Allowed

Genovo Development Services Limited v. Nil

Karnataka HC22 Apr 2014CA/137/2014

Case brief

AI extract

What is this about?

The High Court of Karnataka, on a company application under Section 391 of the Companies Act, 1956, dispensed with the convening of separate meetings of shareholders and creditors. The court approved the application to vest the R&D division in a transferee company.

What did the court decide?

The convening of meetings of equity shareholders and creditors (secured and unsecured) for approving the scheme of arrangement was dispensed with; the applicant was directed to file a petition under S

Genovo Development Services Limited Vs Nil — Company and Corporate | Karnataka HC (2014)

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IN THE HIGH COURT OF KARNATAKA AT BANGALORE DATED THIS THE 22^ND DAY OF APRIL, 2014 BEFORE:

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THE HONOURABLE MR. JUSTICE ANAND BYRAREDDY

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COMPANY APPLICATION No.137 OF 2014

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BETWEEN:

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Genovo Development Services Limited, Plot No.36, Bommasandra Industrial Area, Anekal Taluk, Bangalore – 560 099, Karnataka, India.

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… APPLICANT

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(By Shri. A. Murali, Advocate)

AND:

Nil.

…RESPONDENT

This Company Application is filed under Section 391 of the Companies Act, 1956 praying to order for dispensing with and / or convening separate meetings of the equity shareholders and creditors of the applicant Company for approving the Scheme of Arrangement, whereunder the “R and D” business division of the applicant company is proposed to be demerged and vested in a company known as “Medreich Limited”, having its registered office situated at “Medreich House, No.12/8, Saraswathi Ammal Street, Maruthi Seva Nagar, Bangalore – 560 033, Karnataka, India for purposes of considering and if thought fit approving with

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or without modification[s] the aforesaid Scheme of Arrangement and etc;

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This Company Application coming on for Orders this day, the Court made the following: -

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O R D E R

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This application is filed under Section 391 of the Companies Act, 1956 seeking to dispense with the convening of the separate meetings of the shareholders and creditors both secured and unsecured of the applicant – Demerged Company for approving the Scheme of Arrangement of the applicant company with M/s. Medreich Sterilab Limited (hereinafter referred to as

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‘the Transferee Company’, for brevity)

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The applicant – Demerged Company is said to be

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incorporated in the year 2008 in the name and style of ‘Genovo Development Services Limited’ under the Companies Act, 1956

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in the State of Karnataka with the objects of conducting the business of contract research and development of drug formulation.

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The registered office of the applicant – Demerged Company

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is situated at Plot No.36, Bommasandra Industrial Area, Anekal Taluk, Bangalore-560 099.

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The authorised share capital of the applicant – Demerged

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Company is Rs.1,85,00,000/- divided into 18,50,000 Equity shares of Rs.10/- each and the Issued, subscribed and paid-up capital of the applicant company is Rs.1,82,96,400/- divided into 18,29,640 Equity shares of Rs.10/- each fully paid-up.

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The Board of Directors of the applicant Company had

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approved and adopted a scheme of arrangement at its meeting held on 24.10.2013, by virtue of which the Research and Development Business Division (hereinafter referred to as ‘the Demerged Undertaking’, for brevity) of the applicant – Demerged Company is proposed to be demerged and vested with a company known as “Medreich Limited” – Transferee Company, subject to confirmation of this Court within whose jurisdiction the registered

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offices of the applicant company and the Transferee company are

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situated.

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The applicant is a public company and has seven shareholders. The list of shareholders duly certified by the Chartered Accountant and the consent letters of the shareholders according their no objection to the proposed scheme are also produced.

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It is stated that there are no secured creditors as on date and a certificate issued by the Chartered Accountant certifying the same is also produced. It is further stated that there are 63 unsecured creditors for a value of Rs.2,28,01,821/- as on 30.09.2013. Of the unsecured creditors as on 30.9.2013, majority of the unsecured creditors have been paid-off and only 13 unsecured creditors for a value of Rs.1,80,41,947/- remain as on 10.01.2014. The unsecured creditors who remain, a sum of Rs.1,78,49,367/- is due to the Transferee Company, whose members have consented to the scheme and the other unsecured

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creditors are being paid in the normal course of business of the company. A certificate of Chartered Accountant verifying the list of unsecured creditors as on 30.09.2013 and a certificate confirming the remaining unpaid unsecured creditors as on 10.01.2014 is also annexed.

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It is stated that under the scheme, the interests of the creditors are not being prejudiced and there is no compromise being contemplated with the creditors and hence, the meetings of the creditors for approving the scheme would not be required.

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The combined assets of the Demerged Undertaking and the Transferee Company is sufficient to meet the aggregate liabilities of the Demerged Undertaking. The applicant – company is said to be a going concern and the creditors are being cleared in the normal course of business of the applicant – company. Hence, it is claimed that the meetings of the creditors may not be required to be convened.

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Incidentally, it is stated that out of the 13 unsecured creditors for an value of Rs.1,80,41,947/-, the applicant –

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company has received no-objection letters from eight unsecured creditors for a value of Rs.1,78,85,845/- consenting to the proposed scheme of arrangement. The said unsecured creditors constitute about 99% in value of the remaining unsecured creditors stated in the application. The consent letters of the unsecured creditors are annexed to the memo dated 7.4.2014. The same is also taken on record.

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Hence, the application is allowed as prayed for. The

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convening of the meetings of the equity shareholders and creditors

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both secured and unsecured of the applicant company to consider the scheme of arrangement is dispensed with.

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The applicant is directed to file a petition under Section 394

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of the Companies Act, 1956, within four weeks.

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Sd/-

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JUDGE

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Genovo Development Services Limited v. Nil

Case brief

What is this about?

What did the court decide?

Genovo Development Services Limited v. Nil

Case brief

What is this about?

What did the court decide?

What the court decided

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