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Issues:
Company petition for sanction of a scheme of arrangement under Companies Act - Merger/demerger of undertakings - Approval of shareholders and creditors - No objection from Registrar of Companies - Sanction granted by the court. Analysis: The petitioner, a Company named "Eicher Motors Limited," filed a Company Petition seeking sanction for a scheme of arrangement under sections 391 and 394 of the Companies Act. The scheme involved the merger/demerger of undertakings between Eicher Limited, Eicher Motors Limited, and Malbros Investment Limited. The purpose of the scheme was to transfer the Automobile undertaking of Eicher Limited to Eicher Motors Limited and merge Malbros with Eicher Limited. The detailed terms and conditions of the proposed merger/demerger were set out in the scheme of amalgamation/composition. The rationale behind the amalgamation/merger included facilitating synergies, consolidating businesses, serving the best interests of the companies and their shareholders, and maximizing benefits for stakeholders. The restructuring proposed under the scheme aimed at improving market share, self-dependency, and competitive edge, while also reducing costs and overheads to benefit the business in the long run. In a previous Company Petition, a Chairman was appointed to oversee the process, and meetings of shareholders and creditors were conducted following due procedure. The Chairman submitted a report confirming unanimous approval of the scheme by shareholders and creditors of Eicher Motors Limited. The Registrar of Companies also examined the scheme in detail and filed an affidavit stating no objections to the proposed scheme, affirming its conformity with legal requirements and the interests of stakeholders. The court found no infirmity or objectionable features in the scheme, noting the unanimous approval by shareholders and creditors. The scheme was deemed to be in the best interests of the Company and its stakeholders, with no adverse impact on creditors' rights or shareholders' liabilities. After hearing arguments from both parties, the court granted sanction to the proposed scheme of amalgamation/demerger, subject to approval by other High Courts where the other two companies involved were based. The court directed the preparation of an order in accordance with the Companies (Court) Rules and instructed the petitioner to pay the fees of the standing counsel for the Central Government. Ultimately, the court approved the scheme, emphasizing the importance of shareholders' and creditors' approval in the absence of any illegality, ensuring the scheme's administrative and economic benefits for the companies involved.
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