Allowed

Ajmera Precoated Steels Ltd. v. ---------------------------------------------

Bombay HC21 Mar 2009CP/64/2009

Case brief

AI extract

What is this about?

The High Court allowed petitions seeking sanction for a scheme of arrangement involving the demerger of a steel division and its merger into a resulting company, holding that labeling assets in a balance sheet suffices and no law mandates enumerating every asset.

What did the court decide?

Sanction of the scheme of arrangement and demerger under prayers (a) to (d); Transferee Company to lodge copy for stamp duty adjudication within 30 days.

Ajmera Precoated Steels Ltd. Vs… — Company and Corporate | Bombay HC (2009)

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 IN THE HIGH COURT OF JUDICATURE AT BOMBAY
 ORDINARY ORIGINAL CIVIL JURISDICTION

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 COMPANY PETITION NO.63 OF 2009
 CONNECTION WITH
 COMPANY APPLICATION NO.1652 OF 2008

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 Ajmera Realty & Infra India Ltd. ....Petitioner

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 WITH

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 COMPANY PETITION NO.64 OF 2009
 CONNECTED WITH
 COMPANY APPLICATION NO.1653 OF 2008

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 Ajmera Precoated Steels Ltd. ....Petitioner

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 Mr.Shyam Mehta with Mr.Rajesh Shah i/b Rajesh Shah &
 Co. for the Petitioners.

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 Ms.S.V. Bharucha with Mr.P. Khosla i/b Mr.S.K.
 Mohapatra for the Regional Director.

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CORAM : S.J. VAZIFDAR, J.
DATED : 21ST MARCH, 2009.

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ORAL JUDMENT :-

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 1. The Petitioners seek an order sanctioning a

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 scheme of arrangement entered into between them. The
 scheme involves the demerger of the steel division of
 the Petitioner in Company Petition No.63 of 2009, the
 transferor company and the merger thereof into the
 resulting company i.e. the Petitioner in Company

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 Petition No.64 of 2009.

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 2. The procedure has been complied with. The
 Regional Director has filed an affidavit stating that
 subject to the observations in paragraph 6 thereof,
 the scheme does not appear to be prejudicial to the
 interest of the shareholders and the public.

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 3. In paragraph 6 of the affidavit, the Regional
 Director has stated that neither the petitions nor the
 scheme provide details of the assets and liabilities
 of the steel division of the demerged company that are
 to be transferred to and vested in the resulting
 company.

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 4. As pointed by Mr.Mehta, the Petitioners’
 scheme itself in clause 1.10 defines the steel
 division as under :-

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 "1.10 "Steel Division" means the business of
 manufacturing, processing, distributing,
 importing, exporting, buying selling,
 assembling, repairing etc. all kinds of
 steel products and ferrous and non ferrous
 metal products and includes the undertaking
 comprising of:

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 1.10.1 All assets (whether movable or
 immovable, real or personal, corporeal or
 incorporeal, present, future or contingent,
 tangible or intangible) wherever situated
 pertaining to and relatable to the Steel
 Division;

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 1.10.2 All present and future liabilities
 arising out of the activities or operations

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 of Steel Business, including loans, debts,
 current liabilities and provisions, duties
 and obligations relatable to the Steel
 Division;

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 1.10.3 Without prejudice to the generality of
 the above, the Steel Division shall include
 in particular:

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 a. all properties required for the
 Steel Division wherever situated,
 including all current assets, funds,
 offices, furniture, fixtures, office
 equipment, appliances, accessories,
 vehicles;

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 b. all permits, rights,
 entitlements, bids, tenders, letters of
 intent, expressions of interest,
 municipal and other statutory
 permissions, approvals, consents,
 licenses, registrations, subsidies,
 concessions, exemptions, remissions
 related to Steel Division, tenancies in
 relation to office and factory and/or
 residential property for the employees
 related to Steel Division, offices,
 goodwill, intellectual property rights
 (including technical know how, patents,
 trademarks, copy rights) related to
 Steel Division, investment, cash
 balances, the benefit of any deposit and
 financial assets related to Steel
 Division, funds belonging to or proposed
 to be utilized for the Steel Division,
 bank balances and bank accounts relating
 to the day to day operations an specific
 to the working of Steel Division,
 privileges, all other rights and
 benefits, lease rights, licenses, domain
 names, trade name and other intellectual
 property rights of any nature whatsoever
 and licenses in respect thereof, powers
 and facilities of every kind, nature and
 description whatsoever, rights to use
 and avail of telephone, telexes,
 facsimile connection and installations,
 utilities, power lines, electricity and
 other services, provisions, funds,
 benefits of all agreements, contracts
 and arrangements and all other interest
 in connection with or relating to the
 Steel Division;

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 c. all records, files, papers,
 computer programs, manuals, data,
 libraries, catalogues, quotations, sales
 and advertising materials, lists of
 present and former customers and
 suppliers, customer credit information,
 customer pricing information, and other
 records, whether in physical form or
 electronic form in connection with or
 relating to the Steel Division;

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 d. all duties and obligations which
 are relatable to Steel Division;

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 e. all earnest moneys and/or
 security deposits, if any, paid or
 received by the ARIIL in connection with
 or relating to the Steel Division;

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 1.10.4 For the purpose of this Scheme,
 it is clarified that liabilities pertaining
 to the Steel Division include:

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 a. the liabilities, which arise out
 of the respective activities or
 operations of the Steel Division;

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 b. specific loans and borrowings
 raised, incurred and utilized solely for
 the respective activities or operation
 of the Steel Division;

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 c. liabilities other than those
 referred to in sub-clauses (a) and (b)
 above, being the amounts of general or
 multipurpose borrowings of ARIIL,
 allocated to the Steel Division in the
 same proportion in which the value of
 the assets transferred under this Scheme
 bear to the total value of the assets of
 ARIIL immediately before giving effect
 to this Scheme;

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 1.10.5 All permanent employees of ARIIL
 employed in the Steel Division, as identified
 by the Board of Directors of ARIIL, as on the
 Effective Date;

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 1.10.6 Any question that may arise as
 to whether a specified asset or liability
 pertains or does not pertain to the Steel
 Division or whether it arises out of the
 activities or operations of the Steel
 Division shall be decided by mutual agreement

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 between the Board of Directors of ARIIL and
 Resulting Company."

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 . Further the schedule forming a part of the
 provisional balance sheet as on 31.3.2008 and the
 profit and loss account in the year ended on that date
 bifurcate the details of the steel division and the
 real estate division of the transferor company.

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 5. There is no provision in law which requires
 the balance sheet and profit and loss account or the
 scheme enumerating and setting out each and every
 asset which is the subject matter of the scheme of
 demerger. My attention has not been invited to any
 such provision.

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 6. I do not suggest that in a given case a
 creditor, shareholder or any other concerned party is
 prohibited from calling for any particulars while
 examining a scheme under Sections 391 to 394 including
 a scheme of merger or demerger. Whether such an
 application ought to be granted or not would depend
 upon the facts of the case.

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 7. It is pertinent to note that in the present
 case apart from stating that the details of the assets
 which form a part of the scheme have not been
 enumerated nothing adverse regarding the schemed as

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 such is stated. Nor is it even suggested that as a
 result thereof the interest of any concerned party has
 been adversely affected. Further still the entire
 procedure has been complied with and no objection has
 been raised by any party including the creditors and
 members.

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 8. Lastly, it is pertinent to note that the
 members and the creditors of the Petitioners’ will not
 be affected adversely by the scheme as there are no
 creditors of the transferee company. Nor are there
 any liabilities that the transferee company is exposed
 to. This is so provided in the balance sheet and the
 profit and loss account for the year ending 31.3.2008.
 The unaudited balance sheet and the profit and loss
 account for the period ended on 30.9.2008 indicates
 the liability of only Rs.38,000/-. The creditors are
 the directors of the company themselves. The same
 does not warrant a refusal of an order sanctioning the
 scheme.

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 9. In the circumstances, the both the Petitions
 are made absolute in terms of prayers (a) to (d).

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 10. The Transferee Company shall lodge a copy of
 this order and the scheme with the concerned
 Superintendent of Stamps for the purpose of

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 adjudication of stamp duty payable, if any, on the
 same within thirty days of obtaining the authenticated
 and/or certified copy of the order.

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 11. The transferor company to pay costs of
 Rs.7500/- to the Regional Director. Costs to be paid
 within four weeks from today.

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

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 . All concerned authorities to act on a copy of
 this order duly authenticated by Company Registrar,
 High Court, Bombay.

Ajmera Precoated Steels Ltd. v. ---------------------------------------------

Case brief

What is this about?

What did the court decide?

Ajmera Precoated Steels Ltd. v. ---------------------------------------------

Case brief

What is this about?

What did the court decide?

What the court decided

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Issues for consideration

Statutes considered

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