2020 (9) TMI 802 - Tri - Companies Law

Sanction of Scheme of Arrangement - Sections 230 to 232 read with Section 66 of the Companies Act, 2013 - HELD THAT - From the material on record, the Scheme appears to be fair and reasonable and is not in violation of any provisions of law and is not contrary to any public policy. None of the parties concerned have come forwarded to oppose the Scheme of Arrangement - Since all the requisite statutory compliances have been fulfilled, Company Scheme Petition filed by the Petitioner Companies are made absolute in terms of prayer clause (a) (b) of Company Scheme Petition. All concerned regulatory authorities to act on a certified copy of this order along with the Scheme duly certified by the Deputy/ Assistant Registrar, National Company Law Tribunal, Mumbai Bench.

Summary

Issues:
1. Sanction sought under Sections 230 to 232 read with Section 66 of the Companies Act, 2013 for a Scheme of Arrangement.
2. Approval of Scheme of Arrangement by respective Board of Directors.
3. Rationale for the Scheme of Arrangement.
4. Compliance with statutory requirements and affidavits filed.
5. Response to objections raised by unsecured creditors.
6. Report of the Regional Director and clarifications provided by the Petitioner Companies.
7. Fairness and legality of the Scheme of Arrangement.
8. Directions for stamp duty adjudication and filing with regulatory authorities.

Analysis:

1. The judgment pertains to a Scheme of Arrangement seeking sanction under Sections 230 to 232 read with Section 66 of the Companies Act, 2013. The Scheme involves the demerger of a Product Business from one company to another, along with a reduction of share capital.

2. The approval of the Scheme by the respective Board of Directors of the involved companies plays a crucial role in the legal process. Board Resolutions supporting the Scheme were passed by the companies, demonstrating internal approval.

3. The rationale behind the Scheme of Arrangement includes the segregation of businesses, allowing independent growth strategies for each company, enhancing valuation and flexibility in accessing capital, and enabling separate collaborations and expansions for the companies involved.

4. The Petitioner Companies have demonstrated compliance with statutory requirements, including filing necessary affidavits with the National Company Law Tribunal, Mumbai Bench. Undertakings to fulfill all statutory requirements have been accepted by the Tribunal.

5. Responses to objections raised by unsecured creditors have been addressed, with the Petitioner Companies settling outstanding amounts and providing proof of payment. Unsecured creditors who initially opposed the scheme did not appear before the Tribunal to maintain their objections.

6. The Regional Director's report highlighted certain observations related to accounting standards and the effective dates of the Scheme. The Petitioner Companies responded to these observations, ensuring compliance with accounting standards and the appointed date as specified in the Scheme.

7. The Tribunal found the Scheme to be fair, reasonable, and in compliance with the law, with no opposition from concerned parties. As a result, the Company Scheme Petition was made absolute by the Tribunal.

8. Directions were issued for stamp duty adjudication and filing the Scheme with regulatory authorities within specified timelines to complete the legal process and ensure compliance with all necessary formalities. Interested parties were given the liberty to apply for any necessary directions related to the matter.