Our Bureau

Mumbai , Dec. 2

THE Bombay High Court adjourned, for the second time, hearing on the demerger scheme of Reliance Industries Ltd (RIL) and its group companies. The next hearing has been posted for December 5.

The hearing was adjourned as the petitioner who challenged the scheme on November 26 - Mr Kalpesh Mankad - sought more time to argue the case. Ms Justice Nishita Mhatre asked the petitioner not to seek any more adjournments.

Arguing the case on behalf of RIL, lawyer Mr Iqbal Chagla said that the petitioner's contention that the demerger of RIL and other Reliance companies was merely family arrangement was speculative in nature. The petitioner had argued that the rationale of the proposed scheme was to divide the management, control and shareholding as a part of family arrangement. Thus, the purpose of the demerger was not to avail benefits from demerger, but to settle the family dispute through division of assets, which do not belong to the persons, but to the companies they manage.

Citing the Gujarat High Court decision in the Ambica Mills Vs Narendra Shodhan where it was held that if the scheme is proposed under the guise of giving effect to family division, then any scheme under Section 391 of the Companies Act was bad in law.

"The total book value of assets over liabilities to be demerged from RIL to the resulting companies are nearly Rs 19,119.54 crore. As per provisions of Section 393 of the Companies Act, the explanatory statement must describe the value of individual assets and liabilities to be transferred... the description given in the above schedules does not specify the specific assets or liabilities to be transferred and hence it is incomplete and vague," the petition said.

However, the petitioner cites paucity of time in filing the affidavit and falls back on media reports to substantiate his claim on the scheme of demerger being a family arrangement. Ms Justice Mhatre asked the petitioner to support his claims with proof.

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