2011 (12) TMI 419 - HC - Companies Law

Court denies recall of scheme order, deems jurisdiction valid. Implementation allowed, additional documents permitted.

Castron Technologies Ltd. Versus Castron Mining Ltd.

The court rejected the application to re-call the order sanctioning a scheme of arrangement, finding it was passed with jurisdiction and not unfair. The ... Scheme of arrangement - Re-calling of the order - CTL and CML were family companies - Mining Division of CTL transferred and vested to CML – CTL moved an application for withdrawal of the application for transfer of the mining lease – Held that:- transfer of mining lease by CTL to CML is complete. The consent of the State Government has, since, been obtained. Therefore, in no case, the scheme could be frustrated - in between CTL and CML, the transaction is valid. CTL cannot, now, turn round and throw out CML on the plea of the transaction being unauthorised when CTL in the balance sheet admitted that the mining division of CTL has been transferred and vested in CML - application was jointly moved by CTL and CML. The order is a consent order. Therefore, it cannot be re-called at the instance of one of the party – Application dismissed Issues Involved:1. Application for re-calling the order dated May 13, 2003.2. Application for implementation of the scheme sanctioned by the order dated May 13, 2003.3. Application for leave to rely upon additional documents and subsequent events.4. Application for leave to bring on record letters and a deed of rectification.Issue-wise Detailed Analysis:1. Application for Re-calling the Order Dated May 13, 2003:The application (C.A. no. 209 of 2006) was filed by CTL and CML to re-call the order sanctioning a scheme of arrangement. The argument was that the order was passed in contravention of Rule 37 of the Mines and Minerals Rules, 1960, which prohibits the transfer of mining leases without prior written consent from the State Government and, where applicable, the Central Government. It was contended that the scheme sanctioned by the court effectively sanctioned a voluntary transfer of the mining lease, which was not permissible without the required consents. The court, however, noted that the Central Government had decided not to oppose the scheme, and both the Central and State Governments had acted upon it. The court also observed that the application for re-calling was not moved in the aid of the scheme but rather to frustrate it. The court found that the order sanctioning the scheme was passed with jurisdiction and was not unfair. As a result, the application for re-calling the order was rejected.2. Application for Implementation of the Scheme Sanctioned by the Order Dated May 13, 2003:The application (C.A. Tender no. 209 of 2006, re-numbered as C.A. no. 667 of 2006) was filed by CML and Anup Agarwalla seeking directions for implementing the scheme. The court noted that the scheme had already been acted upon by the parties and the authorities. The State of Jharkhand had executed a deed of rectification substituting the name of CML in place of CTL concerning the mining lease. The court directed the authorities to take steps for the implementation of the scheme in accordance with the law, thereby allowing the application.3. Application for Leave to Rely Upon Additional Documents and Subsequent Events:The application (C.A. no. 96 of 2007) was filed by CML and Anup Agarwalla to rely upon various letters and inspection reports issued by CTL and other relevant documents. The petitioners sought to take into consideration events subsequent to the court's order and to rely upon these documents in support of their application. The court noted that the application was in the aid of the scheme and allowed it.4. Application for Leave to Bring on Record Letters and a Deed of Rectification:The application (C.A. no. 689 of 2009) was filed by CML and Anup Agarwalla seeking leave to bring on record a letter from the Central Government dated February 26, 2009, a letter from the Deputy Secretary, Department of Mining and Geology, Government of Jharkhand dated May 27, 2009, and a deed of rectification dated June 8, 2009. The court acknowledged the significance of these documents in the context of the scheme and allowed the application.Conclusion:The court rejected the application for re-calling the order dated May 13, 2003, and allowed the application for implementing the scheme. The applications for leave to rely upon additional documents and subsequent events, as well as to bring on record letters and a deed of rectification, were also allowed. The court directed the authorities to take steps for the implementation of the scheme in accordance with the law.