2011 (3) TMI 1744 - HC - Companies Law

Summary

Issues involved:
The judgment involves the sanction of a Scheme of Arrangement for De-merger and transfer of a division from one company to another u/s 391 and 394 of the Companies Act, 1956.

Details of the Judgment:

Issue 1: Scheme of Arrangement for De-merger and transfer
- Two companies, Nirma Credit & Capital Private Limited and Nirma Limited, filed petitions for the sanction of a Scheme of Arrangement involving the De-merger and transfer of the Cement and Mining Division from Nirma Credit & Capital Private Limited to Nirma Limited.
- Nirma Limited, the Resulting Company, is a Listed Public Limited Company engaged in various activities, including setting up a Cement plant and obtaining mining rights in Gujarat.
- The De-merged Company, Nirma Credit & Capital Private Limited, is engaged in Finance and Investment Division and Cement and Mining Division.
- The proposed Demerger is aimed at consolidating the Cement and Mining activities in one entity for better economics of scale, administrative convenience, and optimal resource utilization.
- The Resulting Company will pay consideration based on the fair market price of the division to the De-merged company.

Issue 2: Shareholder Approval
- Equity Shareholders of the Resulting Company approved the scheme with a statutory majority of 95.53% in number and 99.99% in value at a meeting convened for this purpose.
- Equity Shareholders and Unsecured Creditors of the De-merged Company also provided consent for the scheme.

Issue 3: Compliance and Objections
- The petitions for sanction were admitted, and notices were duly advertised in newspapers and gazettes.
- No objections were raised against the petitions even after publication.
- The Central Government raised concerns regarding the consideration, details of assets and liabilities, shareholder voting, and compliance with Accounting Standard-14.
- The issues raised by the Central Government were addressed in an Additional Affidavit, clarifying the legal provisions and compliance aspects.

Conclusion:
- The court granted the prayers made by the petitioner companies in the petitions.
- The petitions were disposed of, and costs to be paid to the Central Government Standing Counsel were quantified at Rs. 3,500 per petition.

This judgment approves the Scheme of Arrangement for De-merger and transfer of the Cement and Mining Division from Nirma Credit & Capital Private Limited to Nirma Limited, ensuring compliance with legal provisions and addressing concerns raised during the process.