2016 (6) TMI 1060 - HC - Companies Law

Composite Scheme of Arrangement in the nature of Demerger and Transfer of the demerged Undertaking - Held that - Considering all the facts and circumstances and taking into account all the contentions raised by the affidavits and reply affidavits, undertakings provided vide the additional affidavit dated 21st June 2016, the observations made by the Regional Director, Ministry of Corporate Affairs, have been suitably addressed and hence do not survive. This court has come to the conclusion that the present scheme of arrangement is in the interest of its shareholders and creditors as well as in the public interest and the same deserves to be sanctioned. Prayers in terms of paragraph 16 (a) of the Company Petitions No. 177, 178 and 179 of 2016 are hereby granted.

Summary

Issues involved:
Petitions for sanction of Composite Scheme of Arrangement involving Demerger and Transfer of Undertakings, Meetings dispensation, Official Liquidator's report, Central Government's observations, Compliance with statutory requirements, Sanction of the scheme, Costs quantification, Lodging of order copy for stamp duty adjudication, Filing with Registrar of Companies, Drawn up order dispensation, Implementation directives.

Analysis:
The petitions filed by three companies seek approval for a Composite Scheme of Arrangement involving the Demerger and Transfer of the Treasury Business Undertaking of one company to another, and the amalgamation of the residue undertaking with a third company. The scheme aims to streamline the organization structure and achieve commercial synergies by segregating activities. The petitions detail the benefits anticipated from the scheme.

Meetings of shareholders and creditors were dispensed with based on consent letters, and the petitions were admitted after due advertisement and no objections received. The Official Liquidator's report suggested dissolution of the Transferor Company without winding up, subject to preserving records as per statutory requirements.

Central Government's observations were addressed through submissions and affidavits, confirming compliance with Income Tax Act provisions and no objections from relevant authorities. The Regional Director's concerns were suitably addressed, leading the court to conclude that the scheme is in the interest of stakeholders and public, warranting sanction.

The court granted the prayers in the petitions, disposed of the same, and quantified costs to be paid to the Central Government and Official Liquidator. Directives were issued for lodging the order copy for stamp duty adjudication, filing with the Registrar of Companies, and dispensing with the drawn-up order. Authorities were instructed to act on the order promptly.

In conclusion, the judgment sanctioned the Composite Scheme of Arrangement, ensuring compliance with statutory requirements, addressing concerns raised by authorities, and providing directives for implementation and filing with relevant bodies.