2021 (1) TMI 764 - Tri - Companies Law

Amalgamation scheme - seeking to dispense with convening a meeting of the Shareholders and Creditors of the Demerged Company and Resulting Company for the purpose of considering the proposed Scheme etc. - Sections 230 to 232 of the Companies Act, 2013 R/w the Companies (Compromises, Arrangements and Amalgamations) Rules, 2016 - HELD THAT - The Companies have disclosed material information with regard to the Scheme in question. In the normal circumstances, it is the prerogative of concerned Companies to take decisions dictated by commercial expediency and evolve Scheme in their mutual business interest, and the Tribunal is only empowered to examine the Scheme broadly, so as to ensure that the Scheme is prepared in accordance with the provisions law and the interest of all the stakeholders of Companies involved, are taken care of by affording due notice of Scheme, etc. Therefore, in view of the no objections to the Scheme and consents given by the different stakeholders for dispensing with the meetings, as mentioned in the preceding paragraphs, there is no necessity to convene the meetings for the same purpose. In the instant case, all the Companies involved in the case, have filed necessary Certificates given by the Chartered Accountants duly certifying the number of Shareholders, constituting 100% of Equity Shareholding of the Applicant Companies, Secured and Unsecured Creditors of the Demerged Company, Unsecured Trade Creditors of the Applicant Companies constituting greater than 90% in value of the total amount due, and they have also furnished their consent affidavits. There would not serve any purpose to direct to convene the meetings in question. Therefore, it would be just and appropriate to dispense with the meetings as sought for, on the principle of ease of doing business, and to facilitate the Company to file necessary second stage Petition seeking to sanction the Scheme, subject to fulfillment of all statutory conditions, after ordering notices to respective Statutory Authorities. Appeal is disposed of with the following directions (1) It is hereby dispensed with convening and holding of the meetings of the Equity Shareholders of the Applicant Companies. (2) It is hereby dispensed with convening and holding of the meeting of the Secured Creditors of the Demerged Company. (3) It is hereby dispensed with convening and holding of the meeting of the Unsecured Creditors of the Demerged Company. (4) It is hereby dispensed with convening and holding of the meetings of the Unsecured Trade Creditors of the Applicant Companies. (5) The Applicant Companies are directed to issue paper notification one in English language 'The Hindu' and one in vernacular language 'Udayavani' about the dispensation of the meetings by this Tribunal, within a period of 10 (Ten) days from the date of receipt of copy of this Order. (6) Any party, aggrieved by this Order, is entitled to file miscellaneous application, in the instant Company Application, by seeking appropriate direction(s). (7) The Company is permitted to file necessary Company Petition for the sanction of Scheme of Arrangement in question, in accordance with law.

Summary

Issues Involved:
Application under Sections 230 to 232 of the Companies Act, 2013 seeking dispensation of meetings for shareholders and creditors to consider a proposed Scheme of Arrangement.

Detailed Analysis:

1. Scheme of Arrangement:
The application filed by two companies sought to dispense with convening meetings of shareholders and creditors for considering a Scheme of Arrangement under Sections 230 to 232 of the Companies Act, 2013. The Scheme involved the demerger and vesting of the Demerged Undertaking from one company into another, subject to confirmation by the Tribunal where the registered offices of both companies are located.

2. Certification by Chartered Accountants:
Chartered Accountants provided certificates confirming the shareholders and creditors of both companies. Shareholders and creditors, after due verification, consented to the Scheme through affidavits, meeting the requirements of dispensation as per Section 230(9) of the Companies Act, 2013.

3. Tribunal's Consideration:
The Tribunal, after reviewing the certificates, affidavits, and the Scheme details, observed that all stakeholders had consented to the Scheme and dispensation of meetings. The Tribunal emphasized that it is empowered to broadly examine the Scheme to ensure compliance with the law and the interests of all stakeholders are protected.

4. Decision and Directions:
Based on the stakeholders' no objections and consents, the Tribunal decided to dispense with the meetings for shareholders and creditors. The Tribunal highlighted the principle of ease of doing business and directed the companies to issue notifications about the dispensation. The companies were permitted to file a necessary Company Petition for the sanction of the Scheme.

5. Conclusion:
The Tribunal disposed of the application with directions to dispense with all relevant meetings, emphasizing the importance of stakeholder consent and compliance with statutory conditions. The decision aimed to facilitate the companies in moving forward with the proposed Scheme of Arrangement while ensuring transparency and legal compliance.