2016 (4) TMI 1260 - HC - Companies Law

Scheme of Arrangement in the nature of Demerger - dispensation of the meeting of the Equity Shareholders of the Applicant Company; and convening the meeting of the Unsecured Creditors of the Applicant Company. Scheme allowed.

Summary

Issues:
1. Amendment to record certificate from Chartered Accountant confirming no Secured Creditors.
2. Dispensation of meeting of Equity Shareholders and convening meeting of Unsecured Creditors.

Issue 1: Amendment to Record Certificate from Chartered Accountant
The judgment begins with an application seeking leave to amend the record to include a certificate from a Chartered Accountant confirming the absence of Secured Creditors of the Applicant Company. The certificate was inadvertently omitted but is crucial for the proceedings. The court grants leave to place the certificate on record during the day.

Issue 2: Dispensation of Meeting of Equity Shareholders and Convening Meeting of Unsecured Creditors
The application filed by the Applicant Demerged company requests dispensation of the meeting of Equity Shareholders and directions for convening the meeting of Unsecured Creditors. The Equity Shareholders have already approved the Scheme through written consent letters, which are annexed with the application. The court, considering the circumstances, grants dispensation from convening the Equity Shareholders' meeting. However, it orders the convening of a meeting of Unsecured Creditors to obtain their approval for the proposed Scheme.

The court directs that the meeting of Unsecured Creditors be held at a specified location in Gujarat. Notices, including the Scheme of Arrangement and Form of Proxy, are to be sent to each Unsecured Creditor at their last known address at least 21 days before the meeting. Additionally, the notice of the meeting is to be published in specified newspapers. The Chairman for the meeting is designated, with provisions for adjournments and decision-making powers as per the Articles of Association and relevant rules.

Furthermore, the judgment outlines the quorum for the meeting, allowing voting by proxy if the prescribed form is duly filed. The value of each Unsecured Creditor's vote is to be determined based on the company's records, with the Chairman having the final decision in case of disputes. The Chairman is required to report the meeting's results to the Court within 14 days of its conclusion, verified by affidavit.

In conclusion, the application is disposed of after addressing the issues raised regarding the dispensation of the Equity Shareholders' meeting and the convening of the Unsecured Creditors' meeting, ensuring compliance with legal procedures under the Companies Act, 1956.