Judgment:
S.J. Vazifdar, J.
1. The petitioners seek an order sanctioning a scheme of arrangement entered into between them. The scheme involves the demerger of the steel division of the petitioner in Company Petition No. 63 of 2009, the transferor company and the merger thereof into the resulting company, i.e., the petitioner in Company Petition No. 64 of 2009.
2. The procedure has been complied with. The Regional Director has filed an affidavit stating that subject to the observations in paragraph 6 thereof, the scheme does not appear to be prejudicial to the interest of the shareholders and the public.
3. In paragraph 6 of the affidavit, the Regional Director has stated that neither the petitions nor the scheme provide details of the assets and liabilities of the steel division of the demerged company that are to be transferred to and vested in the resulting company.
4. As pointed out by Mr. Mehta, the petitioners' scheme itself in Clause 1.10 defines the steel division as under:
1.10 'steel division' means the business of manufacturing, processing, distributing, importing, exporting, buying, selling, assembling, repairing, etc., all kinds of steel products and ferrous and non-ferrous metal products and includes the undertaking comprising of;
1.10.1 all assets (whether movable or immovable, real or personal, corporeal or incorporeal, present, future or contingent, tangible or intangible) wherever situated pertaining to and relatable to the steel division;
1.10.2 all present and future liabilities arising out of the activities or operations of steel business, including loans, debts, current liabilities and provisions, duties and obligations relatable to the steel division ;
1.10.3 without prejudice to the generality of the above, the steel division shall include in particular:
(a) all properties required for the steel division wherever situated, including all current assets, funds, offices, furniture, fixtures, office equipment, appliances, accessories and vehicles ;
(b) all permits, rights, entitlements, bids, tenders, letters of intent, expressions of interest, municipal and other statutory permissions, approvals, consents, licenses, registrations, subsidies, concessions, exemptions, remissions related to steel division, tenancies in relation to office and factory and/or residential property for the employees related to steel division, offices, goodwill, intellectual property rights (including technical know how, patents, trademarks and copy rights) related to steel division, investment, cash balances, the benefit of any deposit and financial assets related to steel division, funds belonging to or proposed to be utilised for the steel division, bank balances and bank accounts relating to the day to day operations and specific to the working of steel division, privileges, all other rights and benefits, lease rights, licenses, domain names, trade name and other intellectual property rights of any nature whatsoever and licenses in respect thereof, powers and facilities of every kind, nature and description whatsoever, rights to use and avail of telephone, telexes, facsimile connection and installations, utilities, power lines, electricity and other services, provisions, funds, benefits of all agreements, contracts and arrangements and all other interest in connection with or relating to the steel division;
(c) all records, files, papers, computer programs, manuals, data, libraries, catalogues, quotations, sales and advertising materials, lists of present and former customers and suppliers, customer credit information, customer pricing information, and other records, whether in physical form or electronic form in connection with or relating to the steel division;
(d) all duties and obligations which are relatable to steel division;
(e) all earnest money's and/or security deposits, if any, paid or received by the ARIIL in connection with or relating to the steel division ;
1.10.4 for the purpose of this scheme, it is clarified that liabilities pertaining to the steel division include:
(a) the liabilities, which arise out of the respective activities or operations of the steel division ;
(b) specific loans and borrowings raised, incurred and utilised solely for the respective activities or operation of the steel division;
(c) liabilities other than those referred to in Sub-clauses (a) and (b) above, being the amounts of general or multipurpose borrowings of ARIIL, allocated to the steel division in the same proportion in which the value of the assets transferred under this scheme bear to the total value of the assets of ARIIL immediately before giving effect to this scheme;
1.10.5 all permanent employees of ARIIL employed in the steel division, as identified by the board of directors of ARIIL, as on the effective date ;
1.10.6 any question that may arise as to whether a specified asset or liability pertains or does not pertain to the steel division or whether it arises out of the activities or operations of the steel division shall be decided by mutual agreement between the board of directors of ARIIL and resulting company.
5. Further, the schedule forming a part of the provisional balance-sheet as on March 31, 2008 and the profit and loss account in the year ended on that date bifurcate the details of the steel division and the real estate division of the transferor company.
6. There is no provision in law which requires the balance-sheet and profit and loss account or the scheme enumerating and setting out of each and every asset which is the subject-matter of the scheme of demerger. My attention has not been invited to any such provision.
7. I do not suggest that in a given case a creditor, shareholder or any other concerned party is prohibited from calling for any particulars while examining a scheme under Sections 391 to 394 including a scheme of merger or demerger. Whether such an application ought to be granted or not would depend upon the facts of the case.
8. It is pertinent to note that in the present case apart from stating that the details of the assets which form a part of the scheme have not been enumerated nothing adverse regarding the scheme as such is stated. Nor is it even suggested that as a result thereof the interest of any concerned party has been adversely affected. Further, still the entire procedure has been complied with and no objection has been raised by any party including the creditors and members.
9. Lastly, it is pertinent to note that the members and the creditors of the petitioners' will not be affected adversely by the scheme as there are no creditors of the transferee company. Nor are there any liabilities that the transferee company is exposed to. This is so provided in the balance-sheet and the profit and loss account for the year ending March 31, 2008. The unaudited balance-sheet and the profit and loss account for the period ended on September 30, 2008, indicates the liability of only Rs. 38,000. The creditors are the directors of the company themselves. The same does not warrant a refusal of an order sanctioning the scheme.
10. In the circumstances, both the petitions are made absolute in terms of prayers (a) to (d).
11. The transferee company shall lodge a copy of this order and the scheme with the concerned Superintendent of Stamps for the purpose of adjudication of stamp duty payable, if any, on the same within thirty days of obtaining the authenticated and/or certified copy of the order.
12. The transferor company to pay costs of Rs. 7,500 to the Regional Director. Costs to be paid within four weeks from today.
13. Filing and issuance of the drawn up order is dispensed with.
14. All concerned authorities to act on a copy of this order duly authenticated by the Company Registrar, High Court, Bombay.