These petitions have been filed by the petitioner-Companies under Sections 391 and 394 of the Companies Act, 1956, for obtaining the sanction of this Court to a Scheme of Arrangement, in the nature of Amalgamation, of Hazira Gas Private Limited (the Transferor Company and petitioner of Company Petition No.24 of 2012) with Hazira LNG Private Limited (the Transferee Company and petitioner of Company Petition No.25 of 2012).
It is stated that both the petitioner-Companies were originally promoted as subsidiary Companies of Shell Gas B.V. and are now joint venture Companies between Shell Gas B.V. and Total Gas Electricite Holdings, France. The details of the current commercial activities of both the Companies have been given in the petitions. Hazira Gas Private Limited, the Transferor Company, was incorporated to undertake marketing and distribution of LNG. However, due to several reasons, the Company could not commence the commercial activities though it had entered into various agreements and developed the marketing infrastructure. Hazira LNG Private Limited, the Transferee Company, belongs to the same group and is engaged in the business to explore, develop, refine, liquefy, re-gasify, transport, distribute, market and trade in Natural Gas, LNG, etc. The Amalgamation is proposed to undertake the entire integrated business activity under one Company and to realign the group structure. The petitions mention in detail, the commercial activities that would flow by virtue of the proposed Amalgamation. It is visualized by the Board of Directors of the petitioner-Companies that the Amalgamation will be beneficial to the Shareholders, Creditors and Investors.
It is stated that vide orders dated 11.01.2012, passed in Company Application Nos.4 and 5 of 2012, the meetings of the Equity Shareholders of both the petitioner-Companies were dispensed with in view of the written approval to the Scheme. There being no Secured or Unsecured Creditors of the Transferor Company, no approval was sought from the Creditors.
Substantive petitions for the sanction of the Scheme were filed by the petitioner-Companies, which were admitted on 23.01.2012. The Notices for the hearing of the petitions were duly advertised in the English daily newspaper "Indian Express" and the Gujarati daily newspaper "Sandesh", both Ahmedabad editions of 9th February, 2012. Publication in the Government Gazette was dispensed with, as directed in the said orders. It is stated that pursuant to publication in the newspapers, no objections were received by the petitioner or its advocate. This fact has been confirmed vide additional affidavit dated 21.06.2012.
Notices of the petitions have been served upon the Central Government and Shri M.Iqbal A.Shaikh, learned Central Government Counsel, has appeared for the Central Government. An affidavit dated 11.04.2012 has been filed Shri Kashmir Lal Kamboj, the Regional Director (Incharge), North-Western Region, Ministry of Corporate Affairs, whereby several observations have been made. The observations are as follows:-
(a) That, as per clause-14 of the Scheme, the Appointed Date is 01.04.2008 or such other date as the High Court may direct. That, the Balance Sheet for and upto the year ended 31.03.2011 of the respective petitioner-Companies have already been audited and the same have been filed with the Office of the Registrar of Companies, Gujarat. The applications and the petitions of the respective petitioner-Companies are filed after the filing of the audited Balance Sheets as on 31.03.2011. The financial position of the respective petitioner-Companies have been mentioned in the petitions as per the latest Balance Sheets as on 31.03.2011, therefore, the Appointed Date, that is, 01.04.2008, is abnormally retrospective, being prior to more than three years, which is not justified.
(b) The second observation raised by the Regional Director is that he is not aware whether for carrying on such business, the Transferor Company has obtained any licence(s) from any Competent Authority in its own name, or not. It is stated by the Regional Director that in case any such licence(s) are obtained in the name of the Transferor Company, then the same shall require prior approval, if any, for transferring the same in the name of the Transferee Company after following due procedure laid down under the applicable Rules and Regulations of applicable laws and/or local laws. It is stated that this Court may direct the Transferor Company to place on record, the details of such licence(s), if any obtained in the name of the Company which requires approval of appropriate authorities and direct the petitioner-Transferee Company to undertake to follow all the required procedure, if any, for the said purpose.
(c) The third observation relates to Clause No.9 of the Scheme wherein it is stated that the Transferee Company shall issue 1 (one) Equity Share of Rs.10/- each fully paid up in the Transferee Company against every 3 (three) Equity Shares of Rs.10/- each fully paid up held by the members in the Transferor Company. It is stated by the Regional Director that as per the aforesaid ratio of exchange of shares and the number of shares held by the members of the Transferor Company, there is a likelihood of arising entitlement of shares by the Shareholders of the Transferor Company, in fraction. It is stated there is no clause in the Scheme regarding treatment of the said fractional entitlement, therefore, this Court may direct the petitioner-Companies to amend the Scheme to that extent and to provide for, the relevant clause in the Scheme, if necessary, in respect of treatment to be given to such fractional entitlement.
I have heard Shri S.N.Soparkar, learned Senior Advocate with Mrs.Swati Soparkar, learned counsel for the petitioners and Mr.M.Iqbal A.Shaikh, learned Central Government Counsel.
The attention of the Court has been drawn by the learned Senior Advocate to the additional affidavit dated 21.06.2012, whereby all the above issues have been dealt with. The submissions made by Mr.S.N.Soparkar, learned Senior Advocate, are as follows:-
I. Insofar as the first observation made by the Regional Director regarding the choice of Appointed Date is concerned, there is no legal bar on the same and it is the prerogative of the Board of Directors of the petitioner-Companies to select the Appointed Date for the Scheme. The same is required to be approved by the Shareholders of the respective petitioner-Companies and that the requisite has been complied with in the present proceedings. It has further been pointed out that there is also a commercial rationale for keeping the Appointed Date as 01.04.2008 as both the petitioner-Companies were incorporated to carry out complementary functions for the same business of Natural Gas. Hazira Gas Private Limited, the Transferor Company, was promoted for marketing and distribution of LNG. It was envisaged that initially, the activity shall be carried out for purchasing the same from the international market and supplying the various end users. It is further submitted that the Company, therefore, put in efforts and entered into contracts with various suppliers and end users but due to frequent changes in the Government policy and applicable tax structures, the operations of the Transferor Company were not found to be economical. That, Hazira LNG Private Limited, the Transferee Company, was originally promoted to undertake the business of receipt, storage and re-gasification of LNG encompassing all operations and maintenance activities of the LNG facilities. However, subsequently, it also undertook the marketing activities. It is contended that in order to avoid duplication of administering two Companies promoted by the same group, it is thought appropriate to achieve economic synergies by undertaking all operations by one single entity. Since the initial set up was put in place by the Transferor Company prior to 2008, the Board of Directors of these Companies thought it appropriate to merge the commercial activities from 01.04.2008 for administrative and commercial exigencies. Moreover, the Scheme becoming effective from the Appointed Date of 01.04.2008, will not be prejudicial to the interest of its Creditors, members and/or general public. It is submitted that in view of this, the Appointed Date need not be changed to 01.04.2011.
In support of the above submission, reliance has been placed upon order dated 30.03.2012 of this Court in Company Petition No.180 of 2011 in Company Application No.447 of 2011 and Judgment dated 23.09.2009 of this Court in O.J.Appeal No.65 of 2009 in Company Petition No.100 of 2009 in Company Application No.178 of 2009 and allied matters.
(II) Regarding the second observation of the Regional Director pertaining to the ability of the Transferee Company to undertake the business intended to be carried out by the Transferor Company, particularly, in view of specific licence required to carry out the same, it is submitted by the learned Senior Advocate on behalf of the petitioners that the Transferee Company already has requisite licence to carry on the said activity and, in fact, it has been part of its current activity. However, in the event that the Transferor Company is required to transfer the licences in favour of the Transferee Company, the same shall be done in accordance with law.
(III) Insofar as the third observation of the Regional Director is concerned, it is submitted by the learned Senior Advocate on behalf of the petitioners that this pertains to the Exchange Ratio as provided in Clause 9 of the Scheme. That, the apprehension of the Regional Director is that the said Exchange Ratio may result in fractional entitlement of shares by the Shareholders of the Transferor Company and that the Scheme has not envisaged such a situation. It is submitted that both the petitioner-Companies are private limited Companies belonging to the same group and the Shareholders of both the Companies are the same. Hence, an internal arrangement can be made to avoid such an eventuality, in case it arises, and no such provision in the Scheme is required to be added.
Upon considering the facts and circumstances of the case and the material on record, and taking into account the contentions raised by the respective parties in their affidavits and counter affidavits as well as the submissions made at the Bar, this Court is satisfied that the observations made by the Regional Director, Ministry of Corporate Affairs, have been effectively dealt with by the petitioners, adequately, therefore, the same do not survive.
Notice of Company Petition No.24 of 2012 was also served on the Official Liquidator and a Report dated 16.07.2012 has been filed indicating that the affairs of the Transferor Company are not conducted in a manner prejudicial to the interest of the members of the Company, its Creditors or the public at large.
In view of the above, it is directed that in the event that the Transferor Company is required to transfer the licences in favour of the Transferee Company, the same shall be done in accordance with law. Further, the Transferee Company is directed to preserve Books of Accounts, papers and records of the Transferor Company for a period of eight years and not to dispose of the same without prior permission of the Central Government, as envisaged under Section 396 of the Companies Act,1956.
Considering the justification given by the petitioner-Companies, the material on record and the facts and circumstances of the case, in the view of this Court, the present Scheme of Arrangement would be in the interest of its stakeholders, namely Shareholders, Creditors as well as in the public interest, therefore, the same deserves to be sanctioned.
Accordingly, the prayers made in terms of Paragraph-15(a) of Company Petition No.24 of 2012 by the Transferor Company and prayers made in Paragraph-15(1) of Company Petition No.25 of 2012 by the Transferee Company, are hereby granted. The petitions are disposed of, accordingly.
Insofar as the costs to be paid to the Central Government Counsel are concerned, they are quantified at Rs.7,500/- per petition. The same may be paid to Shri M.Iqbal A.Shaikh, learned Central Government Counsel. The cost of Rs.5,000/- be paid to the Office of the Official Liquidator for the Transferee Company.
(Smt.
Abhilasha Kumari, J.) (sunil)