2016 (3) TMI 602 - HC - Companies Law

Amalgamation and restructuring - Held that - This Court is of the view that the observations made by the Regional Director, Ministry of Corporate Affairs, do not have been suitably redressed. This Court is of the view that based upon the material on record, it can be concluded that the present Scheme of Arrangement, in its modified form, is in the interest of the shareholders and creditors of all the companies as well as in the public interest, therefore, the same deserves to be sanctioned. Hence the following order The prayers in terms of paragraph 21 (a) of Company Petition No.17 of 2016, and paragraph 18 (a) of Company Petition No.18 of 2016 are hereby granted. The petitions are disposed of, accordingly. So far as the costs to be paid to the Central Government Standing Counsel are concerned, they are quantified at ₹ 7,500/- per petition. The same may be paid to Mr.Devang Vyas, learned Assistant Solicitor General of India. Costs to be paid to the Office of the Official Liquidator are quantified at ₹ 7,500/- per petition, payable only by the Transferor Company. The same may be paid to the Office of the Official Liquidator. The petitioner companies are further directed to lodge a copy of this order, the schedule of immovable assets of the Windmill Undertaking being transferred and that of the remaining undertaking of the Transferor company, being transferred to Transferee Company, as on the date of this order and the Scheme duly authenticated by the Registrar, High Court of Gujarat, with the concerned Superintendent of Stamps, for the purpose of adjudication of stamp duty, if any, on the same within 60 days from the date of the order. The Petitioner companies are directed to file a copy of this order along with a copy of the Scheme with the concerned Registrar of Companies, electronically, along with INC28 in addition to physical copy as per relevant provisions of the Act.

Summary

Issues:
Petitions for sanction of a Composite Scheme of Arrangement involving transfer of Windmill Undertaking, amalgamation, and share capital restructuring under Companies Act, 1956.

Analysis:
1. The petitions involve two companies seeking approval for a Composite Scheme of Arrangement under Sections 391 to 394 read with Sections 100 to 103 of the Companies Act, 1956. The scheme includes the transfer of the Windmill Undertaking, amalgamation of residue undertaking, and share capital restructuring. Both companies belong to the same management group, engaged in similar commercial activities, and propose the scheme for synergic benefits.

2. Meetings of Equity Shareholders and Preference Shareholders of the Transferor Company were dispensed with based on consent letters. Meetings of Secured and Unsecured Creditors were conducted, and amendments proposed by a Secured lender were unanimously approved. Fresh approvals were sought for modified schemes from shareholders, and consent letters were submitted.

3. Meetings of Equity Shareholders of the Transferee Company were dispensed with, and Unsecured Creditors' meeting was not held due to the strong financial position of the company. Fresh approvals for modified schemes were obtained. Reduction of Equity Share Capital of the Transferee Company was proposed and approved, with no net reduction after issuing new shares.

4. Substantive petitions for the modified scheme were admitted, and notices were duly advertised. No objections were received post-publication. The Official Liquidator reported that the Transferor Company's affairs were conducted properly, and the company may be dissolved without winding up, but books and records must be preserved.

5. The Transferee Company was directed to preserve Transferor Company's books and records, comply with all statutory liabilities post-sanction, and obtain Central Government permission for disposal of records. The Central Government was notified, and observations by the Regional Director were addressed.

6. The Court heard arguments from both parties and concluded that the modified scheme is in the interest of shareholders, creditors, and the public. Sanction was granted, and costs were quantified for the Central Government Standing Counsel and the Official Liquidator. Directions were given for stamp duty adjudication, filing with concerned authorities, and issuance of authenticated copies of the order and scheme.

7. The petitions were disposed of, and authorities were directed to act upon the order and authenticated scheme. Filing and issuance of drawn-up order were dispensed with for expeditious action.