CP/156/2010 of M/S RAIN CII CARBON (INDIA) LIMITED Vs - on 29 December 2010

COMMON ORDER:

These petitions are filed by M/s. Rain Commodities Limited, M/s.Rain CII Carbon (Vizag) Limited and M/s. Rain CII Carbon (India)Limited respectively under Section 391 to 394 of the Companies(Court) Rules, 1959 for sanction of the Scheme of Arrangementbetween the applicant companies.

The petitioner in C.P.No.154 of 2010 is M/s Rain CommoditiesLimited (for short “RCOL”). The said company was incorporated on15.03.1974 under the provisions of the Companies Act, 1956. Theregistered office of RCOL is situated at “Rain Center” 34, SrinagarColony, Hyderabad–500083, Andhra Pradesh. The authorized sharecapital of RCOL as on 07.08.2010 is Rs.167,00,00,000 divided into 11,80,00,000 equity shares of Rs.10 each and 49,00,000 redeemablepreference shares of Rs.100 each. The issued, subscribed and paidup share capital of RCOL is Rs.70,83,45,790 divided into 7,08,34,579 equity shares of Rs.10each. The main objects of the said company as set out in thememorandum of association are mentioned in para 5 of C.P.No.154 of2010.

The petitioner in C.P.No.155 of 2010 is M/s. Rain CII Carbon(Vizag) Limited (for short “RCCVL”). The said company wasincorporated under the provisions of the Companies Act, 1956 on the23[rd] day of April, 2008 under the provisions of the Companies Act,1956. The registered office of RCCVL is situated at “Rain Center”, 34,Srinagar Colony, Hyderabad-500073, Andhra Pradesh. TheAuthorised share capital of RCCVL as on 07.08.2010 isRs.10,00,00,000 divided into 1,00,00,000 equity shares of Rs.10each. The issued, subscribed and paid up share capital of RCCVL isRs.7,18,00,000 divided into 71,80,000 equity shares of Rs.10 each. The main objects of the said company as set out in the memorandumof association are mentioned in para 5 of C.P.No.155 of 2010.

The petitioner in C.P.No.156 of 2010 is M/s. Rain CII Carbon(India) Limited(for short “RCCIL”). The said company wasincorporated under the provisions of the Companies Act, 1956 on the4[th] day of May, 1999 under the provisions of the Companies Act,1956. The Registered Office of RCCIL is situated at “Rain Center”, 34,Srinagar Colony, Hyderabad-500 073, Andhra Pradesh. Theauthorised share capital of RCCIL as on 07.08.2010 isRs.50,00,00,000 divided into 5,00,00,000 equity shares of Rs.10each. The issued, subscribed and paid up capital is Rs.29,80,50,000divided into 2,98,05,000 equity shares of Rs.10 each. The mainobjects of the said company as set out in the memorandum ofassociation are mentioned in para 5 of C.P.No.156 of 2010.

It is stated that a Scheme of Arrangement has been proposed by the applicant companies for the demerger of Cement BusinessUndertaking of RCOL to RCCIL and the demerger of CalcinedPetroleum Coke and Power Business Undertaking of RCCIL intoRCCVL on going concern basis. There was also a proposal fordemerger of Moonglow Company Business Inc., with RCOL and aconsequent reduction of share capital and/or securities premium ofRCCIL. Accordingly, the Board of Directors of all the three companiesin the respective meetings held on 18.05.2010, 17.05.2010 and13.05.2010 respectively approved the said Scheme of Arrangementsubject to the approval of the shareholders, creditors and confirmationby this Court.

Conclusion

The petitioner in C.P.No.154 of 2010 filed C.A.No.481 seekingto convene the meeting of the shareholders and the same was orderedby this Court on 22.06.2010. Pursuant to the directions of this Court,notices were issued to the shareholders and the meeting was attendedby 146 shareholders and all of them participated in the poll and votedin favour of the resolution approving the Scheme of Arrangement. Byorder dated 22.06.2010 made in C.A.No.482 of 2010, this Court haddispensed with the meeting of the secured creditors upon anundertaking given by the petitioner that the consent letters would besent to the secured creditors along with the company petitions. So faras unsecured creditors of the petitioner in C.P.No.154 of 2010 areconcerned, the petitioner filed C.A.No.483 of 2010 and the same wasordered by this Court dispensing with the meeting of the unsecuredcreditors of the company making it clear that in the event of anyobjection from the unsecured creditors requiring a meeting of theunsecured creditors, the order passed dispensing with the unsecuredcreditors would stand cancelled.

So far as C.P.No.155 of 2010 is concerned, this Court by orderdated 22.06.2010 in C.A.Nos.484 and 485 of 2010 dispensed with themeeting of the equity shareholders as well as the secured creditorsand unsecured creditors. Similarly, by order dated 22.06.2010 passedby this Court in C.A.Nos.490, 491 and 492 of 2010 meeting of the equity shareholders, unsecured creditors and the secured creditors ofthe petitioner company in C.P.No.156 of 2010 was also dispensedwith.

Accordingly, these three petitions have been filed seekingsanction of the above said Scheme of Arrangement between theRCOL, RCCVL, RCCIL and Moonglow Company Business Inc. Inresponse to the notice ordered by this Court, the Registrar ofCompanies, A.P., Hyderabad filed a common affidavit in all thecompany petitions raising the following objections:

(a) As M/s. Moonglow Company Business Inc., is acompany incorporated under the BVI BusinessCompanies Act, 2004 having register office in BritishVirgin Islands, the scheme may be sanctioned subjectto the sanction of the scheme by the appropriateauthorities under the prevailing laws in respect of theaforesaid company in that country.company incorporated under the BVI BusinessCompanies Act, 2004 having register office in BritishVirgin Islands, the scheme may be sanctioned subjectto the sanction of the scheme by the appropriateauthorities under the prevailing laws in respect of theaforesaid company in that country.

(b) The transferee company should pay the Stamp Dutywherever applicable as per the Regulations of AndhraPradesh Stamp Act.wherever applicable as per the Regulations of AndhraPradesh Stamp Act.

(c) As M/s. Moonglow Company Business Inc., is aforeign entity and wholly owned subsidiary of M/s.Rain Commodities Limited, necessary approvals ofRBI and FEMA, if any required, have to be obtained.foreign entity and wholly owned subsidiary of M/s.Rain Commodities Limited, necessary approvals ofRBI and FEMA, if any required, have to be obtained.

The permission sought by the petitioner companies foramalgamation was declined by the Reserve Bank of India also on theground that Moonglow Company Business Inc., was a companyincorporated in the British Virgin Islands. In the circumstances, as perthe resolutions passed by the Board of Directors of the petitionercompanies in the meetings held on 03.11.2010, 02.11.2010 and01.11.2010 respectively, part iv of the Scheme and the other portionsrelating to amalgamation of Moonglow Company Business Inc., weredeleted.

The petitioners also filed C.A.Nos. 1547, 1548 and 1549 of 2010in C.P.Nos. 154, 155 and 156 of 2010 respectively seeking permission to delete the said portions from the Scheme and the said applicationswere allowed by this Court.

I have heard Sri S.Ravi, learned senior counsel appearing for theapplicant companies, and perused the material placed before thisCourt including the modified Scheme of Arrangement and theresolutions passed by the Board of Directors of the petitionercompanies according consent to the modified scheme and toundertake the same with effect from 01.04.2010. I have also heard thelearned Assistant Solicitor General of India, who submitted that there isno objection for sanction of the modified Scheme of Arrangement.

Having regard to the facts and circumstances noticed above,particularly in view of the fact that despite notice of admission of thesecompany petitions by paper publication, no objections whatsoeverhave been received from any quarter, and that the Scheme ofArrangement, apart from being in the best interest of the petitionercompanies and their respective shareholders and creditors is notopposed to any provision of law or public interest, I do not find anyimpediment for granting the sanction for the proposed Scheme ofArrangement.

Accordingly, the Scheme of Arrangement as modified is herebysanctioned and it is declared that the same is binding on all theshareholders, creditors and employees of the petitioner companies.

The parties to the Scheme of Arrangement or other personsinterested shall be at liberty to apply to this court for any direction thatmay be necessary in regard to the working of the Scheme ofArrangement. A certified copy of this order shall be filed before theRegistrar of Companies within 30 days from the date of receipt of thisorder.

All the company petitions are accordingly allowed. No costs.

Date: 29.12.2010

KLP

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G. ROHINI, J