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2005 DIGILAW 1999 (RAJ)

Rochees Breweries Ltd. v. Official Liquidator

2005-08-02

GYAN SUDHA MISRA

body2005
Judgment G.S. Misra, J.-This Company Petition has been filed by the petitioner-Company M/s Rochees Breweries Limited under Section 391 to 394 of the Companies Act, 1956 for obtaining sanction and approval of this Court to the scheme of its amalgamation with SKOL Breweries Limited which has its registered office in the State of Maharashtra. 2. It has been stated by the petitioner-company that under the scheme of amalgamation there are six transferor companies, one of which is the petitioner-company-M/s Rochees Breweries Limited which has its registered office in the State of Rajasthan. The other five transferor companies namely, Malabar Breweries Limited has its registered office in the State of Kerala; Buckingham Distilleries and Breweries Limited has its registered office in the State of West Bengal; Mysore Breweries Limited has its registered office in the State of Karnataka, Deccan Breweries Private Limited has its registered office in the State of Andhra Pradesh. All these companies except the petitioner-company- M/s Rochees Breweries Limited, have already been merged with the transferee company namely SKOL Breweries which has its registered office in the State of Maharashtra for which orders have already been passed by the respective High Courts of the States where the transferor companies are situated. The petitioner-company- M/s Rochees Breweries Limited is one of the last in the series of the six companies which is to be merged with the transferee company namely SKOL Breweries Limited for which the order of amalgamation has been sought from this Court. In this regard, it has been informed to this Court that the Scheme of Amalgamation with respect to the transferee company has been sanctioned by the High Court at Bombay vide order dated 12.08.2004 as a consequence of which five companies, as stated hereinbefore, have already been merged with the transferee company. 3. It was further submitted that the primary objects which are sought to be achieved by the scheme of amalgamation, have been stated in the company petition and are as under: - “a. The transferor companies and the transferee company are primarily engaged in the business of breweries or the business of setting up and operating breweries. 3. It was further submitted that the primary objects which are sought to be achieved by the scheme of amalgamation, have been stated in the company petition and are as under: - “a. The transferor companies and the transferee company are primarily engaged in the business of breweries or the business of setting up and operating breweries. .b. With a view to consolidate the aforestated businesses, it is envisaged that the entire business of running and operating breweries be consolidated in the transferee company by merger of the undertakings of the transferor companies in the transferee company to facilitate consolidation of the undertakings in order to enable effective management and unified control of operations. .c.The amalgamation would also create economics in administrative and managerial costs by consolidating operations and will substantially reduce duplication of administrative responsibility and multiplicity of records and legal and regulatory compliances. .d. The amalgamation will also improve the financial structure and cash flow management of the merged entity.” 4. In view of the aforesaid object the scheme of amalgamation was approved by the Board of Directors of the petitioner-company on 06.03.2004 and by the Board of Directors of the transferee company. An order therefore, was passed by this Court on 04.06.2004 on an application bearing Company Application No. 17/2004 directing that the petitioner company convene meetings of its equity shareholders and unsecured creditors to consider the scheme of amalgamation. In compliance to this order, the petitioner company dispatched notices Under Certificate of Posting to the equity shareholders and unsecured creditors on 06.07.2004 for the purpose of convening the meetings of the shareholders. It was further stated that the petitioner company on 07.07.2004 further published notice of the meetings in the newspapers and consequently on 30.07.2004, the meetings of the equity shareholders and unsecured creditors of the petitioner company was duly held at the registered office of the petitioner company. An advocate Mr. Vinod Kumar Mishra had also been appointed by a co-ordinate bench of this High Court as Chairperson to conduct the meeting of the equity shareholders and unsecured creditors of the petitioner company. A report was thereafter submitted by the Chairman of the aforesaid meetings which disclosed that the meeting of the equity shareholders of the transferor/petitioner company was attended by 15 equity shareholders out of which 14 equity shareholders present and voting, voted in favour of the Scheme and one shareholder abstained from voting. A report was thereafter submitted by the Chairman of the aforesaid meetings which disclosed that the meeting of the equity shareholders of the transferor/petitioner company was attended by 15 equity shareholders out of which 14 equity shareholders present and voting, voted in favour of the Scheme and one shareholder abstained from voting. The meeting of the unsecured creditors of the transferor company was attended by 9 secured creditors out of which 9 unsecured creditors representing 100% in numbers and 100% in value voted in favour of the scheme. A report in this regard was also submitted before this Court by annxing it with the paper book. 5. The petitioner company after completion of the aforesaid meetings and filling of the reports by the respective Chairman of the aforesaid meetings, filed the instant petition bearing Company Petition No. 22/2004, on which this Court issued notices to the Regional Director, Department of Company Affairs, Northern Region, Kanpur and the office of the Official Liquidator. This Court had also directed that notices be published in the newspapers which was complied and the proof of the same was also placed on record. 6. The Company Petition was thereafter listed before this Court when the Counsel for the petitioner and Official Liquidator who appeared in person on his behalf as well as for the Regional Director, Northern Region, were heard. 7. In so far as the Counsel for the petitioner-company is concerned, he invited the attention of this Court to the various orders of amalgamation, which had been passed by the five High Courts of the respective States and also explained the objectives of amalgamation as also the fact that all the due formalities in this regard have been finally completed. 8. The Official Liquidator also stated that there is no hindrance in implementing the scheme of amalgamation except the fact that the shareholders of the petitioner transferor company shall stand to lose on account of not having the liquidity of the stock as the transferee company is not a listed company. 9. 8. The Official Liquidator also stated that there is no hindrance in implementing the scheme of amalgamation except the fact that the shareholders of the petitioner transferor company shall stand to lose on account of not having the liquidity of the stock as the transferee company is not a listed company. 9. Learned Counsel for the petitioner however explained the position in regard to the difficulty pointed out by the Official Liquidator as it was submitted that the shareholders have duly notified who have approved the scheme in the meeting which was convened in pursuance of the order of the Court and they raised no objection in regard to the completion of the merger as the shareholders of the petitioner/transferor company shall be holding shares in the transferee company which is not a listed company. It was further pointed out that the petitioner company has also completed the formalities with regard to de-listing of its shares and in this regard a copy of the letter dated 04.01.2005 of the Bombay Stock Exchange has been placed or record. It was finally submitted that the petitioner company has in any event, ceased to be a listed company even prior to the merger. 10. It thus transpires that all the requisite procedure contemplated by law for the Scheme of Amalgamation have been duly complied as per the proviso to Sub-section (2) of Section 391 of the Companies Act, 1956 and the proposed scheme is also not violative of any provision of law nor is contrary to public policy and there is no material on record to show that the creditors or any class of creditors have not been acting bonafide or in good faith. There is further no material to infer that there is any coercion caused to any shareholders with the object or promoting any interest adverse to the shareholders. The Scheme of Amalgamation including the share exchange ratio has also been approved by the shareholders and the creditors and there also appears to be substance in the contention that in any event the share exchange ratio is in the realm of the commercial decision of the equity shareholders and it is not for the Court to sit in appeal over this Judgment of the equity shareholders as have been held by the Supreme Court in the case of Mihir Mafatlal, reported in 1997 (1) SCC579. 11. 11. In view of the aforesaid unambiguous and unequivocally clear position, it is considered just and appropriate to approve and hence grant sanction of the present Scheme of Amalgamation of the petitioner-transferor company--M/s Rochees Breweries Limited with the transferee Company SKOL Breweries Limited as per the Scheme of Amalgamation so as to be binding equally on both the transferor and the transferee company. 12 The required legal formalities as a consequence of this amalgamation, be duly compiled by all the concerned parties so that the Scheme of Amalgamation is complete in terms of Section 391 to 394 of the Companies Act, 1956. 13. The Company petition accordingly stands allowed and disposed of .