KHODAY INDIA LIMITED Vs. NIL

JUDGEMENT

(1.) THE petitioner - company formulated a scheme of arrangement between the company and its equity shareholders. The said scheme envisages an exit option to those equity shareholders for the cancellation of equity shares on the face value of Rs. 10/- a cash warrant of Rs. 25/- per share to the equity shareholders or average of six months high and low at the stock exchange such shareholders are interested whichever is higher is paid.

(2.) THIS Court on an application made by the petitioner for convening a meeting of the shareholders, secured creditors and unsecured creditors of the company to consider and approve the said scheme, by an order dated 6. 12. 2001 in CA. No. 765/2001 granted the permission sought for and directed that the meeting shall be held on 24. 1. 2002 at 10. 00 a. m. at Registered Office. Accordingly, a meeting was convened and the scheme was approved by the requisite majority and thereafter the Chairman of the meeting has submitted his report, which was accepted by this court. It is thereafter the present petition is filed seeking sanction of the scheme by this Court.

(3.) THE object of the scheme as approved is to provide an exit option to the small equity shareholders of the company holding small-lots up to 500 equity shares with a view to mitigate the hardship faced by the small shareholder, in the present capital market scenario. The scheme is conceived with the object to result in the small shareholders getting back their investment without in any manner affecting the rights and interest of creditors and employee of the company. The scheme envisages cancellation of small shareholding up to 500 shares to all such shareholders, save and except those shareholders who opt to retain their holding of shares and inform the company of their desire to continue to hold the equity shares. Thus, the scheme is basically designed to help the investors at large so as to enhance liquidity in the hands of small investors which in turn would stimulate activities in the capital market.