ASMITHA MICROFIN LIMITED, HYDERABAD REPRESENTED BY ITS AUTHORIZED SIGNATORY Vs. ADITYA BIRLA FINANCE LIMITED, HYDERABAD REPRESENTED BY ITS CHIEF MANAGER-CUM- AUTHORIZED SIGNATORY

JUDGEMENT

(1.) These two appeals arise out of common order dt.03.02.2017 passed by the learned Company Judge in Company Petition Nos.200 and 201 of 2016 respectively.

(2.) The brief facts leading to the institution of these appeals are as follows. The appellants are public limited companies. The appellant in O.S.A. No.8 of 2017 Asmitha Microfin Limited (for short, ASML) was incorporated on 26.02.2001 and the appellant in O.S.A. No.9 of 2017 Share Microfin Limited (for short, SHARE) was incorporated on 20.04.1999. The details of the issued, subscribed and paid up share capital have been referred in the order under appeals. As they do not have relevance in the context of adjudicating these appeals, it is not necessary to refer the same in this judgment. It will suffice to note that both the companies are engaged in the business of providing financial and support services to the marginalized sections of society, particularly underserved rural and urban women across India. In the wake of enactment of the Andhra Pradesh Micro Finance Institutions (Regulation of Money Lending) Act, 2010, by the erstwhile State of Andhra Pradesh, imposing fetters on loan disbursement and recovery process for micro finance institutions in the undivided State of Andhra Pradesh, presently comprising the States of Andhra Pradesh and Telangana (conveniently referred to as the two Telugu speaking States) there was drastic fall in the revenues of both the companies in the two Telugu speaking States. As the companies were required to service their repayment obligations to their creditors out of the recoveries derived from the States other than the two Telugu speaking States, the appellants proposed to segregate their respective businesses to consolidate their position.

(3.) The Board of Directors of both the appellants Companies held a joint meeting on 31.3.2016 and approved the scheme of arrangement. The salient features of the scheme are that the SHARE demerges its two Telugu speaking States business into a Demerged Undertaking which in turn merges into ASML, that ASML demerges its rest of India business other than the two Telugu speaking States into a Demerged Undertaking which merges with SHARE and the operations of ASML post sanction of the scheme are confined to the two Telugu speaking States and SHARE would do the business in the rest of India. That the shareholders of ASML would be allotted equity shares in SHARE in the ratio of 1:1.0956 and the shareholders of SHARE would be allotted equity shares in ASML in the ratio of 1:1.1541. That 89.2004% of the total outstanding Optionally Convertible Cumulative Redeemable Preference Shares (OCCRPS) issued by the SHARE would be cancelled and 5.7996% of the total outstanding OCCRPS issued by SHARE would be converted into equity shares. That out of the total outstanding debt, INR 422,98,77,843 of ASML, an amount of INR 247,06,65,820 would be converted into 24,70,66,582 OCCRPS, that 0.0320% of the total outstanding OCCRPS issued by ASML would be converted into equity shares and that in lieu of cancellation of OCCRPS issued by SHARE, 57,45,71,293 OCCRPS would be issued by ASML to the Corporate Debt Restructuring (CDR) Lenders of SHARE.