2016 (10) TMI 256 - HC - Companies Law

Composite Scheme of Arrangement - Held that - The observations made by the Regional Director having been addressed, in the opinion of this Court, there does not appear to be any impediment to the grant of sanction to the Composite Scheme of Arrangement, in as much as from the material on record and on perusal of the Scheme, the scheme appears to be fair and reasonable and is not violative of any of public policy. The arrangement under the proposed scheme appears to be in the interest of the Petitioner Transferee Company and its members and creditors and, therefore deserves to be sanctioned. Accordingly, the Scheme as proposed by the Petitioner Company is hereby sanctioned. The same shall be binding upon all the equity shareholders, preference shareholders, secured creditors, unsecured creditors of the Petitioner Companies and all other agencies, departments and authorities of the Central, State and any other local authorities. It is clarified that the implementation of the present order shall be subject to the proceedings filed by the Transferor Company before the High Court of Punjab and Haryana at Chandigarh. The petition is disposed of accordingly

Summary

Issues Involved:
Petition for sanction of Composite Scheme of Arrangement under Companies Act, 1956 and 2013, Observations by Regional Director, Compliance with Income Tax Act and Rules, No complaints against Transferee Company, Sanction of the Scheme.

Analysis:

1. Petition for sanction of Composite Scheme of Arrangement:
The petition was filed by the Transferee Company for the sanction of a Composite Scheme of Arrangement between two companies and their respective shareholders and creditors under relevant sections of the Companies Act, 1956 and 2013. The scheme aimed at enhancing shareholder value, operational efficiencies, and revenue growth opportunities. The meeting of shareholders and creditors was dispensed with based on written consents, and public notices were duly advertised.

2. Observations by Regional Director:
The Regional Director raised concerns regarding contingent liabilities and compliance with the Income Tax Act and Rules. The Petitioner Company addressed these observations through affidavits, stating that the contingent liabilities would not adversely affect the company's financial position and committing to comply with tax laws. The Regional Director also confirmed the absence of complaints against the Transferee Company.

3. Compliance with Income Tax Act and Rules:
The Petitioner Transferee Company assured compliance with all applicable provisions of the Income Tax Act and Rules, addressing the concerns raised by the Regional Director. This commitment was crucial in ensuring regulatory compliance and financial transparency.

4. No complaints against Transferee Company:
The report from the Registrar of Companies indicated no complaints against the Petitioner Transferee Company, further validating the company's standing and reputation in regulatory matters.

5. Sanction of the Scheme:
After addressing the observations made by the Regional Director and ensuring compliance with legal requirements, the Court found the proposed scheme fair, reasonable, and in the interest of the company, its members, and creditors. Consequently, the Court sanctioned the Scheme, making it binding on all stakeholders and authorities. The implementation was subject to proceedings in another jurisdiction.

In conclusion, the judgment granted sanction to the Composite Scheme of Arrangement, emphasizing fairness, regulatory compliance, and stakeholder interests. The Petitioner Company was directed to file necessary documents with the Registrar of Companies, and the costs were quantified and directed to be paid. The order was to be acted upon promptly by all relevant authorities, ensuring efficient execution of the sanctioned scheme.