2016 (10) TMI 285 - HC - Companies Law

Scheme of arrangement of demerger - Held that - Observations made by the Regional Director, Ministry of Corporate Affairs, have been suitably addressed and hence do not survive. This court has come to the conclusion that the present scheme of arrangement is in the interest of its shareholders and creditors as well as in the public interest and the same deserves to be sanctioned. Prayers in terms of paragraph 19 (a) of the Co. Petition No. 317 of 2016 for the Demerged Company and paragraph 22 (a) of the Co. Petition No. 318 of 2016 for the Resulting Company are hereby granted. The petitions are disposed of accordingly. So far as the costs to be paid to the Central Govt. Standing Counsel is concerned, quantify the same at ₹ 7,500/per petition. The same may be paid to the learned Standing Counsel appearing for the Central Govt. The petitioner companies are further directed to lodge a copy of this order, the detailed schedule of immovable assets of the Demerged Undertaking of the Demerged Company viz. Manufacturing Division of Amazon Textiles Private Limited 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 alongwith 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 Scheme of Arrangement involving Demerger and Transfer of Undertakings under Companies Act, 1956.

Analysis:
1. Nature of Scheme and Undertakings:
- Two companies filed petitions for sanction of a Scheme of Arrangement involving Demerger and Transfer of Undertakings under sections 391 to 394 of the Companies Act, 1956.
- Amazon Textiles Private Limited engaged in textile processing, leasing machinery, maintenance contracts, and investments. The proposed scheme aims to segregate activities, focusing on Investment and Maintenance Undertakings, transferring Manufacturing Undertaking to Abeer Textile Private Limited.

2. Creditor Approval and Meetings:
- Equity Shareholders and Unsecured Creditors meetings were held for both Demerged and Resulting Companies, with approvals obtained.
- Secured Creditors meeting for the Resulting Company was adjourned but eventually approved the Scheme.

3. Publication and Objections:
- Petitions were admitted, and notices for hearings were advertised in newspapers and gazette. No objections were raised post-publication.

4. Central Government and Regional Director Observations:
- Observations by the Regional Director were addressed through affidavits and submissions.
- Issues included non-compliance with Companies Act, 2013, disclosure of assets and liabilities, sufficiency of Authorized Capital, adjournment of meetings, contingent liabilities, and Income Tax Department communication.

5. Court Decision and Sanction:
- After considering all contentions, the court found the scheme in the interest of shareholders, creditors, and the public. Sanction was granted as prayed in the petitions.
- Costs to the Central Govt. Standing Counsel were quantified, and directions were given for stamp duty adjudication, filing with concerned authorities, and issuance of authenticated orders.

6. Final Directives:
- Lodging of orders and scheme, filing with Registrar of Companies, and dispensation of drawn-up orders were directed.
- Concerned authorities were instructed to act on the order promptly, with the Registrar to issue authenticated copies swiftly.