2007 (11) TMI 403 - HC - Companies Law

Summary

Issues involved: Approval of scheme of arrangement between transferor and transferee-companies, objections raised by Regional Director, compliance with Companies Act

Approval of scheme of arrangement:
The petition sought confirmation of the scheme of arrangement between the transferor and transferee-companies, focusing on demerging the Jindal Invest Division. A previous order had dispensed with the need for shareholder and creditor meetings, with only the creditors of the transferor-company required to convene a meeting. The creditors voted overwhelmingly in favor of the scheme, with no objections raised during the process. The date of the hearing was duly advertised in newspapers to ensure transparency and compliance with legal requirements.

Objections raised by Regional Director:
The Regional Director raised two objections against the scheme. Firstly, it was claimed that the individual assets and liabilities of the Jindalinvest Division were not adequately detailed in the scheme. However, an affidavit was filed to address this concern, ensuring compliance with Form 42 if the scheme was approved. Secondly, the Regional Director objected to a specific clause in the scheme regarding the allotment of shares, arguing it contradicted the valuation report. The scheme indicated shares would be allotted to the transferor-company, while the valuation report suggested shares should go to the shareholders. The court deemed both objections as untenable and rejected them, emphasizing the correct interpretation of the scheme's provisions.

Compliance with Companies Act:
Apart from the objections raised by the Regional Director, no other objections were received against the proposed scheme of arrangement. Consequently, the court allowed the petition and approved the scheme of arrangement, directing the filing of a certified copy of the order with the Registrar of Companies within 30 days. The court's decision sanctioned the scheme, ensuring compliance with the Companies Act and signaling the formal approval of the arrangement between the involved companies.