In Re: Adani Enterprises Ltd.

K.A. Puj, J.—The present petition is filed by the petitioner Transferee company for sanction of the Scheme of arrangement in the nature of Amalgamation, amalgamating seven Transferor Companies, viz., Adani Infrastructure Services Private Limited, Advance Tradex Private Limited, Adani Tradelink Private Limited, Pride Trade and Investment Private Limited, Trident Trade and Investment Private Limited, Radiant Trade and Investment Private Limited and Ventura Trade and Investment Private Limited with Adani Enterprises Limited, the Transferee Company u/s 391 read with Section 394 of the Companies Act, 1956. All the Petitioner Companies belong to the same group of management.

It has been pointed out that vide the order dated 7-5-2010 passed in Company Application No. 136 of 2010 (Copy as Annex. H to the petition), meeting of the Equity Shareholders was directed to be convened and held. Pursuant to the said order, the meeting was duly convened on 10-6-2010 and the proposed scheme was approved by requisite majority of 92.13 per cent in number and 99.54 per cent in value of the Equity Shareholders present and voting at the said meeting. The aforesaid result has been placed on record vide the Chairman''s report and affidavit dated 16-6-2010. (Copy annexed as Annex. I to the present petition).

The petition was admitted vide order dated 25-6-2010. The public notice for the same were duly advertised in the newspapers ''Indian Express'' English daily, and ''Sandesh'' Gujarati Daily, both Ahmedabad editions dated 3-7-2010 and the publication in the Government Gazette was dispensed with. Affidavit dated 7-7-2010 confirms the same. No one has come forward with any objections to the said petitions even after the publication. The same has been further confirmed by the additional affidavit dated 28-7-2010.

Notice of the petition has been served upon the Central Government and Shri P.S. Champaneri, learned Assistant Solicitor General appears for the Central Government. An affidavit dated 22-7-2010 has been filed by Mr. Rakesh Chandra, Regional Director, Western Region, Ministry of Corporate Affairs. Vide paragraph 6 of the said affidavit, following objections and/or observations were made and/or raised:

(A) The Transferee Company''s Balance as at 31-3-2005 was taken up for technical scrutiny u/s 234 of the Companies Act, 1956 by the Registrar of Companies, Gujarat on a reference received from Financial Review Board of Institute of Chartered Accountants of India on noncompliances of various Accounting Standards observed by the Financial Review Board in the General Purpose Financial Statements of the Transferee Company. The Registrar of Companies, Gujarat, has submitted his report and therein opined in that the subject Company has violated provisions of Section 211 read with Accounting Standard 17, Accounting Standard 5 and Clause 2(b) of Part II of Schedule VI of the Companies Act, 1956. The said report has been forwarded to the Ministry of Corporate Affairs by the deponent for necessary direction in the matter. In this connection, the deponent crave leave of this Hon''ble High Court, that liberty may be granted to the Ministry of Corporate Affairs/Regional Director/Registrar of Companies, Gujarat to initiate such necessary penal action in respect of violations, if any, under the provisions of the Companies Act, 1956 is established against the Transferee Company and its Directors in this regard.

(B) The Transferor Company Nos. 4 to 7 are Registered under the Laws of Republic of Mauritius. In this connection, for allotment of new shares by the Transferee Company to these Foreign Transferor Companies, the Transferee Company may be directed to comply with FEMA/RBI Guidelines if any as applicable in this regard.

(C) The present shareholding of promoter and their relatives is about 74 per cent of the capital of the Transferee Company. In the event of this Scheme is approved, the promoter holding is likely to exceed beyond 75 per cent of the Transferee Company. In this regard, the Bombay Stock Exchange vide its letter dated 29-4-2010 has given NOC subject to the condition that 13,01,26,117 number of new Equity Shares will be kept in lock-in-period of 3 years. The Transferee Company may be directed to comply with the condition imposed by BSE.

(D) The Registrar of Companies has received a complaint from Mr. Bhupendra C. Gandhi, shareholder of the Transferee Company alleging that failure to provide the proof of dispatch, failure to forward the notices of the Court convened EGM for merger. In this connection, the Registrar of Companies, Ahmedabad has taken up the matter with the Transferee Company and the Transferee Company has furnished the proof, evidencing of dispatches of annual reports and Court conveying meeting dated 10-6-2010 to all the shareholders of the Company in time for Registrar of Companies perusal. After examining the same, he has observed that notices in compliance of Section 171 of the Companies Act, 1956 have been dispatched, and prima facie, Company has complied with the provisions of the Act. He has further reported that complainant has not made out any prima facie violation of the provisions of the Companies Act, 1956. This for the information of this Hon''ble High Court.

An additional affidavit is filed by Shri Jatin Jalundhwala, Chief Legal Officer and Authorized Signatory of the Transferee Company on 28-7-2010. While dealing with the objections raised by the Regional Director in paragraph 6(a) of the affidavit, it is submitted that the observations made by the Regional Director in the said affidavit are not relevant for the consideration of the Scheme of Amalgamation by this Court. It has been denied by the petitioner Company that the petitioner Company has committed any violation of any provisions of law. Even if it is assumed that any such violation was taken place, though the said violation was alleged to have been committed in the financial year ended on 31-3-2005, no action is yet initiated by the office of the Regional Director or by the Registrar of Companies. For initiating any action against the Company, no permission is required to be sought from this Court, under the present proceedings. The present Scheme does not come in the way of any proceedings, if initiated for such alleged non-compliance against the Company or its Directors and does not envisage any immunity or exemption of the concerned party. This contention is substantiated by the view consistently taken by this Court in various matters while sanctioning the Scheme.

So far as the observations made by the Regional Director in paragraph 6(b) is concerned, it is submitted that upon Scheme being effective, the Transferee Company shall comply with all applicable provisions of FEMA or Reserve Bank of India Guidelines for allotment of new shares to the shareholders of the Transferor Companies.

So far as the observations made by the Regional Director in paragraph 6(c) of the affidavit is concerned, it is submitted that the Transferee Company shall comply with the conditions imposed by the Bombay Stock Exchange, if any, and do the needful to abide by the SEBI Guidelines with regard to the promoters holding in the Company and shall keep the new Equity shares in lock-in period of 3 years. So far as the observations made under paragraph 6(d) is concerned, it is submitted that the complaint filed by one shareholder before the Registrar of Companies is baseless. The petitioner Company had issued requisite notice to the said shareholder for attending to the Court convened meeting and further supplied all the documents sought for by him, viz., Copies of the Annual Reports, copy of the Chairman''s Report as also the copy of the petition. The petitioner Company has submitted necessary proof for the same before the Registrar of Companies, to his satisfaction. The said shareholder has thereafter not come out with any objection to the proposed Scheme.

Mr. S.N. Soparkar, learned Senior Advocate appearing with Mrs. Swati Soparkar for the petitioner Company, over and above dealing with the objections raised by the Regional Director has pointed out that out of 7 Transferor Companies, 4 Companies are Foreign Companies incorporated under the provisions of the Companies Act, 2001 as applicable in Republic of Mauritius. Under the applicable provisions of the said Act, the order passed by this Court for the Transferee Company shall be filed with the Registrar of Companies, Mauritius along with other necessary compliances and the same shall be operative from such date of filing. Upon the Scheme being effective, the said Transferor Companies shall be dissolved accordingly. The said issue of Amalgamation of such Foreign Transferor Companies with the Indian Transferee Company has already been decided by this Court on 16-1-2009 in Company Petition No. 280 of 2008 wherein this Court held that in view of the definition Transferor Company'' contained in Section 394(4)(b), which, inter alia, includes ''body corporate'', the transferor company which is situated outside India can be amalgamated with the Transferee company situated in India. The only condition is that such amalgamation should not be in violation of the provisions contained in the Companies Act prevailing in such foreign country. Like in that case, in the present case also, the Transferor Companies are situated at Mauritius and relevant provisions applicable to the scheme of compromise or arrangement are produced before the Court along with the Counsel''s Certificate which specifically states that there is no violation of any provisions of Mauritius law in the process of proposed amalgamation of 4 Transferor Companies situated at Mauritius, inasmuch as it complies with the provisions of Section 4(2)(b) and Section 4(3) of Part II of 14th Schedule (section 345) of the Companies Act, 2001.

The petitioner Company has produced the letter dated 23-4-2010 from Trustlink stating that merger of all these 4 Transferor Companies situated at Mauritius as proposed by the Transferee Company in this Court is in accordance and in conformity with the laws of Mauritius in particularly with the Companies Act, 2001. The petitioner has also produced letters dated 15-7-2010 confirming the appointment of Agent as per Section 4(2)( b) of Part II of the 14th Schedule of the Mauritius Companies Act, 2001 authorizing them to accept service of process in respect of proceedings for the enforcement of any claim, debt, liability or obligation of the Constituent Company or in respect of proceedings for the enforcement of the rights of its dissenting member(s) against the Surviving Company and further authorizing to pay promptly on behalf of the Surviving Company to the dissenting member(s) of the Constituent Company, if any, to which they are entitled against the Companies Act, 2001 with respect to the rights of dissenting members.

Considering the aforesaid affidavit, submissions and the judgments relied upon, the Court is satisfied that the observations made by the Regional Director could not come in the way of sanctioning the Scheme by this Court. The Scheme neither violates the provisions of RBI Act nor FEMA Act. It is specifically mentioned in the Scheme that the Scheme is conditional and is subject to (a) the Scheme being approved by the respective requisite majorities of the members from the shareholders and the creditors of each of the amalgamating companies and the amalgamated company u/s 391 of the Act and (b) such other provisions if any, as may be required under the provisions of the Foreign Exchange Management Act, 1999. Thus the Company has undertaken to comply with the provisions of the FEMA Act. The Court, therefore, is of the view that Scheme is in the interest of shareholders as well as creditors and it is neither prejudicial to their interest nor to public interest. The Court therefore grants its sanction to the Scheme and prayers made in Para 23(a) of the petition are hereby granted.

The petition is disposed of accordingly. So far as the costs to be paid to the Central Government Standing Counsel is concerned, I quantify the same at Rs. 5,000. The same shall be paid directly to Shri P.S. Champaneri.