2021 (7) TMI 34 - Tri - Companies Law

Scheme of Arrangement - seeking for dispensation of the meeting of the Equity Shareholders Unsecured Creditors of Applicant Companies - Sections 230 232 of the Companies Act, 2013, R/w Companies (Compromises, Arrangements and Amalgamations) Rules, 2013 - HELD THAT - The parties have consented for the Scheme and also for dispensation of their meetings for consideration of the Scheme by the Tribunal. The Statutory Auditors/Chartered Accountants of the Demerged and Resulting Companies have issued Certificates by inter alia certifying the details with regard to Equity Shareholder, Unsecured Creditors/Secured Creditors, and compliance of accounting treatment as prescribed U/s. 133 of the Companies Act, 2013 with reference to the Scheme in question. The Companies have disclosed material information with regard to the Scheme in question. In the normal circumstances, it is the prerogative of concerned Companies to take decisions dictated by commercial expediency and evolve Scheme in their mutual business interest, and the Tribunal is only empowered to examine the Scheme broadly, so as to ensure that the Scheme is prepared in accordance with the provisions law and the interest of all the stakeholders of Companies involved, are taken care of by affording due notice of Scheme, etc. - the case is made out by the Applicants for grant of relief as sought for, by dispensing with meetings of the Equity Shareholders and Unsecured Creditors of all the Applicant Companies. Convening and holding of the meetings of the Equity Shareholders of Demerged and Resulting Companies are hereby dispensed with - Convening and holding of the meetings of the Unsecured Creditors of the Applicant Companies are hereby dispensed with - Application allowed.

Summary

Issues involved:
Joint application under Sections 230 & 232 of the Companies Act, 2013 seeking dispensation of meetings of Equity Shareholders & Unsecured Creditors for proposed Scheme of Arrangement.

Analysis:
1. Facts of the Case: The application involves two Applicant Companies, one being the Demerged Company and the other the Resulting Company. Detailed information is provided regarding the incorporation, share capital, shareholders, and creditors of both companies, along with their respective business activities and financial positions.

2. Board Resolutions & Auditor Certificates: The Board of Directors of both companies have approved the Scheme of Arrangement. Independent Auditors of the companies have issued certificates confirming compliance with accounting standards. The key rationale of the scheme is outlined, focusing on realigning business operations and transferring assets between the companies.

3. Legal Provisions & Counsel Submissions: The legal provisions under Section 230(9) of the Companies Act, 2013 empower the Tribunal to dispense with calling meetings of creditors if at least ninety per cent value agree to the scheme. The Counsel for the Applicant Companies presented arguments supporting the scheme's benefit to stakeholders and the certification provided by Chartered Accountants.

4. Tribunal Decision: After reviewing the certificates, affidavits, and scheme details, the Tribunal concluded that the case made by the Applicants warranted the relief sought. Dispensation of meetings of Equity Shareholders and Unsecured Creditors of both companies was granted. As there were no Secured Creditors, their meeting dispensation was not relevant.

5. Directions and Order: The Tribunal issued specific directions, including dispensation of shareholder and creditor meetings, notification requirements, and granting permission for filing necessary petitions for the sanction of the Scheme of Arrangement. Parties were also informed of their right to file a miscellaneous application if aggrieved by the order.

This detailed analysis covers the application's background, legal provisions, submissions made, and the Tribunal's decision, providing a comprehensive overview of the judgment delivered by the National Company Law Tribunal, Bengaluru Bench.