Allowed

Arvind Envisol Private Limited v. ..

Gujarat HC20 Aug 2015COMP/228/2015

Case brief

AI extract

What is this about?

The Court sanctioned a scheme of arrangement for the de-merger of the MVRE Undertaking Division from Arvind Envisol Private Limited to its parent, Arvind Accel Limited, including a consequential reduction of share capital. The Court observed that the scheme was in the interest of shareholders, creditors, and the public, dispensed with certain procedural requirements, and directed the companies to

What did the court decide?

The scheme of arrangement, including the de-merger of the MVRE Undertaking and reduction of share capital, was sanctioned; petitions disposed of; costs quantified at Rs. 7,500 per petition.

Arvind Envisol Private Limited Vs .. — Company and Corporate | Gujarat HC (2015)

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O/COMP/228/2015 ORDER

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IN THE HIGH COURT OF GUJARAT AT AHMEDABAD

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COMPANY PETITION NO. 228 of 2015

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In COMPANY APPLICATION NO. 171 of 2015

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With
COMPANY PETITION NO. 229 of 2015
 In
COMPANY APPLICATION NO. 172 of 2015

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==============================================================
ARVIND ENVISOL PRIVATE LIMITED....Petitioner(s)

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Versus

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......Respondent(s)

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==============================================================
Appearance:

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MRS SWATI SOPARKAR, ADVOCATE for the Petitioner(s) No. 1

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==============================================================

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CORAM: HONOURABLE MR.JUSTICE VIPUL M. PANCHOLI

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Date : 20/08/2015

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ORAL ORDER

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1.Leave to amend the prayer clause. Petitioners
shall carry out the amendment forthwith.

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2.Common affidavit filed by the Regional
Director as well as the additional affidavit
filed by the petitioners are taken on record.

¶17

3.These are the petitions filed by two
companies viz. Arvind Envisol Private Limited and
Arvind Accel Limited, for the purpose of
obtaining the sanction of this court to a Scheme
of arrangement in the nature of De-merger and
Transfer of the de-merged Undertaking viz.
Mechanical Vapor Recompression Evaporation (MVRE)
Undertaking Division of Arvind Envisol Private

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Page 1 of 10

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O/COMP/228/2015 ORDER

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Limited to Arvind Accel Limited and restructure
of share capital of Arvind Envisol Private
Limited, proposed under section 391 to 394 read
with sections 100 to 103 of the Companies Act,
1956.

¶21

4.It has been submitted that Arvind Envisol
Private Limited, the De-merged Company is a 100%
subsidiary of Arvind Accel Limited. It is an
engineering company with interest in providing
environmental solutions to achieve Zero Liquid
Discharge through Evaporator system for
Municipal, Common Effluent Treatment Plants and
Industrial segment. The company is also engaged
in the business of importing and selling RO
membranes and trading in other water treatment
relateditems,providingoperationand
maintenance, revamping and consulting services
for RO and other water treatment plants.

¶22

5. Arvind Accel Limited, the Resulting company
is a 100% subsidiary of Arvind Ltd. It is a
multi-disciplinaryEngineering-Procurement&
Construction (EPC) company, with in house
engineering consultancy & engineering wing. It
provides a single window services in the field of
water & wastewater treatment with Effluent
recycling / Zero liquid discharge & Municipal
solid waste management on turnkey basis.

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Page 2 of 10

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O/COMP/228/2015 ORDER

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6.The Board of Directors of these Companies
thought it appropriate that the Mechanical Vapor
Recompression Evaporation (MVRE) undertaking of
the De-merged Company be de-merged and
transferred to the said parent company. The de-
merged company will continue with the customer
care division, Maintenance of the water plants,
trading activity for essential parts for the
plant and consultations services. It is envisaged
that de-merger shall help both companies to focus
ontheirrespectivebusinesses,remove
redundancies and pursue growth independently.

¶26

7.Further, vide clause 10 of the scheme,
restructure of Share Capital of the De-merged
Company is proposed in order to make its Balance
Sheet realistic upon the de-merger and transfer
of the De-merged Undertaking. The company has
proposed the restructure in form of reduction in
its issued, subscribed and paid up Equity Share
Capital; for adjusting the value of the net
assets of the De-merged undertaking. It has been
submitted that the proposed reduction is
consequential in nature is proposed as an
integral part of the proposed scheme of
arrangement. Further it does not involve either
diminution of liability in respect of unpaid
share capital or payment to any shareholder of
any paid-up share capital and the order of the

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Page 3 of 10

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O/COMP/228/2015 ORDER

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Court sanctioning the Scheme shall be deemed to
be an order under Section 102 of the Companies
Act confirming the reduction. Considering the
said submissions, vide order dated 7th May 2015
the procedure prescribed under Section 101(2) of
the Companies Act, 1956 as well as under rules 48
to 65 of the Companies (Court) Rules 1959, was
dispensed with.

¶30

8.It has been submitted that vide order dated
7th May 2015 passed in Company Application No. 171
of 2015, the meeting of the Equity Shareholders
of the De-merged Company was dispensed with in
view of the written consent letters from all of
them, approving the proposed scheme, being placed
on record. There being no Secured Creditors, a
meeting of only the Unsecured Creditors of the
De-merged company was directed to be convened for
the purpose of seeking their approval to the
proposed scheme. Pursuant to the directions,
issued with regard to the meeting, after the due
notices to all the Unsecured Creditors as well as
the public notice, the said meeting was duly
convened on 12th June 2015 and the proposed scheme
was duly approved unanimously at the said meeting
of the Unsecured Creditors i.e. 100% in number
and 100% in value by the creditors present and
voting at the said meeting. The result of the
meeting was placed on record vide affidavit dated

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Page 4 of 10

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O/COMP/228/2015 ORDER

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19th June 2015.

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9.It has been submitted that in case of the
Resulting Company, vide the order dated 7th May
2015, passed in Company Application No. 172 of
2015, the meeting of the Equity Shareholders of
the company was dispensed with in view of the
consent letters placed on record. There being no
Secured Creditors, a meeting of only the
Unsecured Creditors of the Resulting company was
directed to be convened for the purpose of
seeking their approval to the proposed scheme.
Pursuant to the directions, issued with regard to
the meeting, after the due notices to all the
Unsecured Creditors as well as the public notice,
the said meeting was duly convened on 12th June
2015 and the proposed scheme was duly approved
unanimously at the said meeting of the Unsecured
Creditors i.e. 100% in number and 100% in value
by the creditors present and voting at the said
meeting. The result of the meeting was placed on
record vide affidavit dated 19th June 2015.

¶35

10.The substantive petitions for the sanction of
the scheme were filed by the De-merged Company
and Resulting Company which were admitted on 1st
July 2015. The notice for the hearing of the
petitions were duly advertised in the newspapers
being ‘Indian Express’, English daily and
‘Gujarat Samachar’, Gujarati daily, both

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Page 5 of 10

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O/COMP/228/2015 ORDER

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Ahmedabad editions on 14th July 2015 and the
publication in the Government Gazette was
dispensed with as directed in the said orders.
Affidavits dated 20th July 2015 confirm the same.
No one has come forward with any objections to
the said petitions even after the publication
and the same has been further confirmed by the
additional affidavit dated 20th August 2015.

¶39

11.Notices of the petition have been served upon
the Central Government and learned counsel Mr.
Kshitij Amin for Mr. Devang Vyas, learned
Additional Solicitor General, appears for the
Central Government. An affidavit dated 18th August
2015 has been filed by Mr. Shambhu Kumar Agarwal,
the Regional Director, North-Western Region,
Ministry of Corporate Affairs, whereby some
observations are made.

¶40

12.The attention of this court is drawn to the
Additional Affidavit dated 20th August 2015,
whereby all the above issues have been dealt
with. I have further heard the submissions made
by the learned counsel appearing for the Central
Government and Mrs. Swati Soparkar, learned
advocate appearing for the petitioners as
follows:

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(i)It has been submitted that observations made

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Page 6 of 10

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O/COMP/228/2015 ORDER

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vide para 2(a), (b) and (c) are factual
statements and do not require any response.

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(ii) The observations made vide para 2(d) pertain
to non-disclosure of the list of the assets and
liabilities of the De-merged company which are
proposed to be transferred to the Resulting
Company. However, attention of the court has been
drawn to Exhibit- B-1 to the said company
petition of the De-merged company whereby the
Petitioner De-merged Company has already placed
on record, a columnar divisional balance sheet
that provides the details of assets and
liabilities of the De-merged Undertaking.
Perusing the same, it is not necessary to give
any further directions in this regard.

¶46

(iii) The observation of the Regional Director
made vide para 2(e) pertains to the letter dated
15th July 2015 sent by the Regional Director to
the Income Tax Department to invite their
objections, if any. Since the statutory period of
15 days as envisaged by the relevant circular of
the Ministry of Corporate Affairs is over, it can
be presumed that the Income Tax dept. has no
objection to the proposed scheme of arrangement.
The petitioner companies agree to comply with the
applicable provisions of the Income Tax Act and
rules. In view of the same, no further directions

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Page 7 of 10

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O/COMP/228/2015 ORDER

¶49

are required to be issued to the petitioner
companies in this regard.

¶50

(iv) It has been further submitted that there
are no complaints received by the Registrar of
Companies as confirmed by para 2 (f). The
Regional Director has, vide the observation 2
(g), confirmed that it has no other objection
except the above.

¶51

13.Consideringtheoverallfactsand
circumstances and taking into account all the
contentions raised by the affidavits and reply
affidavits, undertakings provided vide the
additional affidavit dated 20th August 2015, I am
satisfied that the observations made by the
Regional Director, Ministry of Corporate Affairs,
do not survive. I am of the opinion that the
present scheme of arrangement is in the interest
of its shareholders and creditors as well as in
the public interest and the same deserves to be
sanctioned.

¶52

14.Hence, the prayers in terms of paragraph 22
(a), (b) and (c) of Company Petition No. 228 of
2015 for the De-merged Company including the
reduction of capital as proposed vide clause 8 of
the scheme, are hereby granted. The minutes under
Section 103 (1) in terms of para 17 are hereby

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Page 8 of 10

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O/COMP/228/2015 ORDER

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granted. Similarly prayers made in terms of
paragraph 20 (a) of Company Petition No. 229 of
2015 for the Resulting Company are hereby
granted.

¶56

15.The petitions are, accordingly, disposed of.
So far as the costs to be paid to the Central
Govt. Standing Counsel is concerned, I quantify
the same at Rs. 7,500/- per petition. The same
may be paid to the learned Standing Counsel
appearing for the Central Govt.

¶57

16.The petitioner companies are further directed
to lodge a copy of this order, the detailed
schedule of immovable assets of the De-merged
Undertaking of the De-merged Company and the
Scheme duly authenticated by the Registrar, High
Courtof Gujarat,withtheconcerned
Superintendent of Stamps, for the purpose of
adjudication of stamp duty, if any, on the same
within 60 days from the date of the order.

¶58

17.The Petitioner companies are directed to file
a copy of this order alongwith a copy of the
scheme with the concerned Registrar of Companies,
electronically, along with INC-28 in addition to
physical copy as per relevant provisions of the
Act.

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18.Filing and issuance of drawn up order is

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Page 9 of 10

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O/COMP/228/2015 ORDER

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hereby dispensed with.

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19.All concerned authorities to act on a copy of
this order along with the scheme duly
authenticated by the Registrar, High Court of
Gujarat. The Registrar, High Court of Gujarat
shall issue the authenticated copy of this order
alongwith Scheme as expeditiously as possible.

¶64

(VIPUL M. PANCHOLI, J.)

¶65

Jani

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Page 10 of 10

Arvind Envisol Private Limited v. ..

Case brief

What is this about?

What did the court decide?

Arvind Envisol Private Limited v. ..

Case brief

What is this about?

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