2022 (3) TMI 1174 - Tri - Companies Law

Seeking approval for Scheme of Arrangement - Section 230 to 232 of the Companies Act, 2013 - HELD THAT - Considering the entire facts and circumstances of the case and on perusal of the Scheme, reports of the Regional Director, Official Liquidator, and reply/undertakings of the Petitioner Companies thereon and the documents produced on record, the Scheme of Arrangement appears to be fair and reasonable and is not contrary to public policy and not violative of any provisions of law. All the statutory compliances have been made under Section 230 to 232 of the Companies Act, 2013. The Scheme of Arrangement is hereby sanctioned - Application allowed.

Summary

Issues:
Approval for Scheme of Arrangement between Demerged Company and Resulting Company.

Analysis:
The Company Petition sought approval for a Scheme of Arrangement between Babu Tobacco Private Limited/Demerged Company and Babu Warehousing Private Limited/Resulting Company. The Demerged Company, incorporated under the Companies Act, 1956, deals in merchandise and tobacco trading, while the Resulting Company, incorporated under the Companies Act, 2013, focuses on cold storage and warehouse facilities. The board of Directors of the Demerged Company believed that separating the Demerged Business and remaining business into independent entities would enhance value and allow for focused operations. The Scheme was approved by the board of directors and all Secured and Unsecured Creditors of both companies. The Tribunal dispensed with the requirement of holding shareholder and creditor meetings, as the scheme was approved by relevant parties.

Compliance and Reports:
The Petitioner Companies issued notices to Statutory Authorities and published in newspapers as directed by the Tribunal. Reports were filed by the Regional Director and Official Liquidator, raising minor compliance issues. The Regional Director sought preservation of books of accounts, compliance with applicable laws, and filing of necessary documents. The Official Liquidator raised concerns about accounting treatment, employee protection, pending litigations, and financial status of the Resulting Company. The Petitioners provided responses and undertakings to address the concerns raised by the Regional Director and Official Liquidator.

Sanction of Scheme:
After considering all reports, undertakings, and documents, the Tribunal found the Scheme fair, reasonable, and compliant with statutory requirements. The Scheme was sanctioned with directions for its implementation. The Scheme would be binding on the Petitioner Companies, their shareholders, creditors, and employees. The effective date of the Scheme was set as the Appointed Date, and the Petitioner Companies were directed to comply with all undertakings, preserve records, and submit the Scheme to the Registrar of Companies within 30 days. Newspaper publication and statutory steps were also mandated for transparency and compliance. The Petitioner Companies were instructed to adhere strictly to the directions and provisions of the Companies Act.

Conclusion:
The Tribunal allowed the Company Petition, sanctioning the Scheme of Arrangement between the Demerged and Resulting Companies. The detailed directions provided ensure compliance, transparency, and effective implementation of the approved Scheme. All concerned parties were directed to act in accordance with the sanctioned Scheme, with strict adherence to the prescribed directives and statutory provisions.