2013 (11) TMI 1783 - HC - Companies Law

Summary

Issues involved:
Petitions filed for sanction of a Scheme of arrangement involving De-merger and Transfer of Undertaking u/s 391 and 394 of Companies Act, 1956.

Details of the Judgment:

De-merger and Transfer of Undertaking:
The petitions were filed by two companies, Quick Flight Limited and Shreno Limited, for the purpose of obtaining the sanction of the Court to a Scheme of arrangement involving De-merger and Transfer of the de-merged Aviation Undertaking of Quick Flight Limited to Shreno Limited, along with the Restructure of Share Capital of Quick Flight Limited. Quick Flight Limited is a wholly owned subsidiary of Shreno Limited, engaged in chartered aviation services, aircraft hiring, and other activities, while Shreno Limited is involved in glass manufacturing, engineering solutions, and real estate business. The de-merger was deemed necessary for operational efficiency and realignment of business operations due to different market segments and management requirements. The proposed Scheme outlined commercial advantages for both companies and stakeholders.

Restructure of Share Capital:
As part of the de-merger, the De-merged Company proposed to restructure its Share Capital by cancelling the Preference Share Capital and reducing the Equity Share Capital. Meetings of Equity Shareholders and Preference Shareholders were dispensed with due to written consent letters from all shareholders approving the scheme. The Court directed a meeting of Equity Shareholders of the Resulting Company for approval, which was duly convened and approved unanimously. The petitions for the sanction of the Scheme were admitted, and no objections were received post-publication.

Observations and Compliance:
The Regional Director, Ministry of Corporate Affairs, raised several observations related to unsecured creditors, licenses, tax liabilities, compliance with the Income Tax Act, transfer of Authorised Capital, and restructuring of share capital. Responses were provided addressing each concern, including assurances of compliance, payment of tax liabilities, and transfer of entitlements. The Court considered all contentions, submissions, and judgments, concluding that the Scheme was in the interest of shareholders, creditors, and the public, thus sanctioning the Scheme and granting the requested reductions and prayers.

Disposition and Directions:
The petitions were disposed of, costs to the Central Govt. Standing Counsel were quantified, and directions were given for stamp duty adjudication and filing with relevant authorities. Filing and issuance of drawn-up order were dispensed with, and concerned authorities were directed to act on the authenticated copy of the order promptly.

Conclusion:
The Court sanctioned the Scheme of arrangement involving De-merger and Transfer of Undertaking, restructure of Share Capital, and addressed observations raised by the Regional Director, ensuring compliance and shareholder interests were protected.