DUPHAR - INTERFRAN LIMITED AND DUPHAR PHARMA INDIA LIMITED.
IN THE HIGH COURT OF JUDICATURE AT BOMBAY
ORDINARY ORIGINAL CIVIL JURISDICTION
COMPANY PETITION NO 267 OF 2000
COMPANY APPLICATION NO 57 OF 2000
In the matter of sections 391 to 394 of the companies Act, 1956;
In the matter of Duphar - Interfran Limited, a company incorporated under the Companies Act, 1913 and having its registered office at F/5, Shivsagar Estate, Dr. Annie Besant Road, Worli, Mumbai - 400018;
In the matter of scheme of Arrangement for demerger between Duphar - Interfran limited and Duphar pharma India limited. Duphar - Interfran limited a company incorporated under the Indian companies Act, 1913 and having its registered office at F/5, Shivsagar estate, Dr. Annie Besant Road, Worli, Mumbai - 400018 ………………petitioner.
Shri Virendra Tulzapurkar with shri Virag Tulzapukar and shri S. H. Parikh i/b Amarchand & Mangaldas & Suresh A. Shroff & Co. for the petitioner. Shri F. E. Devitre, i/s stated that the Regional Director has no objection to the sanction of the arrangement embodied in the scheme of Arrangement.
3) However, an application is made behalf of the shareholder Renuka Datla seeking to oppose the sanction of the scheme. It is the case of the shareholders that the scheme is designed to benefit a group of shareholders namely, Vasant Kumar and his family and the foreign collaborators group consisting of Solvay B. V.
4) It is contended on behalf of the interveners that by presenting the scheme, a fraud is perpetrated on the petitioner company and its shareholders, the same is unfair, unjust and sought to be pushed through by reason of brute majority voting power.
5) It is also urged on behalf of the interveners that the meeting of members that was convened and held for the purpose of considering the said scheme as illegal and improper as different classes of members namely, the shareholders on the one hand Vasant Kumar and family group and Solvay B .V. group which constituted another class of members, could not participate in the same meeting as a meeting of different classes of members was combined though the interest was not common and were, in fact, in opposition to each other.
6) It is urged on behalf of the interveners that if this scheme is sanctioned Vasant Kumar and his family and Solvay BV group will acquire controlling interest in their respective companies.
7) It is also urged on behalf of the interveners that the valuation report on the basis of which the share exchange ratio is purported to be made is fully unacceptable and mala fide. It is urged on behalf of the applicants that by this scheme, an attempt is made to transfer unspecified properties of the petitioner company relating to its most valuable division, that is to say, the pharmaceutical division to Solvay BV and apart from that the pharmaceutical products, namely, 'VERTIN' and 'COLOSPA' are transferred to Duphar pharma limited as part of the demerger and that these products originally belonged to the petitioner.
8) It is , therefore, urged on behalf of the applicants that these products are included in the scheme and are required to be transferred as part of the deal which were originally to Duphar Interfran. Reliance is sought to be placed upon a strip of "COLOSPA" tablest which reflects manufactured and marketed by the registered trademark owner Dupen Laboratories Pvt. Ltd. in collaboration with Duphar Interfran Limited . it is, therefore , urged on behalf of the interveners that the petitioners have a rights in this products which is sought to be sold to Solvay BV and thereby the petitioner - company is deprived of valuable consideration.
9) It is also urged on behalf of these applicants that the applicants and another shareholder namely, the husband of the applicant have registered their objection in the meeting which was not taken cognizance of whilst appreciating the objection raised on behalf of the shareholders, it is necessary to note that so far as the petitioners are concerned, they have complied with the formalities that are required to be complied with under sections 391 to 394 of the companies Act, 1956. A meeting of the shareholders was held and at the said meeting, 98 equity shareholders of the applicant - company attended the meeting. The unsecured creditors also attended the meeting and have voted in favour of the scheme. It is also urged on behalf the petitioners - company that the 3/4th of majority of shareholders present in number were aware of the objection raised by the applicants and having full knowledge of the objection raised by the applicants have given their sanction and approval to the scheme.
10) The main bone of contention which is raised on behalf of the interveners is that by virtue of this, an attempt is made to transfer the unspecified and valuable business; namely the pharmaceuticals for a song.
11) On behalf of the interveners, there is a serious challenge raised to clause 5.8, 5.9 and 9.3 of the scheme of arrangement. It is these clauses which are seriously objected to as it is contended on behalf of the applicants that by virtue of these clauses, the foreign collaborators are required to transfer 980,000 equity shares of Duphar- Interfran in favour of the Vasant Kumar Family or their nominees in lieu of the Vasant Kumar Family transferring 1,098,978 equity shares of DPIL and assigning two brands, namely, "VERTIN" and "COLOSPA" presently owned by Dupen Laboratories Private Limited, a company wholly owned by the Vasant Kumar Family in favour of the Foreign Collaborators or its nominees by a separate deed of assignment. The above transfers will be subject to obtaining the necessary regulatory approvals.
12) Clause 5.9 of the Scheme of Arrangement records that Duphar-Interfran and DPIL shall do all such acts, deeds, matters and things they may require in order to give effect to the provision of clause 5.8 herein.
13) Clause 9.3 of the scheme of Arrangement deals with the approval of the foreign investment promotion board and / or Reserve Bank of India under the foreign exchange regulation act, 1973 being obtained in relation to various matters referred to in terms of the scheme for which such approval is necessary, including allotment of transfer of equity shares in favour of nonresidents pursuant to clause 5.1 and clause 5.8 of the scheme of Arrangement.
14) It is in respect of these transfers of shares that principally an objection is raised on behalf of the applicants who also claim to be members of Vasant Kumar family and apparently claim an interest in the shareholding to be acquired by Vasant Kumar Family.
15) So far as clause 5.8 of the scheme of Arrangement is concerned the same becomes operative as post sanction of the scheme and that is apparent from a clause 5.8 of the scheme of Arrangement which becomes effective only after the scheme comes into effect and the demerger takes place. It is this clause which is challenged principally as it is contended that the meeting held for sanctioning the scheme of arrangement, the two classes of members were involved, one was the share holders of the petitioner- company and the other being Vasant Kumar Family and Solvay BV who by virtue of this clause sought to acquire absolute rights in the two companies. It is contended on behalf of the petitioner - company that this shall from part of the scheme, but the allotment of the shares was to come into operation after the scheme was sanctioned and this clause was incorporated only with a view to make the shareholders aware of the fact that Vasant Kumar Family was taking over the shares of Duphar - Interfran; whereas Solvay BV was to take over the control of Duphar Pharma India Ltd.,