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Issues:
Approval of scheme of arrangement under sections 391(2) and 394 of the Companies Act; Objections raised by the Regional Director regarding the scheme's conformity with the Companies Act and accounting principles; Shareholder approval and meeting dispensation; Contention over the treatment of capital reserve arising from the scheme. Analysis: The petitioners, two companies, sought approval of a scheme of arrangement under sections 391(2) and 394 of the Companies Act to bind all shareholders and creditors. The Regional Director raised objections regarding the scheme's conformity with the Companies Act and accounting principles, specifically concerning the treatment of surplus arising from the scheme. The Regional Director contended that the surplus, termed 'arrangement/amalgamation reserve,' is of capital nature and cannot be considered a general reserve for distribution to shareholders. However, despite the objection, the shareholders unanimously approved the scheme, leading the court to find the scheme fair, reasonable, lawful, and in the shareholders' interest. The court directed the convening of separate meetings for preference shareholders and secured creditors, dispensing with the need for meetings of equity shareholders and unsecured creditors due to their written consent to the scheme. The preference shareholders and secured creditors unanimously approved the scheme in their respective meetings. The Official Liquidator submitted an affidavit supporting the scheme, highlighting the provisions related to the transfer of employees and the treatment of capital reserves. The court, after considering the submissions and finding no valid reason to exclude a specific provision objected by the Regional Director, allowed the petition and sanctioned the scheme. The court ordered the petitioner company to pay costs to the Official Liquidator and file a certified copy of the order with the Registrar of Companies within a specified timeframe.
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