In Re: Nicholas Piramal India Ltd. - Court Judgment

Excerpt:
company - amalgamation - sections 235 to 251 and 394 of companies act, 1956 - petition to obtain sanction to arrangement embodied in scheme of amalgamation - scheme was not against public policy - not prejudicial to shareholders - scheme was within framework of law - court granted sanction as prayed for. - - 100 each 15,00,00,000 53,00,32,010 the latest audited accounts and balance sheet for the year ended 31st march, 2003, as well as, unaudited financial results for the quarter ended 30th september, 2003, and for the third quarter ended 31st december, 2003, subject to review by the petitioners statutory order is also part of the record. 4. pursuant to the objects of npil, as well as, canere, as set out in their respective memorandum of association, the board of directors of both the companies have approved the scheme in question in their respective meetings held on 20th january, 2004. 5. in the company application no. piramal has reported the results of the said meeting by his affidavit, verifying the chairman's report dated 9th march, 2004. 10. after due deliberation and discussion on the scheme, as well as, after considering the pros and cons of the scheme of arrangement, the scheme in question was unanimously approved by the members present in the said meeting and the resolution was passed accordingly. the details of the assets and liabilities of the petitioner-company as on 31st march, 2003, as well as, its sound financial position based on the latest audited account is also reflected on record in paragraphs 34, 35 and 36 of the petition. 63 & 37 of 2004) endorsed that the scheme is not prejudicial to the interest of the creditors and shareholders, based on the report of the registrar of companies, as per the procedure and law. the regional director, company registrar -all these authorities have, after due verification of the record of the company, endorsed and reconfirmed that the scheme is not against public interest, prejudicial to shareholders and all actions of the companies are within the framework of law.orderanoop v. mohta, j.1. petitioner herein is nicholas piramal india limited, a company having its registered office at 100, centre point, dr. ambedkar road, parel, mumbai (for short 'npil' and/or 'transferee company') has filed the present company petition to obtain sanction of the court to the arrangement embodied in the scheme of amalgamation ('scheme') with canere actives & fine chemicals private limited ('canere' and/or 'transferor company') and whereby the undertaking of canere shall, with effect from 1st october, 2003, the appointed date in terms of the scheme of arrangement, stand transferred to and be vested in the npil as going concern without any further act, deed, pursuant to section 394 of the companies act, 1956 (for short 'companies act').2. the petitioner-company is a public limited company, having its authorised, issued, subscribed and paid-up share capital as under :authorised (rs. )5,00,00,000 equity shares of rs. 10 each 50,00,00,00015,00,000 preference shares of rs. 10 each (sic) 15,00,00,0001,00,00,000 unclassified shares ofrs. 10 each 10,00,00,000_______________75,00,00000_______________issues, subscribed & paid up.3,80,03,201 equity shares of rs. 10 each 38,00,32,01015,00,000 non-cumulative redeemablepreference shares of rs. 100 each 15,00,00,000________________53,00,32,010________________the latest audited accounts and balance sheet for the year ended 31st march, 2003, as well as, unaudited financial results for the quarter ended 30th september, 2003, and for the third quarter ended 31st december, 2003, subject to review by the petitioners statutory order is also part of the record.3. the equity shares of the petitioner-company are listed on the stock exchange at mumbai and ahmedabad and also the national stock exchange. the preference shares of the petitioner-company are not listed on any of the stock exchanges. as per clause 5.1 of the scheme, npil will have to take steps for listing of the preference shares.4. pursuant to the objects of npil, as well as, canere, as set out in their respective memorandum of association, the board of directors of both the companies have approved the scheme in question in their respective meetings held on 20th january, 2004.5. in the company application no. 544 of 2003, filed by morarjee spinning & weaving company limited (for short 'morarjee'), and pursuant to the orders dated 12th december, 2003, and 18th december, 2003, passed by this court, in the meeting of 30th january, 2004, the morarjee board has concurred with the proposal of merger of canere with the npil (petitioner-company) with further endorsement that the said proposal is not prejudicial or adversely affects the rights of the equity shareholders of morarjee also. the resolution passed by the morarjee at the meeting held on 15th january, 2004, and the board of directors meeting held on 30th january, 2004, are part of the record.6. the facts, reasons and findings elaborated and recorded in company petition no. 73 of 2004 filed by morarjee and the company petition no. 208 of 2004 filed by canere is interlinked and interconnected with the present petition. therefore, the said company petitions have to be treated as part and parcel of the present petition for all the purposes.7. the petitioner-company, therefore, have filed company application no. 37 of 2004 on 3rd february, 2004, under sections 391 to 394 of the companies act. by an order dated 6th february, 2004, and 13th february, 2004, this court has passed an order directing the petitioner-company to hold meetings of its shareholders. accordingly, on 8th march, 2004, the meeting was held and the scheme has been approved. the meeting of the unsecured creditors of the petitioner was dispensed with by the order dated 6th february, 2004. the meeting of the secured creditors was dispensed with.8. pursuant to the order passed by this court dated 6th february, 2004, and 13th february, 2004, the notices of the meetings were sent individually to the equity shareholders as required under section 393 of the companies act. notices of the said meetings were also advertised. by affidavit dated 23rd february, 2004, the company secretary of the petitioner-company filed the affidavit proving publication and service of the notices.9. on 8th march, 2004, the meeting of the equity shareholders was also duly conveyed in accordance with order dated 6th february, 2004, and mr. a.g. piramal has reported the results of the said meeting by his affidavit, verifying the chairman's report dated 9th march, 2004.10. after due deliberation and discussion on the scheme, as well as, after considering the pros and cons of the scheme of arrangement, the scheme in question was unanimously approved by the members present in the said meeting and the resolution was passed accordingly. it may be mentioned here that a resolution was passed unanimously at the extraordinary general body meeting of the petitioner-company held on 8th march, 2004 and the shareholders of the petitioner-company have accorded their consent under section 100 read with section 78 of the act. the special resolution dated 8th march, 2004, is also part of the record. the details of the assets and liabilities of the petitioner-company as on 31st march, 2003, as well as, its sound financial position based on the latest audited account is also reflected on record in paragraphs 34, 35 and 36 of the petition. it is clear that the assets of the petitioner-company are far in excess of its liabilities.11. no investigation proceedings are pending or have been initiated in relation to the petitioner-company under sections 235 to 251 of the act.12. affidavit proving service dated 19th march, 2004, and 25th march, 2004 have been filed on record.13. petition was admitted and fixed for final hearing on 15th april, 2004. requisite notices have been directed to be issued. individual notices to unsecured creditors of the value below rs. 5 lakhs was dispensed with. however, individual notices of the date of hearing of the petition have been directed to be served upon the unsecured creditors upto the value of rs. 5 lakhs and above.14. the matter was accordingly listed and called out for hearing. the present company petition, alongwith other company petitions, was heard.15. the regional director, by its affidavit dated 7th april, 2004, (common in company petition nos. 208 and 209 of 2004 connected with company application nos. 63 & 37 of 2004) endorsed that the scheme is not prejudicial to the interest of the creditors and shareholders, based on the report of the registrar of companies, as per the procedure and law.16. as held in the judgment delivered by this court anoop v. mohta, j.] in larsen & toubro limited dated 22nd april, 2004, all the legal and essential and necessary formalities have been complied with by the companies and the petition were filed within the framework of law. requisite and essential material and documents were made available and notified, published and available with the requisite details and documents, before to all concerned, including the shareholders, creditors and competent authorities. no objections were raised about the non disclosure of materials or documents. the regional director, company registrar - all these authorities have, after due verification of the record of the company, endorsed and reconfirmed that the scheme is not against public interest, prejudicial to shareholders and all actions of the companies are within the framework of law. there is nothing illegal, unjust, unsound or against public policy or interest. no other department have raised any objection. all the experts/professionals submitted their report and opinion and accepted the scheme. these experts/professionals include financiers, auditors, chartered accountants, bankers, creditors, financial institutions and above all company managements, apart from unanimous majority decisions to support the scheme. no illegality of any other law has been placed and proved with supporting material, in reference to the scheme in question, companies are bound to comply with all legal formalities. in the present case, no other alternative or possible view was explained or suggested, on any material issues, including the issue of share ratio. in my opinion, any view should not be given or expressed, as it will amount to thrusting and imposing decision against unanimous and majority decisions of the shareholders, creditors, financial institutions, such imposition is out of the court's domain. in this competitive market, the corporate world with exhaustive strategies is a must, companies know how to make or arrange and adjust their business to run with the national and international markets. third person may not be in a position to provide them business strategies and above all, companies know their respective shareholders' need, may not be bound by the views expressed by the third persons. unless there is apparent illegality, unfairness, unreasonableness where it is essential to pierce the veil of corporate strategies, otherwise, it is difficult to have judicial review of this aspect of globalization and utility of material sources by the businessman or experts in the field. business strategy is not the court's domain. it is difficult for the courts to express their opinion on such matters. business adjustments or arrangements cannot be decided or trusted or imposed by the court specially when such arrangement or adjustment or such scheme is within the framework of the law.17. in view of the above, the sanction of the scheme, as prayed for, is granted. the company petition is made absolute in terms of prayer clauses (a) to (p) with liberty. parties to proceed in accordance with law.18. costs of rs. 2,500 to the regional director to be paid by the petitioner within a period of four weeks from today.

Judgment:
ORDER

Anoop V. Mohta, J.

1. Petitioner herein is Nicholas Piramal India Limited, a company having its registered office at 100, Centre Point, Dr. Ambedkar Road, Parel, Mumbai (for short 'NPIL' and/or 'transferee company') has filed the present company petition to obtain sanction of the court to the arrangement embodied in the Scheme of Amalgamation ('Scheme') with Canere Actives & Fine Chemicals Private Limited ('Canere' and/or 'transferor company') and whereby the undertaking of Canere shall, with effect from 1st October, 2003, the appointed date in terms of the Scheme of Arrangement, stand transferred to and be vested in the NPIL as going concern without any further act, deed, pursuant to Section 394 of the Companies Act, 1956 (for short 'Companies Act').

2. The petitioner-company is a Public Limited Company, having its authorised, issued, subscribed and paid-up share capital as under :

Authorised (Rs. )5,00,00,000 Equity Shares of Rs. 10 each 50,00,00,00015,00,000 Preference Shares of Rs. 10 each (sic) 15,00,00,0001,00,00,000 Unclassified Shares ofRs. 10 each 10,00,00,000_______________75,00,00000_______________Issues, Subscribed & Paid Up.3,80,03,201 Equity Shares of Rs. 10 each 38,00,32,01015,00,000 Non-Cumulative RedeemablePreference Shares of Rs. 100 each 15,00,00,000________________53,00,32,010________________

The latest audited accounts and balance sheet for the year ended 31st March, 2003, as well as, unaudited financial results for the quarter ended 30th September, 2003, and for the third quarter ended 31st December, 2003, subject to review by the petitioners statutory order is also part of the record.

3. The Equity shares of the petitioner-company are listed on the Stock Exchange at Mumbai and Ahmedabad and also the National Stock Exchange. The preference shares of the petitioner-company are not listed on any of the Stock Exchanges. As per Clause 5.1 of the Scheme, NPIL will have to take steps for listing of the preference shares.

4. Pursuant to the objects of NPIL, as well as, Canere, as set out in their respective Memorandum of Association, the Board of Directors of both the Companies have approved the Scheme in question in their respective meetings held on 20th January, 2004.

5. In the Company Application No. 544 of 2003, filed by Morarjee Spinning & Weaving Company Limited (for short 'Morarjee'), and pursuant to the orders dated 12th December, 2003, and 18th December, 2003, passed by this Court, in the meeting of 30th January, 2004, the Morarjee Board has concurred with the proposal of merger of Canere with the NPIL (petitioner-company) with further endorsement that the said proposal is not prejudicial or adversely affects the rights of the equity shareholders of Morarjee also. The Resolution passed by the Morarjee at the meeting held on 15th January, 2004, and the Board of Directors meeting held on 30th January, 2004, are part of the record.

6. The facts, reasons and findings elaborated and recorded in Company Petition No. 73 of 2004 filed by Morarjee and the Company Petition No. 208 of 2004 filed by Canere is interlinked and interconnected with the present petition. Therefore, the said company petitions have to be treated as part and parcel of the present petition for all the purposes.

7. The petitioner-company, therefore, have filed company application No. 37 of 2004 on 3rd February, 2004, under Sections 391 to 394 of the Companies Act. By an order dated 6th February, 2004, and 13th February, 2004, this Court has passed an order directing the petitioner-company to hold meetings of its shareholders. Accordingly, on 8th March, 2004, the meeting was held and the scheme has been approved. The meeting of the unsecured creditors of the petitioner was dispensed with by the order dated 6th February, 2004. The meeting of the secured creditors was dispensed with.

8. Pursuant to the order passed by this Court dated 6th February, 2004, and 13th February, 2004, the notices of the meetings were sent individually to the equity shareholders as required under Section 393 of the Companies Act. Notices of the said meetings were also advertised. By Affidavit dated 23rd February, 2004, the Company Secretary of the petitioner-company filed the Affidavit proving publication and service of the notices.

9. On 8th March, 2004, the meeting of the equity shareholders was also duly conveyed in accordance with order dated 6th February, 2004, and Mr. A.G. Piramal has reported the results of the said meeting by his Affidavit, verifying the Chairman's Report dated 9th March, 2004.

10. After due deliberation and discussion on the Scheme, as well as, after considering the pros and cons of the Scheme of Arrangement, the scheme in question was unanimously approved by the members present in the said meeting and the Resolution was passed accordingly. It may be mentioned here that a Resolution was passed unanimously at the Extraordinary General Body Meeting of the petitioner-company held on 8th March, 2004 and the shareholders of the petitioner-company have accorded their consent under Section 100 read with Section 78 of the Act. The Special Resolution dated 8th March, 2004, is also part of the record. The details of the assets and liabilities of the petitioner-company as on 31st March, 2003, as well as, its sound financial position based on the latest audited account is also reflected on record in paragraphs 34, 35 and 36 of the Petition. It is clear that the assets of the petitioner-company are far in excess of its liabilities.

11. No investigation proceedings are pending or have been initiated in relation to the petitioner-company under Sections 235 to 251 of the Act.

12. Affidavit proving service dated 19th March, 2004, and 25th March, 2004 have been filed on record.

13. Petition was admitted and fixed for final hearing on 15th April, 2004. Requisite notices have been directed to be issued. Individual notices to unsecured creditors of the value below Rs. 5 lakhs was dispensed with. However, individual notices of the date of hearing of the Petition have been directed to be served upon the unsecured creditors upto the value of Rs. 5 lakhs and above.

14. The matter was accordingly listed and called out for hearing. The present company petition, alongwith other company petitions, was heard.

15. The Regional Director, by its Affidavit dated 7th April, 2004, (Common in Company Petition Nos. 208 and 209 of 2004 connected with Company Application Nos. 63 & 37 of 2004) endorsed that the scheme is not prejudicial to the interest of the creditors and shareholders, based on the Report of the Registrar of Companies, as per the procedure and law.

16. As held in the judgment delivered by this Court Anoop V. Mohta, J.] in Larsen & Toubro Limited dated 22nd April, 2004, all the legal and essential and necessary formalities have been complied with by the companies and the petition were filed within the framework of law. Requisite and essential material and documents were made available and notified, published and available with the requisite details and documents, before to all concerned, including the shareholders, creditors and competent authorities. No objections were raised about the non disclosure of materials or documents. The Regional Director, Company Registrar - all these authorities have, after due verification of the record of the company, endorsed and reconfirmed that the Scheme is not against public interest, prejudicial to shareholders and all actions of the companies are within the framework of law. There is nothing illegal, unjust, unsound or against public policy or interest. No other department have raised any objection. All the experts/professionals submitted their Report and opinion and accepted the Scheme. These experts/professionals include Financiers, Auditors, Chartered Accountants, Bankers, Creditors, Financial Institutions and above all Company Managements, apart from unanimous majority decisions to support the Scheme. No illegality of any other law has been placed and proved with supporting material, in reference to the Scheme in question, Companies are bound to comply with all legal formalities. In the present case, no other alternative or possible view was explained or suggested, on any material issues, including the issue of share ratio. In my opinion, any view should not be given or expressed, as it will amount to thrusting and imposing decision against unanimous and majority decisions of the shareholders, creditors, Financial Institutions, such imposition is out of the Court's domain. In this competitive market, the corporate world with exhaustive strategies is a must, Companies know how to make or arrange and adjust their business to run with the national and international markets. Third person may not be in a position to provide them business strategies and above all, companies know their respective shareholders' need, may not be bound by the views expressed by the third persons. Unless there is apparent illegality, unfairness, unreasonableness where it is essential to pierce the veil of corporate strategies, otherwise, it is difficult to have judicial review of this aspect of globalization and utility of material sources by the businessman or experts in the field. Business strategy is not the Court's domain. It is difficult for the Courts to express their opinion on such matters. Business adjustments or arrangements cannot be decided or trusted or imposed by the Court specially when such arrangement or adjustment or such scheme is within the framework of the law.

17. In view of the above, the sanction of the scheme, as prayed for, is granted. The Company Petition is made absolute in terms of prayer Clauses (a) to (p) with liberty. Parties to proceed in accordance with law.

18. Costs of Rs. 2,500 to the Regional Director to be paid by the petitioner within a period of four weeks from today.