Demerger scheme sanction granted despite unadjudicated compliance objections, with alleged breaches expressly left open for future determination.
A scheme of arrangement in the nature of demerger was sanctioned where the shareholders' and creditors' meetings had been duly held and approved by the requisite majorities. Objections raised on behalf of the Central Government, including alleged statutory non-compliances and a SEBI complaint, did not defeat sanction because no proceedings had been initiated and no concluded finding had been reached on those allegations. The sanction order expressly left the question of alleged breaches open and preserved the parties' right to pursue their respective contentions or defences in future proceedings.
Issues: Whether the Scheme of Arrangement in the nature of demerger between the petitioner company and the resulting company should be sanctioned despite the objections raised on behalf of the Central Government, and whether such sanction would conclude the alleged breaches mentioned in the objections.
Analysis: The requisite meetings of shareholders and creditors had been duly held and the Scheme had been approved by the required majorities. No objection was received from the public after publication of notice. The objections from the Central Government related to alleged statutory non-compliances and a complaint received from SEBI, but no proceedings had been initiated and no concluded finding had been reached on those allegations. The sanction of the Scheme was therefore granted while expressly keeping the question of alleged breaches open and clarifying that the order would not bar either side from pursuing their respective contentions or defences in future.
Conclusion: The Scheme of Arrangement in the nature of demerger was sanctioned, and the objections regarding alleged breaches were left open.
Final Conclusion: The petition succeeded, and the demerger scheme received judicial approval without prejudice to any separate action on the alleged statutory violations.
Ratio Decidendi: A scheme of arrangement may be sanctioned where the statutory meetings have been duly approved and no adjudicated breach exists, while pending or unadjudicated allegations of non-compliance are preserved for independent determination.
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AI Drafter ✕
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