Scheme of arrangement sanctioned after compliance concerns, SEBI comments and other objections were resolved for demerger and vesting.

A scheme of arrangement for demerger and vesting of a transferor company's undertakings in the resulting companies was sanctioned after the objections of the Regional Director, Official Liquidator and SEBI were addressed. The petitioners filed affidavits and undertakings covering FIPB approval, compliance with the Foreign Exchange Management Act, RBI requirements, continuation of prosecution proceedings, and treatment of tax and other liabilities under the scheme. SEBI's comments were confined to general observations under its circulars and did not amount to disapproval. As the Competition Commission had already approved the proposal and no surviving objection remained, the restructuring was approved and the undertakings vested in the transferee companies.

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Issues: Whether the Scheme of Arrangement providing for demerger and vesting of the undertakings of the transferor company in the resulting companies should be sanctioned despite objections from the Regional Director, the Official Liquidator and SEBI.

Analysis: The objections raised were addressed by the petitioners through affidavits and undertakings regarding approval from FIPB, compliance with the Foreign Exchange Management Act, 1999 and RBI requirements, continuation of prosecution proceedings, and treatment of tax and other liabilities under the Scheme. SEBI had issued only general comments under its circulars and had not disapproved the Scheme. The Competition Commission of India had already approved the proposal, and no surviving objection remained against the proposed restructuring.

Conclusion: The Scheme of Arrangement was sanctioned, and the undertakings of the transferor company stood vested in the respective transferee companies.

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