2015 (12) TMI 1718 - HC - Companies Law

Scheme of Arrangement in the nature of Demerger - Held that - It appears to the Court that the consent of all the Equity Shareholders and the Unsecured Creditor of the applicant Company has been obtained. In view of the above, the meetings of the Equity Shareholders and the Unsecured Creditor of the applicant Company are ordered to be dispensed with.

Summary

Issues:
Dispensation of meetings of Equity Shareholders and Unsecured Creditors in a Scheme of Arrangement.

Analysis:
The judgment delivered by Honourable Smt. Justice Abhilasha Kumari of the Gujarat High Court pertains to the application filed by Excellent Glass and Ceramic Private Limited, the Resulting Company in a Scheme of Arrangement involving the Demerger of an Industrial Undertaking. The applicant sought dispensation of meetings of Equity Shareholders and Unsecured Creditors on the basis that all Equity Shareholders and the sole Unsecured Creditor had provided written consent approving the Scheme. The applicant submitted consent letters from the Equity Shareholders and the Unsecured Creditor, along with certificates from a Chartered Accountant confirming the consent. The Court, after hearing the applicant's counsel and examining the evidence, noted that the consent of all Equity Shareholders and the Unsecured Creditor had been obtained. Consequently, the Court ordered the dispensation of meetings of the Equity Shareholders and Unsecured Creditor of the applicant Company.

In this case, the key issue revolved around the dispensation of meetings of Equity Shareholders and Unsecured Creditors in a Scheme of Arrangement. The applicant, Excellent Glass and Ceramic Private Limited, demonstrated that all necessary parties had provided written consent for the Scheme, eliminating the need for physical meetings. The Court, upon verifying the evidence presented, acknowledged the compliance with consent requirements and granted the requested dispensation. This judgment underscores the significance of obtaining valid consent from relevant stakeholders in corporate transactions to streamline the legal process and ensure compliance with regulatory requirements.

Overall, the judgment reflects a straightforward application of dispensation of meetings in a Scheme of Arrangement scenario where all Equity Shareholders and the sole Unsecured Creditor had consented in writing. The Court's decision to dispense with the physical meetings was based on the clear demonstration of consent through documented evidence, emphasizing the importance of adherence to procedural formalities in corporate restructuring matters. The outcome highlights the efficiency and effectiveness of the legal process when parties fulfill their obligations and provide requisite approvals in the prescribed manner.