2006 of the Transferee company a sum of Rs.16.94 Crores was written off during the period in respect of debts due to a related party. It is further stated that on inquiry the Transferee Company claims that the said sum was due from Kinetic Finance Limited, a company in which the transferee company holds more than 20% of the share capital and the said write off was occasioned due to the borrower / creditor ie. Kinetic finance Ltd. going into liquidation. As this is a material transaction, the same is bought to the notice of this Court.

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It is further stated in 6(b) that Balance Sheet as at 31/3/2008 of the Demerged Company, (Jay Hind Sciaky Limited) there appears to be prima facie violation of the 297 of the Companies act, 1956 in respect of its transaction of sale with JTECPL & DEPL, private company in which its directors are interested. The Registrar of Companies, Pune has been directed to initiate necessary penal action against the Transferor Company and its Directors in this regards.

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It is further stated that in Balance Sheet as at 31/3/2008 of the Transferor Company reveal violations of section 211 read with Accounting Standard 15 in the matter of non-provision of retirement benefit of employees, section 209 in respect of non-maintenance of Cost Records, sections 297 in respect of purchase and sale of goods with private companies (viz) JHS Taigene Electrical Company Private Limited & Micro-age Instruments Private Limited ) in which the directors of the Transferee Company have interest as directors in the said private limited companies as these transactions were carried out without the approval of Central Government as prescribed and section 217(3) in respect of non-furnishing of Directors fullest explanation on the adverse comments of the auditors in the Directors report for 2007-08. The Registrar of Companies, Pune is being advised to take appropriate penal action on the above noted violations.

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It is further stated that save and except as stated in para 6(a), (b) & ( c) it appears that the Scheme is not prejudicial to the interest of Shareholders

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and Public. The counsel appearing for the Petitioner states that as and when notices are received from the Registrar of Companies suitable replies will be filed. It is open to ROC and other appropriate authorities to initiate necessary action in this regards.

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Upon perusal of the entire material on record, the Scheme appears to be fair and reasonable and is not violative of any provisions of law and is not contrary to any public policy.

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There is no objection to the Scheme and since all the requisite statutory compliances have been fulfilled, Company Petition No.289 of 2009; 290 of 2009 & 291 of 2009 are made absolute in terms of prayer clause (a).

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The Transferee Company to lodge copy of this order and the Scheme duly authenticated by the Company Registrar, High Court, (O.S) Bombay with the concerned Superintendent of Stamps for the purpose adjudication of stamp duty, payable, if any, on the same within 30 days from the date of order.

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The Petitioners to pay cost of Rs.7500/- each to the Regional Director. Petitioner in Company Petition Nos.289 of 2009 to pay cost of Rs.7500/to the Official Liquidator, High Court, Bombay. Cost to be paid within four weeks from today. Petitioner to comply with statutory compliances, applicable, if any.

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Filing and issuance of the drawn up order is dispensed with. All concerned

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authorities to act on a copy of this order and the Scheme duly authenticated by Company Registrar, High Court, Bombay.

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(S. J. KATHAWALLA J)

Kaygee Auto Products Pvt. Ltd. v. ---------------------------------------------

Case brief

What is this about?

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Kaygee Auto Products Pvt. Ltd. v. ---------------------------------------------

Case brief

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