2015 (7) TMI 176 - HC - Companies Law

Application for scheme of Arrangement under sections 391 and 394 of the Companies Act, 1956 - Held that - no objection has been received to the Scheme of Arrangement from any other party. Mr NPS Chawla, Advocate for the Petitioner Companies has filed an affidavit dated 11th March, 2013, confirming that he has not received any objection pursuant to citations published in the newspapers. - In view of the approval accorded by the Shareholders and Creditors of the Petitioner Companies; representation filed by the Regional Director, Northern Region, Ministry of Corporate Affairs, there appears to be no impediment to the grant of sanction to the Scheme of Arrangement. Consequently, sanction is hereby granted to the Scheme of Arrangement under sections 391 and 394 of the Companies Act, 1956. - Decided in favour of appellant.

Summary

Issues:
Petition filed under sections 391-394 of the Companies Act, 1956 seeking sanction for a Scheme of Arrangement between two companies. Compliance with statutory requirements, observations by Regional Director, approval by shareholders and creditors, transfer of assets and liabilities, tax implications, objections received, and voluntary deposit to Common Pool Fund.

Analysis:
The petition was filed by the Petitioner Companies under sections 391-394 of the Companies Act, 1956 seeking approval for a Scheme of Arrangement between two companies. The Court had earlier directed the convening of meetings for shareholders and creditors, which resulted in unanimous approval of the Scheme by the attendees. The Regional Director raised several observations regarding the Scheme, including concerns about employee transfers, compliance with statutes and regulations, the appointed date, assets not reflected in financial statements, and lease agreements. The Petitioner Companies responded to each observation, providing assurances and explanations to address the concerns raised.

One of the key observations by the Regional Director was related to the appointed date and the incorporation date of one of the companies involved. The Petitioner Companies clarified that the Scheme was based on the balance sheet as of 31st March 2012, and the appointed date was for identification and quantification purposes only. They cited previous judgments to support their position on the matter.

Regarding the transfer of assets like Power Station and Boundary Wall, the Petitioner Companies clarified that these assets were part of the Demerged Undertaking and were reflected in the Scheme's Schedule of Assets and Liabilities. They also addressed concerns about lease agreements and premium payments to Andhra Pradesh Industrial Infrastructure Corporation Ltd, stating that the amounts were accounted for in the Scheme and had been paid as per the requirements.

The Court considered the compliance of the Scheme with Section 2(19AA) of the Income Tax Act, 1961, emphasizing that such compliance was relevant for tax neutrality determination by the Income Tax Department and not a precondition for the Court's sanction. The Petitioner Companies provided certification from their statutory auditor and referred to a previous judgment to support their stance on this issue.

With no objections received from any other party and approval from shareholders and creditors, the Court granted sanction to the Scheme of Arrangement under sections 391 and 394 of the Companies Act, 1956. The Petitioner Companies were directed to comply with statutory requirements and file a certified copy of the order with the Registrar of Companies within 30 days. Additionally, a voluntary deposit to the Common Pool Fund of the Official Liquidator was agreed upon by the Petitioner Companies.