2016 (3) TMI 1249 - HC - Companies Law

Scheme of Arrangement - Held that - The scheme envisages the amalgamation of applicant no.1/ transferor company with applicant no.2/ transferee company. It also envisages, thereafter, the demerger of the industrial division, which would, merge with resulting company no.1; while the investment business would get demerged,and thereafter, would stand merged with resulting company no.2. The high end business centre would, however, remain with applicant no.2/ transferee company. The resulting company no.1 and resulting company no.2 would act as special purpose vehicles which would absorb the industrial business and the investment division respectively. This, in nutshell, are the broad contours of the proposed scheme. A prayer has been made to dispense with the requirement of convening meetings of the shareholders of the applicants and unsecured creditors of the transferee/demerged company. The letters of consent submitted by the shareholders have been seen and examined. They are found in order. Similarly, letters of consent of the unsecured creditors of the transferee/demerged company have been seen and found in order. Accordingly, the prayer made for dispensing with the requirement of convening meetings of the aforementioned class of persons is allowed

Summary

Issues: Application under sections 391 to 394 of the Companies Act, 1956 for approval of Composite Scheme of Arrangement involving merger and demerger of companies.

Analysis:
1. The application filed by Ecotrust Capital Private Limited, Chemical and Metallurgical Design Company Limited, Unisystems Packers, and Talentgenie Consultants Private Limited sought approval for a Composite Scheme of Arrangement under sections 391 to 394 of the Companies Act, 1956. The scheme involved the merger of the transferor company with the transferee company, followed by the demerger of the industrial division and investment business into resulting companies. The purpose was to merge the industrial division with resulting company no. 1 and the investment business with resulting company no. 2, while the high-end business center would remain with the transferee company.

2. The registered office of the companies was in Delhi, falling within the territorial jurisdiction of the Delhi High Court where the application was made.

3. Details regarding the authorized, issued, subscribed, and paid-up capital of the companies were provided in the scheme, along with copies of the Memorandum and Articles of Association and the latest audited annual accounts.

4. The applicants confirmed that no proceedings were pending against them under Sections 235 to 251 of the Companies Act.

5. The Board of Directors of the companies had approved the scheme, and copies of the Board resolutions were submitted with the application.

6. Consent from equity shareholders and unsecured creditors was obtained for the scheme. The table presented the number of shareholders and creditors for each company along with the consent status. The application requested dispensation from convening meetings of shareholders and unsecured creditors, which was granted after examining the letters of consent.

7. As there were no secured creditors, meetings for that class were unnecessary. The prayer to dispense with the requirement of convening meetings for shareholders and unsecured creditors of the transferee/demerged company was allowed.

8. The joint application for the scheme was allowed by the Delhi High Court in the terms presented in the application.

9. The judgment was issued in Dasti, indicating that the parties involved were provided with the necessary copies of the judgment.