Ahmad Hassan Textile Mills Ltd etc. vs Joint Registrar Of Companies etc.

Form No: HCJD/C-121

ORDER SHEET

IN THE LAHORE HIGH COURT, MULTAN BENCH, MULTAN

JUDICIAL DEPARTMENT

CO No. 08 of 2019

Ahmad Hassan Textile Mills Limited & another vs Joint Registrar of Companies & another

S.No. of Date of Order with signature of Judge and that of parties or Order/ order/ counsel where necessary Proceeding proceeding 12.01.2021 Barrister Malik M. Kashif Rajwana, Advocate for petitioners.

Mr. Sohail Ahmad Janjua, Advocate for NIT. Malik Ahsan Karol, Advocate for Meezan Bank. Shoukat Qamar for FBR.

This petition under Sections 279 to 282 of the Companies Act, 2017 (“Act”) has been filed by authorized representative of petitioner/companies for obtaining sanction of this Court to a Scheme of Arrangement for bifurcation of weaving and spinning business of already existing company of petitioner No.1 with effect that spinning business shall be transferred to petitioner No.2/Ahmad Hassan Spinning Limited (“AHSL”) which is a newly incorporated company.

2.The brief facts of the case are that petitioner No.1/Ahmad Hassan Textile Mills Limited (“AHTML”) is running textile business comprising of weaving and spinning units and for the purpose of better management of its business, a scheme of arrangement for reconstruction and demerger of business of the said company into two separate businesses i.e. weaving business to be retained by AHTML and spinning business/undertaking to be transferred to AHSL which is a newly incorporated company has been approved by

CO No. 08 of 2019 Dated 12.01.2021.

members/shareholders of AHTML in extraordinary General Meeting held on 30.11.2019.

3.The present scheme of arrangement in nutshell is intended to split the spinning business from weaving business to be operated by a group of sponsors within management of AHTML holding 41.20% shares of the company against consideration of their equity in AHTML. This arrangement has been arrived at between two major sponsors holding 89.15% shares of AHTML. Main object as defined in the scheme is split of weaving and spinning and close supervision of sponsors for better operating results having an effective date 30.06.2019 subject to sanctioning of this Court. Scheme of arrangement has already been approved by the Board of Directors of both the Companies in their respective Board Meetings held on 07.11.2019. Subsequently, the scheme of arrangement was considered and approved by 93.67% of the members/shareholders of AHTML in EOGM held on 30.11.2019. Mandatory notices alongwith statement under Section 134(3) of the Companies Act, 2017 have also been published in seven newspapers (English & Urdu). AHTML has obtained finance facilities from different financial institutions. AHSL is a newly incorporated company, therefore, at present it does not have any assets or liabilities and thus it has no creditors. The scheme of arrangement has already been approved by the BOD and shareholders of both the companies in their respective Board Meetings and EOGMs and all the creditors of AHTML have provided NOCs.

4.Alongwith this petition, Scheme of Arrangement in terms of Section 382 of the Act between the petitioners and respective shareholders is also attached as Annexure

“A”.

CO No. 08 of 2019 Dated 12.01.2021.

5.The principal object of the Scheme is to demerge the petitioner No.1 company’s business into two units i.e weaving unit shall remain with petitioner No.1 whereas spinning unit shall transfer to newly constituted company i.e. petitioner No.2 along with its assets and liabilities w.e.f. 30.06.2019.

6.After filing of the petition, this Court vide order dated 20.10.2020 directed that notices be issued for 09.12.2020 in national dailies for the purpose of informing general public about the scheme and inviting objections from members and creditors of the petitioners as well as from any person having interest in the affairs of the petitioners. In addition, notices were also directed to be issued to the Securities and Exchange Commission of Pakistan and to the creditors of the petitioner companies as per list of creditors attached with the petition.

7.In compliance with the aforesaid order by the Court, public notices issued on 28.10.2020 in Dailies Nawa-i-Waqt (Lahore, Multan, Karachi, Rawalpindi/ Islamabad) and Business Recorder (Islamabad, Lahore, Karachi) were issued, copies whereof are available on record.

8.It has been pointed out by the learned counsel for the petitioners that Scheme of Arrangement has already been approved in Extraordinary General Meetings of the Company held on 30.11.2019, therefore, holding of meetings by the petitioners afresh would be unnecessary. He relied on Fatima Sugar Mills Limited and others (2014 CLD 26) in which it has been held as under: “10. Vide order dated 14.3.2012 when the instant petition came up for hearing before this Court, it was pointed out by the learned counsel for the petitioner companies that Scheme of Arrangement has already been approved in Extra Ordinary General Meetings of the company held on 18-0-2012 (sic.) and 24-2-2012

CO No. 08 of 2019 Dated 12.01.2021.

respectively, hence, holding of meetings by the companies afresh in terms of section 284 of the Companies Ordinance, 1984 would be unnecessary. For this reason the requirement of holding fresh meetings was dispensed with.”

This was also noted in case reported as Mahmood Textile Mills Ltd. etc. v. Registrar Joint Stock Companies [NLR 1993 UC (Civil) 49]. In view of the afore-said principles laid down above, requirement of further meeting is dispensed with.

9.The petitioners have placed on record No Objection Certificate issued by the creditors of the petitioner No.1.

10.Only objection has been raised on behalf of NIT which holds approximately 7% share in the petitioner No.1 company; however, as majority has already approved the afore-referred scheme and the NIT has failed to point out how the rights of said minority shareholder holding only 7% would be adversely affected with demerger scheme, consequently, the said objection is overruled. As regards their claim to allow same treatment as given to the petitioners relating to buyback of the shares of minority shareholders, they may seek the same through appropriate proceedings.

11.Learned counsel for the respondent banks have no objection to the sanction of Scheme of Arrangement and NOCs on behalf of the creditors bank have already been placed on record. Vide order dated 22.12.2020 SECP had stated that it had no objection to sanction the afore- referred scheme.

12.In the present case, the petitioners and its creditors and shareholders except NIT have unanimously approved the scheme of arrangement, hence there is no reason why their business decision should be interfered with. Resultantly, this Court deems it appropriate to proceed on the basis of proposed scheme as approved by the

CO No. 08 of 2019 Dated 12.01.2021.

shareholders of the transferor company as in absence of any serious challenge from the shareholders of the transferor and transferee company, who are primarily and exclusively concerned with the same, the proposed arrangement has to be considered as fair and reasonable.

13.In view of the foregoing reasons, there remains no impediment to grant and sanction of the Scheme of Arrangement for demerger of petitioner No.1 Company by transferring its spinning unit to petitioner No.2. Accordingly, this petition is allowed and the Scheme attached at Annexure-A is hereby sanctioned in terms thereof w.e.f proposed date i.e. 30.06.2019.

(MUZAMIL AKHTAR SHABIR)

JUDGE

Naveed *