2016 (5) TMI 519 - HC - Companies Law

Scheme of Amalgamation - Held that - Sanction to the present Scheme of Arrangement approved by a majority of statutory requirement.

Summary

Issues:
1. Scheme of Arrangement under Sections 391 to 394 of the Companies Act, 1956 for Demerger of Industrial Undertaking.
2. Dispensation of meetings of Equity Shareholders, Secured Creditors, and Unsecured Creditors.
3. Modification of order for convening and holding creditor meetings.
4. Sanction of Scheme of Arrangement for Resulting Company.
5. Observations by Regional Director and responses by the petitioner Resulting Company.
6. Grant of sanction to the Scheme of Arrangement.

Analysis:

1. The petitions were filed seeking the sanction of the Court for a Scheme of Arrangement under Sections 391 to 394 of the Companies Act, 1956, specifically for the Demerger of an Industrial Undertaking. Crystal Ceramic Industries Private Limited, the Demerged Company, sought dispensation of the Equity Shareholders' meeting and directions for the Secured and Unsecured Creditors' meetings. The Court ordered the dispensation of the Equity Shareholders' meeting and directed the creditor meetings to be held on specific dates, appointing Chairmen for the meetings.

2. The petitioner later filed for modification of the order to hold the meetings at a different venue, which was allowed by the Court. Notices were sent to all creditors, and public notices were published regarding the adjourned meetings. The Chairman Reports confirmed creditor approval of the Scheme by a majority above the statutory requirement. The Resulting Company also sought dispensation of meetings for Equity Shareholders and Unsecured Creditors, which was granted by the Court.

3. Subsequently, the petitioners sought sanction for the Scheme of Arrangement through separate Company Petitions. The Court admitted the petitions, directed notice issuance to the Regional Director, and ordered publication in newspapers. The petitioners complied with the publication requirements and filed affidavits supporting the same.

4. The Regional Director raised observations related to accounting treatment, compliance with FEMA and RBI guidelines, submission of property schedules, and comments from the Income Tax Department. The Resulting Company responded to each observation, clarifying misconceptions and affirming compliance with applicable regulations. The Court considered the Scheme, the Regional Director's report, and the responses before granting sanction to the Scheme of Arrangement.

5. The Court sanctioned the Scheme, determined the costs, and instructed the petitioners to lodge a copy of the order and Scheme for stamp duty adjudication. Additionally, the petitioners were directed to file copies with the Registrar of Companies electronically and physically. The issuance of the drawn-up order was dispensed with, and authorities were instructed to act on authenticated copies promptly.

6. Finally, the Court disposed of the petitions, concluding the legal proceedings related to the Scheme of Arrangement for the Demerger of the Industrial Undertaking into the Resulting Company.