2017 (1) TMI 1269 - HC - Companies Law

Scheme of demerger - Held that - As in view of the approval accorded by the shareholders and creditors of the Petitioner Companies and the report filed by the Official Liquidator and the representation/affidavit filed by the Regional Director, whereby no objections to the Scheme have been raised, there is no impediment to grant of sanction to the Scheme. Consequently, sanction is hereby granted to the Scheme under Sections 391 and 394 of the Act. In terms of the provisions of Sections 391 and 394 of the Act and in terms of the Scheme, (a) Transferor Company No. 1 shall amalgamate with Transferee/Demerged Company; (b) Transferor Company No. 2, Transferor Company No. 3 and Transferor Company No. 4 shall amalgamate with Transferee/Demerged Company; and (c) the Demerged Undertaking (as defined in the Scheme) of the Transferee/Demerged Company shall demerge to the Resulting Company, as on the Appointed Date (as defined in the Scheme) without any further act or deed. Similarly, in terms of the Scheme, all the liabilities and duties of the Transferor Companies be transferred to the Transferee Company and all liabilities and duties of the Demerged Undertaking be transferred to the Resulting Company without any further act or deed.

Issues Involved:
1. Sanction of the scheme of arrangement under Sections 391, 393, and 394 of the Companies Act, 1956.
2. Amalgamation of Transferor Companies with the Transferee/Demerged Company.
3. Demerger of the Demerged Undertaking from the Transferee/Demerged Company to the Resulting Company.
4. Compliance with statutory requirements and approval processes.
5. Consideration of objections from stakeholders and authorities.

Detailed Analysis:

1. Sanction of the Scheme of Arrangement:
The petition was filed jointly under Sections 391, 393, and 394 of the Companies Act, 1956, by the Transferor Companies, Transferee/Demerged Company, and Resulting Company seeking sanction of the scheme of arrangement. The scheme aimed to amalgamate the Transferor Companies with the Transferee/Demerged Company and demerge the Demerged Undertaking to the Resulting Company.

2. Amalgamation of Transferor Companies with the Transferee/Demerged Company:
The scheme provided for:
- The amalgamation of Transferor Company No.1 with the Transferee/Demerged Company.
- The amalgamation of Transferor Company No.2, Transferor Company No.3, and Transferor Company No.4 with the Transferee/Demerged Company.

The registered offices of all Petitioner Companies are situated in Delhi, under the jurisdiction of the Delhi High Court. The scheme outlined the share allotment ratio for each amalgamation, ensuring the equitable distribution of shares among shareholders.

3. Demerger of the Demerged Undertaking:
The scheme also provided for the demerger of the Demerged Undertaking from the Transferee/Demerged Company to the Resulting Company. The share allotment ratio for the demerger was specified, ensuring that equity shares were issued to the shareholders of the Transferee Company in proportion to their holdings.

4. Compliance with Statutory Requirements and Approval Processes:
The petitioners submitted copies of the Memorandum of Association, Articles of Association, and financial statements. The scheme was approved by the respective Boards of Directors of the Petitioner Companies. The Court had previously dispensed with the requirement of convening meetings of shareholders, secured creditors, and unsecured creditors.

Notices were issued to the Official Liquidator, the Regional Director, and the Registrar of Companies. The Official Liquidator and the Regional Director raised no objections to the scheme. The Court noted that no objections were received from any person or party.

5. Consideration of Objections from Stakeholders and Authorities:
The Court observed that the scheme had received approval from shareholders and creditors, and no objections were raised by the Official Liquidator or the Regional Director. Consequently, the Court granted sanction to the scheme under Sections 391 and 394 of the Act.

Conclusion:
The Court sanctioned the scheme of arrangement, which included the amalgamation of the Transferor Companies with the Transferee/Demerged Company and the demerger of the Demerged Undertaking to the Resulting Company. The Court directed the Petitioner Companies to comply with all statutory requirements and deposit a sum of ?50,000 with the Delhi High Court Bar Association Lawyers Social Security and Welfare Fund. The petition was allowed and disposed of accordingly.

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