Scheme of arrangement sanctioned where capital reduction procedure was complied with and no prejudice to creditors or shareholders was found.

A scheme of arrangement involving transfer of specified properties and reduction of share capital was sanctioned under Section 391 of the Companies Act, 1956 after the company complied with the procedural requirement under Rule 85 read with Section 100 for reduction of capital. The Regional Director raised no objection, confirmed that the scheme was not prejudicial to the interests of creditors or shareholders, and required only compliance with the reduction procedure. The petition was therefore made absolute in terms of the prayer clause.

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Issues: Whether the scheme of arrangement, involving transfer of certain properties and reduction of share capital, should be sanctioned.

Analysis: The petition sought sanction under Section 391 of the Companies Act, 1956. The Regional Director raised no objection and only required compliance with Rule 85 read with Section 100 of the Companies Act, 1956 in view of the reduction of share capital. The company complied with the requirement. The Regional Director also stated that the scheme was not prejudicial to the interests of creditors and shareholders.

Conclusion: The scheme was sanctioned and the petition was made absolute in terms of the prayer clause.

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