JUDGMENT S.P. Mehrotra, J.
1. The present Company Application by summons, as provided under Rule 67 of the Companies (Court) Rules, 1959, has been filed under Sections 391 to 394 of the Companies Act, 1956 by Upper Ganges Sugar & Industries Limited, having its Registered Office at Post Office Seohara (PIN Code 246 746), District-Brjnor in the State of Uttar Pradesh. The said Company has hereinafter also been referred to as "the Applicant-Company".
2. It appears that a Scheme of Arrangement is proposed to be made between New India Sugar Mills Limited having its Registered Office at 9/1, R.N. Mukherjee Road, Kolkata-700001 and the Applicant- Company (i.e., Upper Ganges Sugar & Industries Limited) and their respective Shareholders. Copy of the proposed Scheme' of Arrangement has been filed as Annexure-A to the affidavit accompanying the Company Application, and appears at page 27 of the Paper Book of the Company Application.
3. It is, interalia prayed in the Company Application that a meeting of the Equity Shareholders of the Applicant-Company be held for the purpose of considering, and if thought fit, approving with or without modification the proposed Scheme of
4. The Company Application is supported by an affidavit of Santosh Kumar Poddar, stated to be the Secretary of the Applicant- Company, sworn on 8.4,2005-
5. At the outset, it may be mentioned that by the order dated 15.4.2005, the Company Application was directed to be put up as fresh on 19.4.2005.
6. Again, by the order dated 19.4.2005, the Company Application was directed to be put up as fresh on 5.5.2005.
7. When the case was taken up on 5.5.2005, a Affidavit, sworn by the aforesaid Santosh Kumar Poddar on 4.5.2005, was filed on behalf of the Applicant-Cornpany.
8. Alongwith the said Supplementary Affidavit, a list of Equity Shareholders of the Applicant-Company as on April 30, 2005 has bear fifed as Annexure-A to the said Supplementary Affidavit
9. By the order dated 5.5,2005, the said Supplementary Affidavit was taken on record and the case was directed to be put up as fresh on 6.5.2005. The said order dated 5.5.2005 is quoted below:
"Pursuant to the order dated 19th April, 2005, the case has been put up as fresh today before the Court.
Supplementary Affidavit has been filed today on behalf of the; applicant/Company. Let the same be taken on record. Put up this case as fresh on 6th May, 2005 ."
10. On 6.5.2005, teamed counsel for the Applicant-Company was heard in part. On prayer made by the teamed counsel for the Applicant-Company, the case was directed to be put up as fresh on 10.5.2005. The said order dated 6.5.2005 is reproduced below:
"Heard Sri Piyush Agarwal, teamed counsel for the applicant-Company in part.
As prayed by Sri Piyush Agarwal, put up as fresh on 10th May, 2OO5."
11. On 10.5.2005, the case was directed to be put up as fresh on 17.5.2005 on prayer made by the learned counsel for the Applicant- Company.
12. Again, on 17.5.2005, the case was directed to be put up as fresh on 19.5.2005 on prayer made by the learned counsel for the Applicant-Company.
13. On 19.5,2005, two more Supplementary Affidavits, namely, Second Supplementary Affidavit, sworn by the aforesaid Santosh Kumar Poddar on 18.5.2005, and Third Supplementary Affidavit, sworn by the aforesaid Santosh Kumar Poddar on 4.5.2005, were filed on behalf of the Applicant-Company.
14. Alongwith the Second Supplementary Affidavit, the Applicant- Company has, interalta, filed a list of Equity Shareholders of the Applicant-Company as on April 30, 2005 also containing their respective value and percentage of shareholding as Annexure-C to the Second Supplementary Affidavit.
15. Alongwith the Third Supplementary Affidavit, letters issued by various Stock-Exchanges have been filed and collectively marked as Annexure-A to the Third Supplementary Affidavit.
16. By the order dated 19.5.2005, the said Second Supplementary Affidavit and Third Supplementary Affidavit were taken on record. The Said order dated 19.5.2005 is as flows:
" Pursuant to the order dated 1715.2005, the case has been put up as fresh case today.
Second Supplementary affidavit and Third supplementary affidavit have been filed today on behalf of the applicant-Company. Let the same be taken on record.
Heard Shri Bharat Ji Agrawal, learned Senior Counsel assisted by S/Shari Piyush Agrawal and Ankit Agrawal, learned counsel for the petitioner-Company.
Order is reserved."
16. Coming now to the averments made in the said affidavit accompanying the Company Application it is interalia, stated in the said affidavit that New India Sugar Mills limited was incorpcraated on the 4th day of may, 1933 as a Company limited by shares under the provisions of the Indian Companies Act, 1913; and that New India Sugar Mills Limited is an existing Public Comply within the meaning of the Companies Act, 1956 and that the Registered Office of New India Sugar Mills Limited is situated at 9/1, R.N Mukherjee Road, Kolkatta 700001 within the jurisdiction of the High Court at Calcutta.
17. It is, interalia, further stated in the affidavit accompanying the Company Application that the Authorised Share Capital of New India Sugar Mills Limited is Rs. 7,00,00,000/- divided into 50,00,000 Equity Shares of Rs. 10/- each and 2,00,000 Preference Shares of Rs., 100/- each; and that the Issued, Subscribed and Paid-up Share Capital of New India Sugar Mills Limited is Rs. 1,35,88,069/- divided into 13,57,115 Equity Shares of Rs. 10/- each full paid-up and a sum of Rs. 16,919/-, being the amount originalty paid-up on forfeited Equity Shares.
18. It is, interalia, further stated In paragraph 4(d) of the affidavit accompanying the Company Application that the objects c? New India Sugar Mills Limited are set-out in its Memorandum of Association. Certain Clauses of the Object Clause as obtained in the Mernorandum of Association of New India Sugar Mills limited have been reproduced in paragraph 4(d) of the affidavit accornpanying the Company Application.
19. Copy of the Memorandum and Articles of Association of New India Sugar Mills Limited has been filed as Annexure-B to the affidavit accompanying the Company Application, and appears at page 42 of the Paper Book of the Company Application.
20. It is, interalia, stated in paragraph 4(e) of the affidavit accompanying the. Company Applicatioin that shortly after incorporation, New India Sugar Mills limited commenced its business and that at present, New India Sugar Mills Limited is engaged in business of manufacture of sugar.
21. It is interalia, stated in paragraph 4{f) of the affidavit accompanying the Company Application that the latest Annual Accounts-of New India Sugar Mills Limited have been audited for the year ended on June 30,2004.
22. Copy of the Annual Accounts of New India Sugar Mills Limited for the year ended on June 30, 2004 alongwith the Auditors' Report thereon and the Directors' Report for such year are annexed collectively and marked as Annexure-C to the affidavit accompanying the Company Application (appearing at page 104 of the Paper Book of the Company Application).
23. It is, interalia, further stated in paragraph 4(f) of the affidavit accompanying the Company Application that New India Sugar Mills Limited has maintained proper Books of Accounts, as required by law.
24. It is, interalia further stated in paragraph 4(f) of the affidavit accompanying the Company Application that New India Sugar Mills limited had neither issued nor agreed to issue any debentures.
25. The financial position of the Applicant-Company, as per its aforementioned Audited Accounts as on June 30, 2004, has been summarised in paragraph 4(f) of the affidavit accompanying the Company Application.
26. It is, interalia, stated in paragraph 4(g) of the affidavit accompanying the Company Application that subsequent to the date of the aforesaid Audited Accounts, there has been no substantial change in the financial position of New India Sugar Mills Limited excepting those arising or resulting from the usual course of business.
27. It is, interalia, further stated in paragraph 4(g) of the affidavit accompanying the Company Application that in accordance with the listing agreement with the Stock-Exchange, New India Sugar Mills Limited has also published its financial results for the quarters ended on 30.9.2004 and 31.12.2004.
28. Copies of the said financial results for the said quarters have been annexed collectively and marked as Annexure-D to the affidavit accompanying the Company Application (appearing at page 163 of the Paper Book of the Company Application.).
29. As regards the Applicant-Company, namely, Upper Ganges Sugar and Industries Limited, it is, iteralia, stated in the said affidavit accompanying the Company Application that the Applicant-Company was incorporated on the 10* day of August, 1932 as a Company limited by shares under the provisions of the Indian Companies Act, 1913 by the name and style of Upper Ganges Sugar Mills Limited' ; and that with effect from the day of September, 1984, the name of the Applicant-Company was changed to its present one; and that the Applicant-Company is an existing Public Company within the meaning of the Companies Act, 1956; and that the Registered Office of the Applicant-Company is situated at Post Office Seohara (PIN Code 246746), District Bijnor in the State of Uttar Pradesh within the jurisdiction of this Court.
30. It is, interalia, further stated in the affidavit accompanying the Company Application that the Authorised Share Capital of the Applicant-Company is Rs. 32,00,00,000/- divided into 1,60,00,000 Equity Shanes of Rs. 10/- each and 16,00,000 Preference Snares of Rs. 100/-each; and that the Issued, Subscribed and Paid-up Share Capital of the Applicant-Company is Rs. 6,97,93,830/- divided into 69,79,378 Equity Shares of Rs. 10/-eadh fully paid-up and a sum of Rs. 50/-, being the amount originlly paid-up on forfeited Equity Shares.
31. It is, interalia, further stated in paragraph 5(d) of the affidavit accompanying 'the Company Application that the objects of, the Applicant-Company are set-out in its Memorandum of Association. Certain Clauses of the Object Clause as contained in the Memorandum of Association of the Applicant-Company have been reproduced in paragraph 5(d) of the affidavit accompanying the Company Application.
32. Copy of the Memorandum and Articles. of Association pf the Applicant-Company has been filed as Annexure-E to the affidavit accompanying the Company Application, and appears at page 165 of the Paper Book of the Company Application.
33. It is, interalia, stated in paragraph 5(e) of the affidavit accompanying the Company Application that shortly after incorporation, the Applicant-Company commenced its business; and that at present, the Applicant-Company engaged in 'the business of manufacture of sugar and its by -products, industrial alchohal and bio- compost and Cultivation and manufacture of tea.
34. It is, interalia, stated in paragraph 5(f) of the affidavit accompanying the Company Application that the latest Annual Accounts of the Applicant-Company have been audited for the year ended on June 30, 2004.
35. Copy of the Annual Accounts of the Applicant-Company for the year ended on June 30, 2004 alongwith the Auditors' Report thereon and the Directors' Report for such year are annexed collectevely and marked as Annexure-F to the affidavit accompanying the Company Application' (appearing at page 231 of the Paper Book of the Company Application).
36. It is, interalia, further stated in paragraph 5(f) of the affidavit accompanying the Company Application that the Applicant-Company has maintained proper Books of Accounts, as required by law.
37. It is, interalia, further stated in paragraph 5(f) of the affidavit accompanying the Company Application that the Applicant-Company had issued 7,00,000 16% Non-Convertible Debentures of Rs. 100/- each on which a sum of Rs. 467,00,000/- was outstanding as on the said date.
38. The financial position of the Applicant-Company, as per its aforementioned Audited Accounts as on june 30, 2004, has been summarised in paragraph 5(f) of the affidavit accompanying the Company Application.
39. It is, literalia, stated in paragraph 5(g) of the affidavit accompanying the Company Application that subsequent to the date of the aforesaid Audited Account there has been no substantial change in the financial position of the Applicant-Company excepting those arising or resulting from the usual course of business.
40. It is, interalia, further stated in paragraph 5(g) of the affidavit accompanying the Company Application that in accordance with the listing agreement with the Stock-Exchange, the Applicant-Company has also published its financial results for the quarters ended on 30.9.2004 and 31.12.2004;
41. Copies of the said financial results for the said quarters have been annexed collectivly and marked as Annexure-G to the affidavit accompanying the Company, Application (appearing at page 317 of the Paper Book of the Company Application.)
42. It is, interalia, stated in the affidavit accompanying the Company Application that the Circumstances, which justify and/or have necessitated the de-merger, are stated in the proposed Scheme of Arrangement. The said circumstances have also been mentioned in Sub-paragraphs (a) to (g) of paragraph 6 of the affidavit accompanying the Company Application.
43. It is pertinent to note that in Sub-paragraph (b) of paragraph 6 of the affidavit accompanying the Company Application, it is interalia, stated that subject to necessary approvals, New India Sugar Limited has agreed to enter into a separate Scheme of whereby and whereunder ft is proposed to amalgamate a Company by the name of 'Saran Trading Company Limited' with New India Sugar Mills Limited with effect from April 1, 2004;, and that Saran Trading Company limited is an existing Company within the meaning of tne Companies Act, 1956 having its Registered Office in the same premises as New India Sugar Mills Limited; and that Saran Trading Company Limited is a wholly owned subsidiary of the Applicant-Company and carries on business of trading in various goods and products, including dress materials, moorti, photos and curio goods and holds substantial investments in shares and securities.
44. The said averments made in. Sub-paragraph (b) of paragraph 6 of the affidavit accompanying the Company Application, have been further clarified in paragraph 3 of the Second Supplementary Affidavit.
45. It is, interalia, stated in paragraph 3 of the Second Supplementary Affidavit that under the proposed Scheme of Arrangement between New India Sugar Mills Limited and the Applicant-Company, which is under consideration in the present case, the Sugar Division of New India Sugar Mills Limited is proposed to be.; demerged and transferred from New India Sugar Mills limited to the Applicant-Company; and that the rest of the business, assets and liabilities.-of New India Sugar Mills Limited will continue to remain with New India Sugar Mills Limited; and that apart from such remaining business, New India Sugar Mills Limited will acquire the entire undertaking of Saran Trading Company limited under a separate Scheme of Arrangement for amalgamation of Saran Trading Company Limited with New India Sugar Mitts limited (as mentioned in Sub- paragraph (b) of paragraph 6 of the affidavit accompanying the Company Application); and that Saran Trading Company Limited is a wholly owned subsidiary of the Applicant-Company; and that in consideration of the amalgamation, New India Sugar Mills Limited will issue and allot shares credited as fully paid-up in New India Sugar Mills Limited to the shareholders of Saran Trading Company limited, i.e., to the Applicant-Company.
46. It is, interalia, further stated in paragraph 3 of the Second Supplementary Affidavit that meeting of the Equity Shareholers of of New India Sugar Mills limited to consider the said Scheme of Arrangement for amalgarmation of Saran Trading Company Limited with New India Sugar Mills Limited (as mentioned in Sub-paragraph (b) of paragraph 6 of the affidavit accompanying the Company Application) has also been separately convened and held in terms of the order dated March 21, 2005 passed by the High Court at Calcutta; and that the said meeting of Equity Shareholders of New India Sugar Mills limited has duly approved the said Scheme-
47. Copy of the said Scheme of Arrangement for amalgamation of Saran Trading Company Limited with New India Sugar Mills limited has been filed as Annexure-A to the Second Supplementary Affidavit, and appears at page 2B of the Paper Book of the Second Suppllementary Affidavit.
48. Copy of the said order dated March 21, 2005 passed by the Calcutta High Court has been filed as Anetexure-B to the Second Supplementary Affidavit, and appears at page 2N of the Paper Book of the Second Supplementary Affidavit
49. During the course of hearing. It has been stated by Shri Bharat Ji Agrawal, learned Senior Counsel appearing for the Applicant Company that a Company Petition for confirmation of the said Scheme of Arrangement for amalgamation of Saran Trading Company Limited with New India Sugar Mills limited has been filed before the Calcutta High Court.
50. Resuming the narration of the averments made in the affidavit accompanying the Company Application, the salient features of the proposed Scheme of Arrangement between New India Sugar Mills Limited and the Applicant-Company have been stalled in Sub- paragraphs (a) to (n) of paragraph 7 of the affidavit accompanying the Company Application.
51. In Sub-paragraph (k) of paragraph 7 of the affidavit accompanying the Company Application, it is, interalia, stated that in consideration of the de-merger and transfer of the Sugar Division, the Applicant-Company shall upon the proposed Scheme of Arrangement becoming effective, without further application, issue and allot to the shareholders of New India Sugar Mills Limited whose names shall appear in the Register of Members as on a Record Date to be fixed by New India Sugar Mills Limited in consultation with the Applicant-! Company, two Equity Shares of Rs, 10/- each in the Applicant- Company, credrted as fully paid-up for every 100 Equity Shares held by them in New India Sugar Mills Limited.
52. In Sub-paragraph (m) of paragraph 7,of the affidavit accompanying the Company Application, it Is interalta, stated that all the Equity Shares to be issued and allotted by the Applicant-Company to the Equity Sharehoders of New India sugar Mills Limited under the proposed Scheme of Arrangement shall rank pari-passu in ail respects with the existing Equity Shares of the Applicant-Company and that such Equity Shares shall, subject to applicable regulations, be Listed and/or admitted to trading on the relevant Stock-Exchange(s) where the Equity Shares of the Applicant-Company are listed and/or admitted to trading.
53. In paragraph 11 of the affidavit accompanying the Company for it is, interaiia, stated that under the proposed Scheme of Arrangernent, the Applicant-Company will issue and allot Equity Shares credited as fully paid-up in the Applicant Company to the shareholders of New India Sugar Mills Limited in the entitlement ratio provided in the proposed Scheme of Arrangement and that such entitlement ratio of shares has been fixed on fair and reasonable basis and on the oasis of Valuation Report of M/s N.M. Raiji and Company, a firm of Chartered Accountants, and fairness opinion of Ernst and Young Private Limited, a Management Consultancy Concern.
54. It is pertinent to, note that under the proposal Scheme of Arrangement, the Sugar Division of New India Sugar Mllis Limited is proposed to be dernerged and transferred from New India Sugar Mills Limited to the Applicaht-Company. It has also been stated in paragraph 3 of the Second Supplementary Affidavit that the rest of the business, assets and liabilities of New India Sugar Mills Limited will continue to remain with New India Sugar Mills Limited. Evidently, therefore, this is not a case of amalgamation of New India Sugar Mills Limited with the Applicant-Company. Even after the proposed Scheme of Arrangement becomes effective, New India Sugar Mills Limited will continue to exist and run its business.
55. Only one of the Divisions, namely, Sugar Division belonging to New India Sugar Mills Limited is proposed to be demerged and transferred from New India Sugar Mills limited to the Applicant-Company.
56. In the circumstances, a question arose during the course of hearing that as to why and as to for what purpose the shares in the Applicant-Company are to be allotted to the shareholders of New India Sugar Mills Limited under the proposed Scheme of Arrangement even though New India Sugar Mills Limited will continue to remain in existence and its shareholders will continue to have shares in New India Sugar Mills Limited even after the proposed Scheme of Arrangement becomes effective. As the properly (i.e., Sugar Division) of New India Sugar Mills Limited is proposed to be transferred to the Applicant-Company, the consideration, if at all, will have to be given to New India Sugar Mills limited, and not to its shareholders whose personalities are distinct from that of New India Sugar Mitts Limited.
57. Shri Bharat Ji Agrawal, learned Senior Counsel appearing for the Applicant-Company submits that the aforesaid question may be considered at the stage of consideration of the Petition for confirmation of the proposed Scheme of Arrangement Shri Bharat Ji Agrawal relies upon a decision of the Supreme Court in Rainbow Denim Limited v. Rama Petrodiemicals Limited (2003)116 Company Cases 640 (S.C).
58. In the said decision, their Lordships of the Supreme Court opined as follows:
"...The appropriate time for the Company Judge to consider the scheme is subsequent to approval thereof by the shareholders and creditors of. the appellant-company. Therefore, the order of the learned company judge and the order appeal must be set aside and liberty given to the appellant-company to move the High Court for directions for calling meetings of its shareholders and creditors for the purposes of considering and approving the scheme, Once that has been done, a further application wit be required to be ''made before the learned company judge. That would be the appropriate time for the learned company judge to consider the Scheme"
59. In view of the said decision of the Supreme Court and in view of the submissions made by Shri Bharat Ji Agrawal, teamed Senior Counsel appearing for the Applicant-Company, the consideration of the aforementioned question, which has arisen during the course of hearing of the Company Application, is postponed till the stage of consideration of the Petition for confirmation of the proposed Scheme of Arrangement
60. Another question', which has arisen during the course of hearing of the Company Application, is as to whether the proposed Scheme of Arrangement, which involves demerger and transfer of the Sugar Division of Mew India Sugar Mills Limited from New India Sugar Mills Limited to the Applicant-Company, will attract the requirements of registration under the Registration Act, 1908 and the 'payment of stamp duty under the Indian Stamp Act, 1899, as amentied in the concerned states.
61. Shri Bharat Ji Agrawal, learned Senior Counsel appearing for the Applicant-Company submits that in view of the decision of the Supreme Court in Rainow Denim Limited (supra), the consideration of the aforementioned question may also be postponed till the stage of consideratton of the Petition for confirmation of the proposed Scheme of Arrangement
62. In view of the said decision of the Supreme Court and in view of the submissions made by Shri Bharat Ji Agrawal, learned Senior Counsel appearing for the Applicant-Company, the consideration of the aforementioned question is also postponed till the stage of the consideration of the Petition for confirmation of the proposed Scheme of Arrangement.
63. Coming back to the averments made in the affidavit accompanying the Company Application, it is, interalia, stated in paragraph 8 of the affidavit accompanying the Company Application that the proposed Scheme of Arrangement was approved by the respective Board of Directors of New India Sugar Mills limited and the Applicant-Company at their meetings held on 28.10.2004 and by the respective Finance & Corporate Affairs Committee of New India Sugar Mills Limited and the Applicant-Company at their meetings held on 9.2.2005.
65. Photostat copies of the Resolutions passed by the respective Board of Directors of New India Sugar Mills Limited and the Applicant-Company and the Resolutions passed by the respective Finance & Corporate Affairs Committee of New India Sugar Mills Limited and the Applicant-Company haste been filed collectively as Annexure-H to the affidavit accompanying the Company Application, and appear at pages 322,323,324 and 325, respectively of the Paper Book of the Company Application.
66. The constitution of the Board of Directors of New India Sugar Mills Limited and the constitution of the Board of Directors of the Applicant-Company have been given in paragraph 9 of the affidavit accompanying the Company-Application.
67. It is, interalia, further stated in paragraph 9 of the affidavit accompanying the Company Application that none of the Directors of Hew India Sugar Mills limited and the Applicant-Company has any material interest in the proposed Scheme of Arrangement
68. It is, interalia, stated in paragraph 10 of .the affidavit accompanying the Company Application that there are no proceedings pending under Sections 235 to 251 of the Companies Act, 1956 against India Sugar Mills limited or the Applicant-Company.
69. It is, interalia, stated in paragraph 12 of the affidavit accompanying the Company Application that New India Sugar Mills Limited and the Applicant-Company have filed the proposed Scheme of Arrangement with the Stock Exchanges pursuant to the listing agreement entered into with them by New India Sugar Mills Limited and the Applicant-Company; and that the Stock Exchanges have given their no-objection to the proposed Scheme of Arrangement.
70. As noted above, copies of no-objection letters issued by The Calcutta Stock Exchange Association Limited, The Stock Exchange, Mumbai and National Stock Exchange of India Limited have been filed collectively as Annexure-A to the Third Supplementary Affidavit, and appear at pages 4,5 and 6, respectively of the Paper Book of the Third Supplementary Affidavit.
71. It is, interalia, stated in paragraph 13 of the affidavit accompanying the Company Application that the instant Scheme of Arrangement is proposed to be made between New India Sugar Mills Limited and the Applicant-Company and their respective shareholders and that no compromise or arrangement is proposed with any creditors of the Applicant-Company; and that no reduction in the quantum or change in terms and conditions of the liabilities, debts duties and obligations owed by the Applicant-Company to its creditors is proposed or will result consequent to. the said Scheme of Arrangement.
72. It is, interalia, stated in paragraph 14 of the affidavit accompanying the Company Application that the Applicant-Company Is in sound financial position, has been making good profits and is able to meet all its liabilities as and when they accrue; and that the Applicant-Company had a positive networth, i.e. excess of assets over liabilities, of Rs. 69,77.68 lacs, as on June 30, 2004; and that upon the demerger taking place, the Applicant-Company will acquire an established undertaking; and that the aggregate assets of the Applicant-Company and such undertaking (Sugar Division of New India Sugar Mills Limited) are more than sufficient to meet their aggregate liabilities; and that the acquisition of the said undertaking by the Applicant-Company also does not involve any pay out in cash by the Applicant-Company inasmuch as the consideration for the same is to be satisfied by issue and allotment, of. shares in the Applicant- Company, credited as fully paid-up to the. shareholders of New' India Sugar Mills Limited.
73. It is interalia, further stated in paragraph 14 of the affidavit accompanying the Company Application that there will be no change in management consequent to the de-merger.
74. It is, interalia, further stated in paragraph 14 of the affidavit accompanying the Company Application that the creditors of the Applicant-Company will not be affected in any manner by the proposed Scheme of Arrangement; and that all the creditors of the Applicant- 'Company have all along been paid and are being paid and are being passured to be paid their dues in the ordinary course of business,
75.It is, interalia, further stated in paragraph 14 of the affidavit accompanying the Company Application that the proposed Scheme of Arrangement is in the interest of both New India Sugar Mills Limited and the Applicant-Company and will entire to the benefit of all concerned, induling their shareholders and creditors.
76. It is, interalia, stated in paragraph 15 of the affidavit accompanying the Company Application that the Registered Offices of New India Sugar Mills Limited being situated at Kolkata, New India Sugar Mills Limited had filed a similar application before the Calcutta High Court for obtaining its orders directions under Section 391(1) of the Companies Act, |956 in respect of the proposed Scheme of Arrangement; and that by an order passed on March 28, 2005 in such Application (Company Application No. 232 of 2005) filed by New India Sugar Mills Limited, the Calcutta High Court has directed oily a meeting of the Equity Shareholders of New India Sugar Mills Limited to be held on April 27, 2005 for the purpose of the said shareholders considering, and, if thought fit, approving the proposed Scheme of Arrangement under Section 391(1) of the Companies Act, 1956.
77. Copy of the said order dated .March 28. 2005 has been filed as Annexure-I to the affidavit accompanying the Company Application, and appears at page 326 of the Paper Book of the Company Application.
78. It is relevant to mention that during the course of hearing of the Company Application, reference was made to Schedule-I to the proposed Scheme of Arrangement appearing at page 41 of the Paper Book of the Company Application. The said Schedule-I purports to be the Statement of Assets and Liabilities of the Sugar Division of New India Sugar Mills Limited as on September 30, 2004. A perusal of the said Schedule-I shows that the said Schedule-I Interalia, nations aggregate figures in respect of the Assets and Liabilities of the Sugar Division of New India Sugar Mills Limited.
79. The Annual Report in respect of New India Sugar Mills limited for the year ended on 30.6.2004, filed as Annexure-C to the affidavit accompanying the Company Application, contains the Balance-Sheet of New India Sugar Mills Limited as on 30.6.2004, The said Balance-Sheet read with the relevant Schedules thereto, evidently, gives details of the Assets and Liabilities of the Company as a whole and not of any particular Division of the Company.
80. Shri Bharat Ji Agrawal, teamed Senior Counsel appearing for the Applicant-Company submits that the details contained in Schedule-1 to the proposed Scheme of Arrangement appearing at page 41 of the Paper Book of the Company Application have been prepared on the basis of the accounts maintained in respect of Sugar Division of New India Sugar Mills Limited.
81. As noted above the proposed Scheme of Arrangement involves de-merger and transfer of Sugar Division of New India Sugar Mills Limited from New India Sugar Mills limited to the Applicant-Compaoy. Therefore, in my opinion, the shareholders/members of the Applicaant-Company should be given complete details of the Assets and Liabilities in respect of the Sugar Division of New India Sugar Mills Limited so that the said shareholders of the Applicant-Company may have the entire picture of the said Sugar Division before them when the proposed Scheme of Arrangement is considered at the meeting of the shareholders/ members of the Applicant-Company sought to be convened in the present application.
82. Shri Bharat Ji Agrawal, learned Senior Counsel appearing for the Applicant-Company has fairly stated that suitable directions may be given in this regard.
83. It is, accordingly, directed that the Applicant-Company will give complete details in respect of the Assets and Liabilities of the Sugar Division of New India Sugar Mills Limited, particularly the Fixed Assets and the Liabilities (including those in respect of secured loans and unsecured loans) in the Explanatory Statement to be sent alongwith the notice under Section 393(1)(a) of the Companies Act 1956.
84. It is, interalia, stated in paragraph 20 of the affidavit accompanying the Company Application that the Company Application is made bonafide and in the interests of justice.
85. It is, intealia, stated in paragraph 21 of the affidavit accompanying the Company Application that no one will be prejudiced if orders are made and/or directions are given as prayed for.
86. It is, interalia, stated in paragraph 16 of the affidavit accompanying the Company Application that it is necessary that a meeting of the Equity Shareholders of the Applicant-Company be called to consider, and if thought fit to approve the said proposed Scheme of Arrangement with or without modification.
87. I have heard Shri Bharat Ji Agrawal, (earned Senior Counsel assisted by S/Shri Piyush Agrawal and Ankit Agrawal, learned counsel for the Applicant-Company, and perused the record.
88. It is submitted by Shri Bharat Agrawal that in view of the facts as disclosed in the Company Application and is accompanying affidavit as well as in the various Supplementary Affidavits, the prayers made by the Applicant-Company deserve to be granted.
89. I have considered the submissions made by Shri Bharat Ji Agrawal, learned Senior Counsel appearing for the Applicant-Company.
90. Having regard to the facts and circumstances of the case, and having considered the submissions made by Shri Bharat Ji Agrawal learned Senior Counsel appearing' for the Applicant-Company I am of the opinion that it is necessary to convene the meeting of the Equity Shareholdrs/Members of the Appiicant-Cornpany, as per the requirements of Section 391(1) and (2) of the Companies Act, 1956 read with Section 393 of the Companies Act, 1956 for the purpose of considering, and, if thought fit, approving, with or without modification, the proposed Scheme of Arrangement.
91. It is, accordingly, ordered as follows:-
Upon the application of the company Upper Ganges Sugar & Industries Limited (thereinafter referred to as "the Applicant- Company"), having its Registered Office at Post Office Seohara (PIN Code 246 746), Dtstrict-Bijnor In the State of Uttar .Pradesh, by summons presented on the 12th day of April, 2005, and upon hearing Shri Bharat Ji Agrawal, Senior Advocate assisted by S/Shri Piyush Agrawal and Ankit Agrawal Advocates, for the Applicant Company, and upon reading the application, Exhibits thereto, and the affidavits in support thereof (Exhibit /Annexture-A at page 27 of the Paper Book of the Company Applcation being a copy of the proposed scheme of arangement).
IT IS ORDERED That for the purpose of considering, and if thought fit for approving, with &r without modification, the proposed scheme arrangemef4, it Is necessary to have meeting of the Equity Shareholders/Members of the Applicant Company.
That meeting of the Equity Shareholders/Members of the Applicant Company will be convened and held at the Registered Office of the Applicant Company atPost Office Seohana (PIN Code 246746), District-Bijnor on Ist day of October, 2005 (Saturday) at 11.00'clock in the. forenoor. for the purpose of Considering, and if thought fit, approving, with or without modifications, the proposed scheme of arrangement.
That at least 21 clear days before the day appointed for the meeting of the Equity Shareholders/Members of the Applicant Company to be held as aforesaid, a notice convening the said meeting at the place and time aforesaid, together with the copies of the said scheme and of the statement required to be furnished pursuant to Section 393 of the Companies Act, 1956, and the prescribed form of proxy, shall be sent by pre-paid letter post under certificate of posting, addressed to each of the Equity Shareholders/Members of the Applicant Company aforesaid at their respective registered or last known addresses.
That, in addition, at least 21 clear days before the day appointee for the meeting of the Equity Shareholders/Members of the Applicant Company, as aforesaid, an advertisement convening the said meeting and stating that copies of the said scheme together with the copy of the statement required to be sent under Section 393 of the Companies Act, 1956 and the prescribed ) forms of proxy can be obtained free of charge at the Registered Office of the Applicant Company, shall be published in the daily national newspapers Economic Times, published in English from Delhi, Hindustan Times, published in English from Lucknow in its Edition having circulation in, the District Bijnor and in Dainik. Jagran published in Hindi from Meerut in its Edition having acirculation in the District Bijnor.
That the Explanatory Statement required to he furnished pursuant to Section 393 of the Companies Act. 1956. an mentioned above, unit give complete details in respect of the Assets and Liabilities of the Sugar Division of New India Sugar Mills Limited, particularly the Fixed Assets and the Liabilities (including those in respect of secured loans and unsecured loans).
That for the purposes of conducting the meeting of the Equity Shareholders/Members of the Applicant Company, the 'Court ', hereby appoints Shri Naxmen Sinha, Senior Advocate as the Chairman and Shri S.K. Garg, Advocate as the alternate Chairman, The Chairman will be paid Rs. 30,000/- plus incidental expenses and the alternate Chairman well be paid Rs. 15,000/- plus incidental expenses, in addition, the expenses Of the journey ami stay in respectable hotel being taken care of.
That the Chairman appointed for the meeting unll issue the Advertisement and send out the notices of the meeting referred to above.
That the quorum for the said meeting of the Equity Shareholders/Members of the Applicant Company to be held as aforesaid shall be 75 by number and 8O% by value of the Equity Shareholders/Members of the Applicant Company present either personally or by proxy.
That voting proxy shall be permitted, provided that a proxy in the prescribed form duly signed by the person entitled to attend and vote at the meeting is filed with the Applicant Company at its registered off ice not latter than 48 hours before the meeting.
That the value of each Equity Shareholder/Member shall be in accordance with the books of the Applicant Company and, where the entries in the books are disputed, the Chairman shall determine the value for purposes oft he meeting, AND IT IS FURTHER ORDERED that the Chairman will report to this Court the result of the said meeting with in two weeks of the conclusion of the meeting, and the report shall be verified by ' affidavit.
List for orders on 11.11.2005.