2015 (12) TMI 1722 - HC - Companies Law

Scheme of demerger - directions to convene meeting of the Equity Shareholders of Resulting Company/ Petitioner Company II and secured and unsecured creditors of the Resulting Company and Equity Shareholders, secured and unsecured creditors of Demerged Company/ Petitioner Company I - Held that - The Scheme is for the benefit of all the members of the companies. The creditors of the companies are in no way affected or prejudiced by the approval of the scheme. In this view of the aforesaid factual matrix, when all the Equity Shareholders and unsecured creditors of the Quatrro Business Support Services Private Limited (Demerged Company/ Petitioner Company I) and secured and unsecured creditors of the Quatrro Global Services Private Limited (Resulting Company/ Petitioner Company II) have given their consent to the Scheme of Arrangement, I do not find any reason to decline the prayer to dispense with their meeting. Accordingly, their meeting is dispensed with. There is no secured creditor of petitioner company I. As far as the prayer of counsel for the petitioner regarding convening the meeting of Equity Shareholders of the petitioner company II, is concerned, the prayer is justified. Accordingly, it is directed that a meeting of Equity Shareholders of the petitioner company II be convened accordingly. The scheme put up in the meeting of the Equity Shareholders shall be approved/ decided by the majority in number and by minimum 75% in value of the Equity Shareholders present and voting either in person or proxy.

Summary

Issues:
1. Directions to convene meeting of Equity Shareholders of the Quatrro Global Services Private Limited and dispensation of meetings of secured and unsecured creditors.
2. Approval of the Scheme of Arrangement under Sections 391-394 of the Companies Act, 1956.
3. Confirmation of no pending investigations or proceedings against the petitioner companies under Sections 235 to 251 of the Act.
4. Convening a meeting of Equity Shareholders of the petitioner company II.

Issue 1: Directions to convene meeting of Equity Shareholders and dispensation of meetings of secured and unsecured creditors:
The petition under Sections 391-394 of the Companies Act sought directions to convene a meeting of Equity Shareholders of Quatrro Global Services Private Limited and dispensation of meetings of secured and unsecured creditors of the Resulting Company and Equity Shareholders, secured and unsecured creditors of the Demerged Company. The petitioner companies confirmed that all Equity Shareholders and unsecured creditors of the Demerged Company and secured and unsecured creditors of the Resulting Company had consented to the Scheme of Arrangement. Consequently, the court dispensed with the meetings of these stakeholders.

Issue 2: Approval of the Scheme of Arrangement:
The Scheme of Arrangement, approved by the Board of Directors of the petitioner companies, involved the merger of the Demerged Undertaking into Quatrro Global Services Private Limited. The court noted that all Equity Shareholders and unsecured creditors of the Demerged Company had consented to the scheme, and there were no pending investigations or proceedings against the petitioner companies under Sections 235 to 251 of the Act. The court found the Scheme to be beneficial to all members of the companies, with no adverse impact on creditors. Consequently, the court approved the Scheme and dispensed with the meetings of the concerned stakeholders.

Issue 3: Confirmation of no pending investigations or proceedings:
The petitioner companies confirmed that there were no investigations or proceedings pending against them under Sections 235 to 251 of the Companies Act. This confirmation was crucial in determining the eligibility and appropriateness of the Scheme of Arrangement under Sections 391-394 of the Act.

Issue 4: Convening a meeting of Equity Shareholders of petitioner company II:
Regarding the prayer to convene a meeting of Equity Shareholders of the petitioner company II, the court found it justified. A meeting was directed to be convened at a specified venue, date, and time. The court appointed a Chairman and Co-Chairman for the meeting, with their fees and expenses to be borne by the company. The meeting was to be conducted in accordance with the law, with due notification to all concerned parties. The approval of the scheme in the meeting was to be decided by the majority in number and by a minimum of 75% in value of the Equity Shareholders present and voting. Proxies were not to exceed 50% of the quorum for the meeting.

This detailed analysis of the judgment covers the issues involved comprehensively, addressing the directions for convening meetings, approval of the Scheme of Arrangement, confirmation of no pending investigations, and the process for convening a meeting of Equity Shareholders of the petitioner company II.