2016 (10) TMI 516 - HC - Companies Law

Scheme of arrangement of demerger - Held that - Considering all the facts and circumstances and taking into account all the contentions raised by the affidavits and reply affidavits, and the submissions during the course of hearing, as satisfied that the observations made by the Regional Director, Ministry of Corporate Affairs, have been redressed satisfactorily. The prayer for amendment made in Company Application as also the amendments sought by the petitioner companies are hereby granted. As come to the conclusion 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 and the same deserves to be sanctioned. The modification sought for amending the scheme with regard to clause 1.3 referring to the Appointed Date as 1st July 2016 and Clause 34.1 are specifically granted and the Modified Scheme, as placed on record with the amendment application is hereby sanctioned. Prayers in terms of paragraph 18(a), (b) and (c) of the Company Petition are hereby granted. The restructure of Capital of Aura in form of the utilization of securities Premium as well as Reduction of Issued, Subscribed and Paid Up Equity Share Capital is specifically sanctioned. The minute under Sec. 103 is hereby approved. Prayers in terms of paragraph 15 (a) of the Company Petition paragraph 16(a) in case of Company Petition No. 277 and 278 of 2016 are hereby granted.

Issues Involved:

1. Sanction of a Composite Scheme of Arrangement involving demerger, transfer, amalgamation, and restructuring of share capital.
2. Compliance with statutory requirements and addressing the observations of the Regional Director.
3. Amendments to the Scheme and their implications.
4. Directions for preserving records and compliance with statutory liabilities.
5. Approval of the Scheme and associated costs.

Issue-Wise Detailed Analysis:

1. Sanction of a Composite Scheme of Arrangement:
The petitions were filed for sanctioning a Composite Scheme of Arrangement involving demerger and transfer of the Demerged Undertakings, amalgamation of the Residue Undertaking, and restructuring of share capital among Aura Securities Private Limited, Anagram Knowledge Academy Limited, Mayur Prakash Trading & Commercial Private Limited, and Avadh Material & Equipment Suppliers Private Limited under Sections 391 to 394, 78, and 100 to 103 of the Companies Act 1956 and Section 52 of the Companies Act 2013. The scheme aimed to segregate trading and investment activities from coaching and training activities to streamline operations, reduce managerial overlaps, and achieve economies of scale.

2. Compliance with Statutory Requirements:
The Regional Director observed several compliance issues:
- Non-compliance with Section 89 of the Companies Act, 2013 by two Petitioner Companies for filing e-form MGT6, which the companies undertook to rectify within a month.
- Non-compliance with AS_1 by Anagram Knowledge Academy Limited due to accumulated losses exceeding the capital base, which would be addressed by bringing in additional capital.
- The NBFC status of Aura Securities Private Limited and the need for RBI guidelines compliance post-scheme.
- Specific accounting treatments proposed under the scheme were permissible, with disclosures to be made in the first financial statements post-scheme sanction.
- Non-disclosure of assets and liabilities of the Demerged Undertakings, which was later rectified by submitting unaudited balance sheets and undertaking to provide a complete list of immovable assets at the scheme's sanction date.

3. Amendments to the Scheme:
Amendments were proposed to change the Appointed Date from 1st April 2016 to 1st July 2016 and to modify the accounting treatment in the books of Avadh. The amendments were based on the Statutory Auditor's recommendations and were supported by fresh consent letters from all shareholders. The amendments did not affect the rights and interests of any concerned parties and were granted in the interest of justice.

4. Directions for Preserving Records and Compliance with Statutory Liabilities:
The Official Liquidator requested that the Transferee Company preserve the books of accounts and records of the Transferor Company for eight years from the date of scheme sanctioning. The court directed the petitioner companies to comply with this request and ensure all statutory liabilities were met.

5. Approval of the Scheme and Associated Costs:
The court, after considering all contentions and submissions, found that the observations made by the Regional Director had been satisfactorily addressed. The scheme, in its modified form, was deemed to be in the interest of shareholders, creditors, and the public. The court sanctioned the scheme, including the restructure of capital and the amendments sought. Costs were quantified at ?7,500 per petition to be paid to the Central Government Standing Counsel and the Official Liquidator.

Conclusion:
The petitions were disposed of with directions to lodge a copy of the order and the detailed schedule of immovable assets with the concerned Superintendent of Stamps for stamp duty adjudication within 60 days. The petitioner companies were also directed to file a copy of the order and the modified scheme with the Registrar of Companies electronically and physically. The Registrar, High Court of Gujarat, was instructed to issue authenticated copies of the order and scheme expeditiously.

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