Approval of Company Scheme under Companies Act, 1956: High Court Sanctions Fair Compromise

The High Court of Madras approved a scheme of arrangement and compromise under sections 391 to 393 of the Companies Act, 1956, between a petitioner company and its shareholders. The Court found the scheme fair, just, and compliant with statutory provisions, without prejudice to any party's interests. With no objections and in the absence of conflicting proceedings, the Court sanctioned the scheme for implementation upon filing with the Registrar of Companies, Chennai. The judgment stressed adherence to procedural requirements, directing the company to fulfill stamp duty, taxes, permissions, and legal obligations.

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Issues:
1. Sanctioning scheme of arrangement and compromise under sections 391 to 393 of the Companies Act, 1956.

Analysis:
The High Court of Madras considered a company petition filed under sections 391 to 393 of the Companies Act, 1956, seeking approval for a scheme of arrangement and compromise between the petitioner company, Cognizant Technology Solutions India Private Limited, and its shareholders. The petitioner company had followed the prescribed procedure, including obtaining a certificate from the Statutory Auditor confirming the absence of secured creditors and passing a resolution by the Board of Directors adopting the scheme. Affidavits of equity shareholders consenting to the scheme were also submitted. The Court had earlier dispensed with the requirement of holding a shareholders' meeting to approve the scheme. The Regional Director, Ministry of Company Affairs, had submitted a report stating no objection to sanctioning the scheme.

Upon reviewing the scheme, the Court found it to be non-prejudicial to any party with an interest in the petitioner company. The scheme was deemed fair, just, and compliant with statutory provisions, not conflicting with public policy or interest. No pending proceedings under Sections 231 to 237 of the Companies Act, 1956, were identified. Consequently, the Court approved the scheme of arrangement and compromise, directing its implementation upon filing with the Registrar of Companies, Chennai. The order clarified that it did not exempt the company from stamp duty, taxes, or other charges, nor from necessary permissions or compliance with legal requirements.

The Court awarded a fee of Rs. 5,000 to the Senior Central Government Standing Counsel representing the Regional Director, Ministry of Company Affairs. The judgment emphasized the adherence to the procedural requirements outlined in Sections 391 to 393 of the Companies Act, ensuring the validity and legality of the sanctioned scheme of arrangement and compromise.

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