LAWS(SB)-2007-8-5

PENTAMEDIA GRAPHICS LTD. Vs. BOMBAY STOCK EXCHANGE LTD.

Decided On August 10, 2007
Pentamedia Graphics Ltd. Appellant
V/S
Bombay Stock Exchange Ltd. Respondents

JUDGEMENT

(1.) PENTAMEDIA Graphics Ltd. ('Pentamedia'), is a listed company and is engaged in the business of animation and special effects for cinema, home videos, television and personal computers. Mediadreams Limited, Kris Srikkanth Sports Entertainment Limited, Intelevision Limited and Mayajaal Entertainment Limited (MDL, KSSEL, Intelevision and Mayajaal respectively) are its wholly owned subsidiaries. The boards of directors of these companies proposed restructuring under a scheme which, according to them, would result in greater synergies of operations and better management of the companies concerned. A composite scheme of amalgamation, arrangement and compromise ('the scheme') between Pentamedia and its aforesaid subsidiaries and their respective shareholders and creditors was prepared. The board of directors of Pentamedia in their meeting held on 30 -1 -2004 approved the scheme.

(2.) IT is pertinent to mention here that under the scheme framed by Pentamedia and its subsidiaries, Pentamedia had written off its assets to the tune of Rs. 690.04 crores and that it had been writing -off its assets since the year 2001 -02 every year till 2003 -04 which amounted to an aggregate of Rs. 1153.09 crores. The fact that the assets had been written off by Pentamedia is not in dispute before us. Ever since Pentamedia filed its application under clause 24(f) of the listing agreement, BSE has been calling upon it to furnish the rationale for the substantial reduction in its capital and also to furnish details of the fixed assets in which the future diminution of value was expected and reasons for such diminution. Several letters in this regard were written to Pentamedia but to no effect. Not only this, BSE had also informed Pentamedia by its letter dated 29 -6 -2004 and also by subsequent letters not to proceed further in this matter till it gives its no objection. Since Pentamedia had not furnished adequate explanation to the various queries made from it, BSE decided to reject the application under clause 24(f) and communicated its reasons by letter dated 13 -6 -2006. It is against this communication that the present appeal has been filed.

(3.) THE learned Company Judge further observed in para 42 of the order as under: