2016 (4) TMI 3 - HC - Companies Law

Scheme of arrangement for demerger - Held that - Learned counsel appearing for the Regional Director is not having any other objection except the contentions raised at para Nos. 9 to 11 as stated above. Considering the fact that the Regional Director has decided not to make any objection to the scheme except to the objections/observations made at para Nos. 9 to 11 in his affidavit and considering the fact that those objections/observations cannot be sustained in view of the findings rendered as stated supra by following the earlier decisions of this Court, find that there cannot be any impediment for this Court to allow all these company petitions. Accordingly, all the company petitions are allowed as prayed for.

Summary

Issues:
1. Sanction of scheme of arrangement between companies
2. Dissolution of demerging company
3. Objections raised by Official Liquidator and Regional Director
4. Compliance with Companies Act, 2013 procedures
5. Shareholders' approval and consent for scheme of arrangement
6. Legal precedents and decisions influencing the judgment

Issue 1: Sanction of scheme of arrangement between companies
The judgment involves Company Petitions filed by the demerging company and resulting companies, seeking sanction of a scheme of arrangement between them. The demerging company requested the scheme to be sanctioned to bind all shareholders and for its dissolution. The Official Liquidator's report confirmed no adverse remarks on accounts, compliance with laws, and absence of pending disputes or misfeasance, leading to no objections from the Liquidator. The Regional Director initially raised objections regarding procedural compliance under the Companies Act, 2013.

Issue 2: Dissolution of demerging company
The demerging company sought dissolution without winding up, supported by consent affidavits from all shareholders. The resulting companies also filed petitions for sanction of the scheme, with shareholders' consent for the arrangement. The court noted the quorum and approval of the scheme by shareholders, indicating proper procedural adherence.

Issue 3: Objections raised by Official Liquidator and Regional Director
The Official Liquidator's report confirmed no objections to the petitions based on compliance and financial aspects. The Regional Director raised objections related to amendments in object clauses and name changes without following Companies Act procedures. However, the court found these objections unsustainable based on past decisions favoring similar cases.

Issue 4: Compliance with Companies Act, 2013 procedures
The judgment highlighted the importance of complying with Companies Act procedures for name changes and amendments, as per Section 13 and other applicable provisions. The court emphasized that objections raised by the Regional Director were adequately explained by legal counsel, supported by reports from the Official Liquidator and Chartered Accountant.

Issue 5: Shareholders' approval and consent for scheme of arrangement
The court reviewed consent affidavits from shareholders of all companies involved, confirming their approval of the scheme and dispensation with the requirement for shareholder meetings. The shareholders' consent and meeting proceedings were found to be in order, ensuring the validity of the scheme of arrangement.

Issue 6: Legal precedents and decisions influencing the judgment
The judgment referenced previous decisions by the court in similar cases, where objections related to procedural compliance were satisfactorily explained and resolved. Legal precedents highlighted the internal nature of amalgamations and the sufficiency of compliance under Section 391 of the Companies Act for certain changes, supporting the approval of the scheme of arrangement in this case.

In conclusion, the court allowed all company petitions, considering the absence of sustained objections and the compliance with legal procedures. The Regional Director's objections were deemed unfounded based on past decisions, leading to the approval of the scheme of arrangement between the companies.