Scheme of Arrangement sanctioned for transfer and vesting of tea estate assets, liabilities and pending proceedings in transferee company.

The High Court sanctioned a Scheme of Arrangement between the transferor and transferee companies after finding that the shareholder meetings had been duly held, the required reports were filed, notice was served on the Regional Director and the Company Law Board, and public notice of the hearing was published. With no objection from the Regional Director and no legal impediment identified, the Court treated the scheme as bona fide. The scheme provided for transfer and vesting of the Lohpohia Tea Estate, together with its assets, liabilities and pending proceedings, in the transferee company from the appointed date under section 394(2) of the Companies Act, 1956, making the arrangement binding on the companies, their shareholders and all concerned.

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Issues: Whether the Scheme of Arrangement between the transferor company and the transferee company deserved sanction and, if so, whether the transfer of the Lohpohia Tea Estate with its assets, liabilities and pending proceedings should take effect in favour of the transferee company.

Analysis: The requisite shareholder meetings had been duly held and the reports placed before the Court under Rule 78 of the Companies (Courts) Rules, 1959. Notice had been served on the Regional Director and the Company Law Board, and public notice of the hearing had also been published as directed. The Regional Director raised no objection to approval of the scheme. The Court found the arrangement to be bona fide and saw no legal impediment to granting sanction. The scheme expressly provided for transfer and vesting of the undertaking, liabilities and pending proceedings of the Lohpohia Tea Estate in the transferee company with effect from the appointed date, in terms of section 394(2) of the Companies Act, 1956.

Conclusion: The Scheme of Arrangement was sanctioned, and the transfer and vesting provisions became binding on the companies, their shareholders and all concerned.

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