2022 (5) TMI 584 - Tri - Companies Law

Sanction of Scheme of Arrangement - Sections 230 to 232 and other applicable provisions of the Companies Act, 2013 read with the Companies (Compromises, Arrangements and Amalgamations) Rules, 2016 - HELD THAT - There appears to be no reservation to grant sanction to the Scheme and the sanction of the present Scheme is not against public policy, nor it would be prejudicial to the public interest at large. In addition to above, all the statutory compliance seems to have been complied with by the Petitioner Companies, therefore, the present Company Petition deserves to be allowed in terms of its Prayer clause. The scheme is sanctioned - application allowed.

Issues Involved:
1. Approval of the Scheme of Arrangement between Dhampur Sugar Mills Limited (Demerged Company) and Dhampur Bio Organics Limited (Resulting Company).
2. Compliance with statutory requirements and observations by regulatory authorities.
3. Accounting treatment and financial implications of the Scheme.
4. Impact of pending legal proceedings on the Scheme.
5. Issuance and allotment of shares post-demerger.
6. Public interest and policy considerations.

Detailed Analysis:

1. Approval of the Scheme of Arrangement:
The present Joint Company Petition was filed under Sections 230 to 232 and other applicable provisions of the Companies Act, 2013, seeking sanction for the Scheme of Arrangement between Dhampur Sugar Mills Limited and Dhampur Bio Organics Limited. The Scheme involves the demerger of the Demerged Undertaking of Dhampur Sugar Mills Limited and its vesting in Dhampur Bio Organics Limited from April 1, 2021. The Scheme was approved by the Board of Directors of both companies on June 7, 2021, and was forwarded to the Securities and Exchange Board of India, with no adverse observations from BSE and NSE.

2. Compliance with Statutory Requirements and Observations by Regulatory Authorities:
The Tribunal noted that the Petitioners complied with the procedural requirements, including convening meetings of Equity Shareholders, Secured Creditors, and Unsecured Creditors, which approved the Scheme with requisite votes. Notices were served to the Regional Director, RoC Kanpur, Income Tax Authority, and other regulatory authorities, and the hearing was published in widely circulated newspapers. The Regional Director's report highlighted pending prosecution under the Companies (Acceptance of Deposits) Rules, 2014, and issues related to borrowing limits and accounting treatment. The Tribunal addressed these concerns and directed compliance with the relevant provisions of the Companies Act, 2013.

3. Accounting Treatment and Financial Implications:
The Scheme's accounting treatment was confirmed to be in conformity with the Accounting Standards prescribed under Section 133 of the Companies Act, 2013. The Tribunal directed that any difference in the value of assets and liabilities transferred should be credited or debited to the Capital Reserve in the Resulting Company's books, ensuring compliance with applicable Accounting Standards.

4. Impact of Pending Legal Proceedings on the Scheme:
The Tribunal noted the pending prosecution against Dhampur Sugar Mills Limited but clarified that the offence is compoundable under Section 441 of the Companies Act, 2013. Since both companies will continue to exist post-demerger, any legal proceedings can continue as per law.

5. Issuance and Allotment of Shares Post-Demerger:
The Resulting Company is required to issue Equity Shares to the shareholders of the Demerged Company upon the Scheme's effectiveness, and the existing shareholding of the Resulting Company held by the Demerged Company will be canceled.

6. Public Interest and Policy Considerations:
The Tribunal concluded that the Scheme is not against public policy and would not be prejudicial to public interest. Statutory compliance was verified, and the Scheme was found to be just and equitable, benefiting the Petitioner Companies and their stakeholders.

Conclusion:
The Tribunal approved and sanctioned the Scheme of Arrangement, directing the Petitioner Companies to act per the Scheme's terms and conditions. The order clarified that it does not grant any tax exemptions and required the Petitioner Companies to deliver a certified copy of the order to the Registrar of Companies, Uttar Pradesh, within thirty days. The Scheme will be binding on all stakeholders and regulatory authorities, with liberty for any interested person to apply for further directions if necessary. The Company Petition was allowed and disposed of accordingly.

← Previous Next →