2016 (2) TMI 205 - HC - Companies Law

Scheme of Arrangement - Held that - As on the basis of the material on record that the present Scheme of Arrangement would be in the interest of the shareholders and creditors of all the companies as well as in the public interest, therefore, the same deserves to be sanctioned.

Summary

Issues:
1. Sanction of Scheme of Amalgamation under Sections 391 to 394 of the Companies Act, 1956.
2. Dispensation of meetings of Equity Shareholders and Unsecured Creditors.
3. Observations and report by the Official Liquidator.
4. Directions regarding preservation of books of accounts, papers, and records.
5. Compliance with observations by the Regional Director, Ministry of Corporate Affairs.
6. Sanctioning of the Scheme of Arrangement.

Analysis:
1. The petitions were filed for obtaining the sanction of the High Court for a Scheme of Amalgamation between two companies belonging to the same management group. The purpose was to consolidate business operations and streamline the organizational structure. The advantages of the proposed amalgamation were detailed in the petitions.

2. Meetings of Equity Shareholders and Unsecured Creditors of both companies were dispensed with due to the consent letters provided by all parties. No objections were received after due publication and the petitions were admitted. The Official Liquidator confirmed that the Transferor Company's affairs were conducted within its object clauses and not prejudicial to members or public interest.

3. The Official Liquidator recommended dissolving the Transferor Company without winding up but sought directions to preserve books of accounts and records. The Court directed the Transferee Company to preserve these and comply with statutory liabilities even after the Scheme is sanctioned.

4. Observations by the Regional Director included payment of necessary fees for name alteration and compliance with Income Tax provisions. The Court found these observations no longer relevant, concluding that the Scheme would benefit shareholders, creditors, and the public interest, hence granting the prayers in the Company Petitions.

5. Costs to the Central Govt. Standing Counsel and the Official Liquidator were quantified and directed to be paid by the respective parties. The petitioner companies were instructed to lodge assets schedules, file copies of the order and Scheme with relevant authorities, and expedite necessary actions without the need for drawn-up orders.

6. The Court dispensed with filing and issuance procedures, directing all authorities to act on the order promptly. The Registrar was instructed to issue an authenticated copy of the order and Scheme without delay.