2012 (11) TMI 207 - HC - Companies Law

Scheme of Arrangement - Held that - As there are nil secured creditors of the Transferee Company, therefore, the requirement of convening the meeting of secured creditors does not arise. As only six unsecured creditors representing 26.33% of the total unsecured debt have given the Board Resolutions along with the said consents. Consequently the meeting of the unsecured creditors of the Transferee Company be held on December 07, 2012 at 10 30 AM at India Habitat Centre, Lodhi Road, New Delhi as headed by the appointed Chairperson & Alternate Chairperson - if the Quorum is not present in the meetings, the meetings would be adjourned for 30 minutes and thereafter, the persons present in the meetings would be treated as proper quorum & for the purpose of computing the quorum the valid proxies shall also be considered. Both the Companies will publish advance notice of the aforesaid proposed meetings in Business Standard (English Delhi Edition) and Dainik Bhaskar (Hindi Delhi Edition) minimum 21 days in advance before the Scheduled date of meeting & Individual notice too to be sent by ordinary post minimum 21 days in advance - The Chairpersons/Alternate Chairpersons shall file their reports within two weeks of the conclusion of the respective meetings.

Issues:
1. Application under Section 391 and 394 of the Companies Act, 1956 for Scheme of Arrangement.
2. Jurisdiction of High Court in connection with the Scheme.
3. Details of incorporation and financials of the Transferee Company.
4. Approval of the proposed scheme by both companies.
5. Dispensation of meetings requirement for Transferor Company.
6. Consent and approval status of shareholders and creditors.
7. Requirement of convening separate meetings for various stakeholders.
8. Appointment of Chairperson and Alternate Chairperson for unsecured creditors' meeting.
9. Quorum and proxy regulations for the meetings.
10. Publication and notice requirements for the proposed meetings.
11. Filing of reports by Chairpersons/Alternate Chairpersons post meetings.

Analysis:
1. The judgment pertains to a first motion application under Sections 391 and 394 of the Companies Act, 1956, concerning a Scheme of Arrangement between a Transferor Company and a Transferee Company. The application includes details of the proposed scheme, company financials, and approvals obtained.

2. The Transferor Company's registered office is in Chennai, under the jurisdiction of the High Court of Judicature at Madras, while the Transferee Company's office is in Delhi, within the jurisdiction of the Delhi High Court. The application seeks appropriate directions from the Delhi High Court due to the Transferee Company's location.

3. The application provides detailed information on the Transferee Company's incorporation, authorized capital, issued capital, subscribed capital, and paid-up capital, along with the submission of relevant documents like Memorandum, Articles of Association, and financial accounts.

4. Both the Transferor and Transferee Companies have approved the proposed scheme, as evidenced by board resolutions and consents obtained from shareholders and creditors.

5. The Transferor Company's requirement of holding meetings, including shareholder meetings, was dispensed with by the High Court of Judicature at Madras, as per an order dated August 29, 2012, due to its location in Chennai.

6. The application outlines the consent status of shareholders and creditors, with specific details on the number of shareholders, secured and unsecured creditors, consents received, and the percentage of consent in value.

7. The judgment addresses the need for separate meetings of equity shareholders, secured creditors, and unsecured creditors of the Transferee Company based on the consents received and the value of debts.

8. The Court appoints a Chairperson and an Alternate Chairperson for the unsecured creditors' meeting, along with secretarial assistance, and sets their fees for conducting the meeting.

9. Quorum requirements for the meetings, including the consideration of valid proxies, are established to ensure the meetings' validity and decision-making process.

10. Detailed instructions are provided regarding the publication of advance notices of proposed meetings in newspapers, individual notice dispatch, and the conduct of meetings in a fair manner.

11. The Chairpersons and Alternate Chairpersons are directed to submit reports within two weeks post meetings, and the application is allowed in the specified terms, with an order for immediate action.

This comprehensive analysis covers the key issues addressed in the judgment, providing a detailed understanding of the legal proceedings and requirements involved in the Scheme of Arrangement between the two companies.

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