Court approves demerger & capital reduction scheme under Companies Act. Equity shareholders unanimously approve. Central Govt concerns addressed.

The court sanctioned the composite scheme of arrangement involving demerger and transfer of the treasury segment, as well as the reduction of capital under the Companies Act, 1956. Meetings were dispensed with due to the excess of assets over liabilities, and the scheme was unanimously approved by equity shareholders. Public notices yielded no objections, and the Central Government's concerns regarding share capital reduction were addressed. The court ruled in favor of the scheme, overruling objections and granting the petitions while specifying costs to be paid to the Central Government's standing counsel.

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Issues:
Petitions for sanction of a composite scheme of arrangement involving demerger and transfer of treasury segment, reduction of capital under Companies Act, 1956.

Analysis:
1. Dispensation of Meetings and Procedures:
The court noted that meetings of equity shareholders, secured, and unsecured creditors of the demerged company were dispensed with due to the substantial excess of assets over liabilities, ensuring no adverse impact on creditors. The required procedures under relevant sections and rules were also waived based on specific averments in the application.

2. Approval of Scheme by Equity Shareholders:
The resulting company's application for the scheme was approved unanimously by all equity shareholders present at the convened meeting, as confirmed by the chairman's report and affidavit.

3. Public Notices and Lack of Objections:
After admission of the petitions, public notices were advertised in newspapers, and no objections were raised by any party even after publication, as confirmed by affidavits.

4. Central Government's Observations:
The Central Government was served notice, and the Regional Director's observation focused on the issue of reduction of share capital of the resulting company. However, it was clarified that no net reduction of share capital occurred, thus no separate compliance with section 100 was necessary.

5. Court's Decision and Sanction of Scheme:
After considering submissions and relevant documents, the court found the scheme to be in the interest of the companies, members, and creditors. The objections raised by the Regional Director were overruled, and the scheme was sanctioned as it was deemed beneficial.

6. Costs and Disposal of Petitions:
The court disposed of the petitions, granting the prayers as per the respective company petitions. Costs to be paid to the Central Government's standing counsel were quantified, with instructions to pay the same to the respective advocate.

Overall, the judgment detailed the process of dispensation of meetings, approval by stakeholders, lack of objections, clarification on share capital reduction, and the court's decision to sanction the scheme based on its benefits to the involved parties.

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