2016 (7) TMI 278 - HC - Companies Law

Demerger and Transfer of Demerged Undertaking - seeking dispensation and directions for convening meeting - Held that - As ordered a meeting of the Unsecured Creditors of the Applicant Company shall be convened and held at the registered office of the Applicant Company for the purpose of considering and if thought fit, approving with or without modifications, the Composite Scheme of Arrangement in the nature of demerger and transfer of Trading Undertaking of Priyal International Private Limited to Shroff Wholesome Living Farms Private Limited as well as the Restructure of Capital of in form of Utilization of Security Premium Account of Priyal International Private Limited, the Applicant Demerged Company, as proposed between the company and its creditors. At least 21 clear days before the meeting to be held as aforesaid, Notice convening the said meeting, indicating the day, the date, the place and the time as aforesaid, together with a copy of the Scheme of Arrangement, copy of the Explanatory Statement required to be sent under Section 393 of the Companies Act, 1956 and the prescribed Form of Proxy shall be sent to each of the Unsecured Creditors of the Applicant Company, at their last known address. Also the rules for appointment of chairman, quorum of meeting, voting by proxy and other relevant provision of Companies act should be strictly adhered to.

Summary

Issues:
1. Dispensation of Equity Shareholders meeting
2. Directions for convening Unsecured Creditors meeting
3. Dispensation of procedure under Companies Act, 1956
4. Confirmation of no Secured Creditors

Issue 1: Dispensation of Equity Shareholders meeting
The application sought dispensation of the meeting of Equity Shareholders as all shareholders had approved the scheme through written consent letters, which were annexed with the application. The court granted dispensation based on the approval received from all Equity Shareholders, considering the facts and circumstances presented.

Issue 2: Directions for convening Unsecured Creditors meeting
The court ordered a meeting of Unsecured Creditors to be convened and held to consider and approve the proposed Scheme of Arrangement. Notices were to be sent to Unsecured Creditors at least 21 days before the meeting, along with a copy of the Scheme, Explanatory Statement, and Form of Proxy. The list of Unsecured Creditors was required to be placed on record, and notices of the meeting were to be published in specified newspapers.

Issue 3: Dispensation of procedure under Companies Act, 1956
The court dispensed with the procedure prescribed under Section 101(2) of the Companies Act, 1956, and under rule 48 to 65 of the Companies (Court) Rules 1959. It was held that the procedure was not necessary to be followed based on the submissions made regarding the proposed Restructure of Capital and the approval granted by Equity Shareholders.

Issue 4: Confirmation of no Secured Creditors
It was confirmed that there were no Secured Creditors of the Applicant Company, as verified by a certificate issued by a Chartered Accountant. Consequently, directions were given to convene a meeting of only Unsecured Creditors for consideration of the proposed Scheme.

In conclusion, the court disposed of the application after addressing all the issues raised, including dispensation of the Equity Shareholders meeting, directions for convening the Unsecured Creditors meeting, dispensation of certain procedures under the Companies Act, and confirmation of the absence of Secured Creditors. The detailed orders and directions were provided for the conduct of the Unsecured Creditors meeting, ensuring transparency and compliance with legal requirements.