2016 (8) TMI 1051 - HC - Companies Law

Sanction of a Scheme of demerger - Held that - The Court is of the view that the observations made by Regional Director do not prevent the Court from sanctioning the Scheme of Demerger. The petitioner-Company have filed affidavit on 19.8.2016 which clearly demonstrates that the observations made by the Regional Director in his affidavit are taken care of. Moreover, there are no other objections to the scheme by anybody, as is clearly borne out from the affidavit of the Regional Director. The Court therefore is of the view that the Scheme of Demerger as proposed is in the interest of the company and their members and is not otherwise prejudicial to public interest. This Court doth hereby sanction the Scheme of Demerger set forth in the petition and this Court does hereby declare the same to be binding on the petitioner-Company and all the members and creditors of the petitioner-Company and all other concerned parties and does hereby approve the said scheme of the demerger with effect from the appointed date i.e. 1st April 2016

Summary

Issues:
1. Sanction of a Scheme of demerger by the High Court.
2. Compliance with provisions of Income Tax Act, FEMA, and RBI guidelines.
3. Disclosure of assets and liabilities in demerger scheme.
4. Benefit of Clause 6 of the Scheme to all employees.
5. Approval of the demerger scheme by all stakeholders.
6. Court's declaration and orders regarding the demerger scheme.

Analysis:

1. The petition was filed for the sanction of a Scheme of demerger transferring the non-foundary undertaking of a company to another. Meetings of stakeholders were held, and the scheme was unanimously approved. No objections were raised post-publication of the hearing notice.

2. The Regional Director's affidavit highlighted the need for compliance with various laws and guidelines, including the Income Tax Act, FEMA, and RBI guidelines. The petitioner-Company responded, assuring compliance with these provisions and clarified the benefit of Clause 6 to all employees.

3. The Court, after considering the affidavits and submissions, found that the Regional Director's observations did not hinder sanctioning the demerger scheme. The petitioner-Company addressed the concerns raised, and no other objections were raised by any party.

4. The Court determined that the demerger scheme was in the interest of the company and its members, without prejudicing public interest. Thus, the Court sanctioned the Scheme of Demerger, declaring it binding on the petitioner-Company, its members, creditors, and all other concerned parties.

5. The Court approved the demerger scheme with effect from the appointed date and issued orders for registration with the Registrar of Companies. Parties involved were given liberty to seek necessary directions related to the scheme's implementation. Additionally, a cost of ?10,000 was awarded for the petition.

6. The petition was disposed of accordingly, concluding the legal proceedings related to the sanction and approval of the demerger scheme by the High Court.