In Re: Ganesh Synthetics (P.) Ltd.

Bharati Sapru, J.—This is a petition under Sections 391 and 394 of the Companies Act, 1956 by which the applicants seek an amalgamation of Ganesh Synthetics Private Limited (Transferor Company No. 1), Abhinav Investments Private Limited (Transferor Company No. 2), Ginni Power Limited (Transferor Company No. 3), Goodworth Merchants Private Limited (Transferor Company No. 4), with Ginni Filaments Limited, Transferee Company.

The present petition seeks a sanction of scheme of arrangement in terms of which the transferor companies are to merge with the transferee company. The scheme also seeks a conversion of the debt word by the Transferor Companies in the Transferee Companies into equity. The Scheme seeks to implement the decisions taken by the term lenders of the transferee company, which was to maintain a debt equity ratio of 1.85. The Transferee Company has sought to achieve this by converting various loans granted to it by the transferor company into equity. The applicant company has brought on record communications from the Corporate Debt Re-structuring Cell formed by the Reserve Bank of India whereby the committee formed is monitoring the scheme of the applicant company and has accorded approval to the conversion of the unsecured loans representing the lending by the transferee company into equity.

The other facts are that scheme of amalgamation was initially approved by the Board of Directors of the Transferor Companies and Transferee Company on 19-12-2007. After getting approval from various quarters, the Company Application No. 18 of 2008 was filed before this Court on 30-7-2008 and on 1-8-2008. This Court passed an order for the convening of meeting of the shareholders, secured creditors of the Transferor Company and the unsecured creditors of the Transferee Company.

Publications were made in Newspapers and meetings were held, subsequently in compliance of the orders of this Court dated 1-8-2008, the reports of the chair persons appointed for the Transferor Companies and of the Transferee Company for holding the meeting of the shareholders and the unsecured creditors are all on the record of this case.

This petition was filed on 25-11-2008 and notices were duly issued to the Regional Director of Company affairs and to the Official Liquidator on 27-11-2008.

On 20-12-2008 publications have been made in two Newspapers i.e., ''Dainik Jagran'' and ''Times of India''.

The Regional Director has filed his report on 29-4-2009. Other than imposing a condition that the company must comply with the accounting methods as provided in accounting standard 14, no other objection has been taken by the Regional Director.

The Official Liquidator has also filed a report and has made objections with regard to the conversion of the debts of the Company into equity. These objections are stated in paragraphs 14 & 15 of the said report.

The applicant has filed a counter affidavit, to the reports filed by the Regional Director as well as the Official Liquidator and has brought to the notice of the Court that the conversion of loans into equity by the Companies has been done under the surveillance and monitoring of the Corporate Debt Re-structuring Cell, which has been formed by the Reserve Bank of India vide its circular dated 23-8-2001. This cell is also responsible for looking after the issue of Re-structuring of the company and has exposer to more than one financial institution. The minutes of the Corporate Debt Re-structuring Cell dated 27-4-2009 has been brought on record.

Thus, I am satisfied that the objection made by the Official Liquidator has been adequately met by the applicant companies as the matter of restructuring of the finances of the company are being monitored by the Corporate Debt Re-structuring Cell, it obviates any chances of the company indulging in any kind of surreptitious or under hand dealings.

The re-structuring will therefore be done under the monitoring of the CDR. The Company will also comply with accounting standards 14 and all other requirements, as prescribed under the Companies Acts and the Company Rules.

Subject to the above observations, the petition for confirmation is allowed.