2022 (6) TMI 1287 - Tri - Companies Law

Joint application for demerger of demerged undertaking of the Demerged Company - section 230-232 of Companies Act, 2013 read with Companies (Compromises, Arrangements and Amalgamations) Rules, 2016 - HELD THAT - Various directions with regard to holding, convening and dispensing with various meetings issued - directions for issuance of various notices also issued. The scheme is approved - application allowed.

Summary

Issues Involved:
1. Approval and dispensation of meetings for Equity Shareholders, Secured Creditors, and Unsecured Creditors of the Demerged Company.
2. Approval and dispensation of meetings for Equity Shareholders, Secured Creditors, and Unsecured Creditors of the Resulting Company.
3. Compliance with legal requirements for the scheme of demerger under Sections 230-232 of the Companies Act, 2013.

Detailed Analysis:

1. Approval and Dispensation of Meetings for Demerged Company:

- Equity Shareholders:
The Demerged Company has 49 equity shareholders. The company obtained consent affidavits from all shareholders, representing 100% of its total paid-up share capital. Consequently, the necessity of convening and holding the meeting is dispensed with.

- Secured Creditors:
The Demerged Company has one secured creditor. The company obtained the consent affidavit from this sole secured creditor. Therefore, the necessity of convening and holding the meeting is dispensed with.

- Unsecured Creditors:
The Demerged Company has 49 unsecured creditors with a total value of Rs. 1,09,49,683/-. The company submitted that the scheme would not jeopardize the interests of these creditors and that the undertakings are solvent to meet their liabilities post-demerger. However, considering the facts and precedents, the Tribunal directed the meeting of the unsecured creditors to be held at 11:00 AM on 20th July 2022 at the registered office of the Demerged Company or another suitable place approved by the Tribunal.

2. Approval and Dispensation of Meetings for Resulting Company:

- Equity Shareholders:
The Resulting Company has two equity shareholders who have provided their consent affidavits. Therefore, the necessity of convening and holding a meeting of equity shareholders is dispensed with.

- Secured Creditors:
The Resulting Company has no secured creditors. Hence, the necessity of convening and holding the meeting of secured creditors is dispensed with.

- Unsecured Creditors:
The Resulting Company has no unsecured creditors. Therefore, the necessity of convening and holding the meeting of unsecured creditors is dispensed with.

3. Compliance with Legal Requirements:

- Scheme Approval:
The Board of Directors of both Applicant Companies approved the proposed scheme on 14th February 2022. The appointed date for the scheme is 1st April 2022.

- Chartered Accountant Certification:
An Independent Chartered Accountant examined the scheme and certified that the accounting treatment complies with the Accounting Standards and Section 133 of the Companies Act, 2013.

- Precedents:
The Applicant Companies relied on decisions from NCLT and NCLAT in similar matters (Ambuja Cements Limited, Vodafone Idea Ltd, Mohit Agro Commodities, and Gujarat Ambuja Exports Ltd.) to support their prayer for dispensing with the meeting of unsecured creditors.

Tribunal Directions:

- Quorum and Chairperson:
The quorum for the meeting of the unsecured creditors of the Demerged Company is set at 5. Mrs. J. Bharathi is appointed as the Chairperson, and the Managing Director of the company is the alternate chairperson. Mr. G.S. Sudhir is appointed as the Scrutinizer.

- Meeting Logistics:
The meeting can be conducted physically or via video conferencing as per MCA Circulars. Notices of the meeting must be sent 30 days in advance, and advertisements must be published in specified newspapers.

- Voting and Reporting:
Voting shall be allowed in person, and the Chairperson must report the meeting results within three days. The companies must send individual notices to relevant authorities and provide copies of the scheme free of charge upon request.

- Compliance:
The Applicant Companies must comply with all directions and applicable laws, including the Companies (Compromises, Arrangements, Amalgamations) Rules, 2016, and the Companies Act, 2013.

The application stands allowed on the aforesaid terms, and the Registry is directed to forward a copy of the order to the Chairperson and Scrutinizer.