2009 (5) TMI 551 - HC - Companies Law

Demerger - Compromise and arrangement - Held that - All the assets of CFS Division of the demerged Company are to be transferred into the resulting Company. Even otherwise, it is stated that the list of the fixed assets of CFS Division of the demerged company is contained in Schedule XII of the balance sheet as at 31-3-2008, a copy of which is annexed at Annexure B to Company Petition No. 5 of 2009. As per the requirements of Rule 84 of the Companies (Court) Rules, 1959 read with Form No. 42, the demerged Company will be required to submit short description of the assets to be transferred to the resulting Company for the purpose of making an order under section 394 of the Act. It is, therefore, submitted that at this stage, there may not be any need to submit a separate list of the assets. The Scheme of Arrangement annexed at Annexure D to the petition is accordingly sanctioned.

Summary

Issues:
Sanction of Scheme of Arrangement for demerger of CFS Division into another company.

Analysis:
The petitions were filed seeking sanction of a Scheme of Arrangement for the demerger of CFS Division of one company into another. The court had directed meetings of shareholders and creditors to be held for consideration of the Scheme. Due to delays in filing Chairman Reports, extensions were granted for the same. The Chairman Reports were required to be filed in compliance with earlier court orders. Similar procedures were followed for both companies involved in the demerger.

The Company Petitions seeking sanction of the Scheme were subsequently filed. The court admitted the petitions and directed the issuance of notices to the Regional Director. Notice publication in newspapers was delayed, leading to further applications for fresh hearing dates, which were granted for final hearing. The petitioners published the notice in newspapers as required and filed supporting affidavits.

In response to the notice to the Regional Director, an affidavit was filed by the Deputy ROC along with a letter from the Regional Director. Two observations were made, one regarding the financial statement submission and the other regarding details of assets and liabilities transfer. The latest financial statement was submitted, and details of assets transfer were explained, satisfying the Regional Director and the court.

After hearing the advocates, the court found that both observations were satisfied, and accordingly, the Scheme of Arrangement was sanctioned. Costs were quantified and directed to be paid by the Transferee Company to the Assistant Solicitor General. The court granted liberty for the payment to be made directly by the Transferee Company.

In conclusion, the court approved the Scheme of Arrangement for the demerger, ensuring compliance with all necessary procedures and submissions, and directed the payment of costs as specified.