2016 (8) TMI 392 - HC - Companies Law

Scheme of arrangement between Composite Scheme of Arrangement - Held that - The observations made by the Regional Director having been addressed and the Official Liquidator having opined that the affairs of the petitioner company have not been conducted in the manner prejudicial to the interest of its members or to the public interest, in the opinion of this court it does not appear to be any impediment to the grant of sanction to the Scheme of Arrangement, in as much as from the material on record and on perusal of the Scheme, the scheme appears to be fair and reasonable and is not violative of any of public policy. The arrangement under the proposed scheme appears to be in the interest of the companies and its members and creditors and, therefore deserves to be sanctioned. Accordingly, the Scheme as proposed by the petitioner companies is hereby sanctioned. The same shall be binding upon all the equity shareholders, preference shareholders, secured creditors, unsecured creditors of the petitioner Companies and all other agencies, departments and authorities of the Central, State and any other local authorities. It is ordered that as required under section 396A of the Companies Act, 1956, the transferor companies shall not dispose of or destroy their books of accounts and other connected papers without the prior consent of the Central Government and shall preserve the same. The petition is disposed of accordingly. So far as the cost to be paid to the Central Government Counsel is concerned, the same is quantified at ₹ 7,500/- per petition. The same may be paid to the Counsel appearing for the Central Government. The Official Liquidator shall be paid cost of ₹ 7,500/- per petition.The Petitioner Companies are further directed to lodge a copy of this order, the schedules of immovable assets pertaining to the Transferor Companies as on the date of this order and the Scheme duly authenticated by the Registrar, High Court of Gujarat, with the concerned Superintendent of Stamps, for the purpose of adjudication of stamp duty, if any, on the same within 60 days from the date of the order.

Summary

Issues involved:
Petition for sanction of a scheme of arrangement under Companies Act, 1956 and Companies Act, 2013.

Analysis:

1. Scheme of Arrangement:
The petition was filed for the sanction of a scheme of arrangement between three companies under Sections 391 to 394 of the Companies Act, 1956 and corresponding provisions of the Companies Act, 2013. The scheme aimed at benefiting shareholders, creditors, employees, and other stakeholders by enhancing shareholder value, operational efficiencies, and revenue growth opportunities.

2. Meetings Dispensed With:
Meetings of equity shareholders, secured creditors, and unsecured creditors of the transferor and transferee companies were dispensed with based on written consent letters and court orders. The rights and interests of unsecured creditors were deemed unaffected by the scheme, and no compromise or arrangement was offered to them.

3. Compliance Issues:
The Regional Director highlighted compliance concerns related to RBI guidelines, Accounting Standards - 14, and provisions of the Income Tax Act and Rules. The petitioner companies and the transferee company undertook to comply with these regulations through affidavits submitted to the court.

4. Observations and Opinions:
The Regional Director's observations, including compliance issues and the absence of complaints against the petitioner companies, were addressed. The Official Liquidator opined that the companies' affairs were not prejudicial to their members' interests, suggesting dissolution without winding up.

5. Sanction of Scheme:
After reviewing the material on record and the scheme's fairness, reasonableness, and compliance with public policy, the court sanctioned the proposed scheme of arrangement. The scheme was deemed to be in the interest of the companies, their members, and creditors, and binding on all relevant parties.

6. Post-Sanction Directions:
The court issued directions regarding the preservation of books of accounts, payment of costs to the Central Government Counsel and Official Liquidator, adjudication of stamp duty, filing of orders and scheme copies with relevant authorities, and maintenance of records by the registry.

7. Conclusion:
The petition was disposed of with the scheme's sanction, emphasizing compliance with regulatory requirements, fairness, and the scheme's benefits to stakeholders. The court's orders and directions aimed at ensuring the effective implementation and legal compliance of the sanctioned scheme.