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2016 (6) TMI 59 - HC - Companies LawSanction of the Scheme of Arrangement - Held that - On the consideration of all the relevant facts, the procedural requirements contemplated under Sections 391 & 394 of the Act and the relevant Rules and on due consideration of the reports of the Regional Director, Northern Region, Ministry of Corporate Affairs, New Delhi and Official Liquidator, the Scheme of Arrangement is hereby sanctioned and as a result thereof, the assets and liabilities of the Scope e-Knowledge Center Private Limited/Transferor Company shall stand vested in the Quatrro Global Services Private Limited/Transferee Company and the Transferor Company shall be dissolved without being wound up. The Scheme of Arrangement shall be binding on the Scope e-Knowledge Center Private Limited/Transferor Company, Quatrro Global Services Private Limited/Transferee Company, their respective Equity Shareholders, Creditors and all concerned. Let formal order of sanction of the Scheme be drawn in accordance with law and its certified copy be filed with the Registrar of Companies within 30 days from the date of receipt of the same.
Issues Involved:
1. Sanction of the Scheme of Arrangement under Sections 391 & 394 read with Sections 100 to 104 of the Companies Act, 1956. 2. Objections raised by the Regional Director regarding compliance with Accounting Standard-14. 3. Objections raised by the Regional Director regarding the capital reduction of the Transferee Company. 4. Compliance with procedural requirements and statutory provisions. Detailed Analysis: 1. Sanction of the Scheme of Arrangement: The petition was filed under Sections 391 & 394 read with Sections 100 to 104 of the Companies Act, 1956, seeking sanction of the Scheme of Arrangement whereby Scope e-Knowledge Center Private Limited (Transferor Company) would merge into Quatrro Global Services Private Limited (Transferee Company). The Scheme was approved by the Board of Directors of both companies in their meetings held on 01.12.2015. The court had previously dispensed with the meetings of the Equity Shareholders and Unsecured Creditors of the Transferor Company and the Secured and Unsecured Creditors of the Transferee Company due to their consent to the Scheme. The Equity Shareholders of the Transferee Company held their meeting on 23.1.2016, and the Chairman's report was submitted, leading to the disposal of CP No.224 of 2015 on 01.02.2016. 2. Objections Regarding Compliance with Accounting Standard-14: The Regional Director raised an objection that the Accounting Certificate certifying compliance with Accounting Standard-14 had not been furnished. The Petitioner Companies responded by providing a certificate from the Statutory Auditors confirming that the accounting treatment specified in Clause 10 of the Scheme complies with Accounting Standard (AS-14) issued by the Institute of Chartered Accountants of India. The Petitioner Companies also undertook to comply with the provisions of AS-14 related to the pooling of interests method as prescribed under the Companies Act. 3. Objections Regarding Capital Reduction: The Regional Director also objected to the capital reduction of the Transferee Company, questioning whether it fell within the ambit of Section 100(1) of the Companies Act, 1956. The Petitioner Companies clarified that the Scheme provided for the merger and reduction of share capital, with Scope India being wholly owned by QGS India. The reduction of the face value of equity shares from Re.1 to Re.0.5 each was an arrangement between the company and its shareholders, approved by the Board of Directors and the creditors and members of both companies. The Petitioner Companies cited various judgments supporting that Section 391 is a complete code intended to be a "single window clearance" system, and the reduction of share capital was within the purview of Section 100(1) of the Companies Act, 1956. 4. Compliance with Procedural Requirements and Statutory Provisions: The Official Liquidator did not raise any objections and confirmed that the affairs of the Transferor Company were conducted in a manner not prejudicial to the members or public interest. The counsel for the Petitioner Companies confirmed that no investigation proceedings were pending against the companies under Sections 235 to 251 of the Act. The court, considering all relevant facts, procedural requirements, and the reports of the Regional Director and Official Liquidator, sanctioned the Scheme of Arrangement. The assets and liabilities of the Transferor Company would vest in the Transferee Company, and the Transferor Company would be dissolved without winding up. The Scheme would be binding on both companies, their shareholders, creditors, and all concerned. A formal order of sanction was to be drawn, and a notice of the order published in specified newspapers and the Official Gazette of the Government of Haryana. Conclusion: The Scheme of Arrangement was sanctioned, and the petition was disposed of with directions for publication and voluntary deposit by the Petitioner Companies into the Common Pool Fund Account of the Official Liquidator.
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