Allowed

M/s United Steel Allied Industries Private Limited, v. -

Telangana HC12 Nov 2014COMPA/692/2014

Case brief

AI extract

What is this about?

The court allowed an application to dispense with convening meetings of shareholders and creditors for approving a scheme of arrangement between United Steel Allied Industries and Kamineni Health Care. The dispensation was granted because unsecured creditors were not involved with the specific project unit and all other stakeholders had provided consent.

What did the court decide?

Dispensation with the holding of meetings of equity shareholders, sole secured creditor, and unsecured creditors for the approval of the proposed scheme of arrangement.

M/s United Steel Allied Industries Private Limited… — Company and Corporate | Telangana HC (2014)

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THE HON’BLE SRI JUSTICE A.RAJASHEKER REDDY COMPANY APPLICATION No.692 of 2014

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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, read with Rule 67 of the Companies (Court) Rules, 1959, by M/s.United Steel Allied Industries Private Limited (Transferor Company) for dispensing with the convening of meetings of its equity shareholders, sole secured creditor and unsecured creditors for approving the proposed scheme of arrangement between it and M/s.Kamineni Health Care Private Limited (Transferee Company).

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The applicant pleaded that it was incorporated on 30.03.1989, that its authorised share capital is Rs.1,00,00,00,000/- divided into 10,00,00,000 equity shares of Rs.10/- each and that its issued, subscribed and paid up capital is Rs.1,00,00,00,000/- divided into 10,00,00,000 equity shares of Rs.10/- each. That its main objects are to manufacture and supply steel, steel pipes, steel rods, sheets and allied products etc. that, by the proposed scheme of arrangement, the transferor and transferee companies seek to amalgamate the undertaking of the applicant company, namely “Vijayawada Hospital Project’ Unit into the transferee company.

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It is also stated that the accounts of the Applicant/Transferor Company have been audited till 31^st March, 2013 considered and approved by the Board of Directors and the Auditor’s report does not disclose any irregularity or mismanagement in the affairs of the Applicant/transferor company, as they have been conducted transparently and prudently. It is also stated that the assets of the said ‘Vijayawada Hospital Project’ of the Applicant/Transferor company and the transferee company are sufficient to meet all their liabilities, if

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any in the future. The scheme of arrangement does not involve any compromise with the creditors of either company. The scheme will not affect any of the creditors of the transferor company or the transferee company in any manner whatsoever whether in terms of value of their debt or security for the debt.

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By resolution of the Board of Directors of the applicant, dated 19.08.2013, the proposed scheme of arrangement was approved subject to approval of their shareholders, secured creditors and of this Court. The applicant further pleaded that it has 17 shareholders and that they have given their consent for the proposed scheme of arrangement by way of affidavits filed at page Nos.57 to 73. That it has lone secured creditor, namely, Allahabad bank, which has also given its consent for the proposed scheme of arrangement by way of affidavit filed at page No.46. The applicant further pleaded that it has 36 unsecured creditors and that it undertakes to file their consent letters at the time of filing of the company petition if necessary. Further that all the36 unsecured creditors and the transferor company is well placed financially to take care of all or any contingent liabilities as the assets of the transferor company are more than its liabilities as per the latest audited balance sheet of the company. It has, therefore, sought for dispensing with the holding of meeting of its shareholders, lone secured creditor and unsecured creditors.

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This Court on 02.06.2014, passed orders and thereby dispensed with convening of meetings of the shareholders and the lone secured creditor of the applicant company. This Court also dispensed with convening of meeting of its unsecured creditors, in view of the undertaking given by the applicant that the consent affidavits of its unsecured creditors will be filed at the time of filing of the company petition.

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Subsequently, the applicant filed Company Application No.1296 of 2014 to modify the order dated 02.06.2014 in CA.No.692 of 2014 to the extent of deleting of filing of the consent affidavits of the unsecured creditors of the applicant company and this Court passed orders dated 07.11.2014, stating that since order dated 02.06.2014, was based on the undertaking given by the applicant, it is not possible to amend the same unless the applicant, in the first instance, amends its averments in the affidavit. Therefore, Order, dated 02.06.2014 in Company Applicant No.692 of 2014 was recalled and CA.No.692 of 2014 was restored.

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As such, Company Application No.692 of 2014 is again posted for hearing and an Additional affidavit is also filed stating that 36 unsecured creditors are no way concerned with the ‘Vijayawada Hospital Project’ Unit, as it is at initial stage and they did not even supply any single item/goods to the ‘Vijayawada Hospital Project’ Unit and as such, their consent in the present case is not required.

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Heard learned counsel for the applicant.

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Since it is stated that the 36 unsecured creditors of the Transferor Company are no way concerned with the ‘Vijayawada Hospital Project’ Unit, as it is at initial stage and they did not even supply any single item/goods to the ‘Vijayawada Hospital Project’ Unit and that all the shareholders and the lone secured creditor of the applicant company have submitted their no objection/consent affidavits for the proposed scheme of arrangement, no purpose will be served by holding their meetings. It is also stated that the assets of transferor company are more than its liabilities as per the latest audited balance sheet of the Company. In view of the above facts and circumstances, holding of the meetings of the shareholders, lone secured creditor and

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consent letters of unsecured creditors of the applicant company is dispensed with.

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The company applications is accordingly allowed.

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_________________________ A.RAJASHEKER REDDY, J 12.11.2014 tk

M/s United Steel Allied Industries Private Limited, v. -

Case brief

What is this about?

What did the court decide?

M/s United Steel Allied Industries Private Limited, v. -

Case brief

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