2016 (5) TMI 1110 - HC - Companies Law

Court Sanctions Demerger Scheme under Companies Act Sections 391-394, 100-104

The court granted sanction for a scheme of arrangement involving the demerger of an undertaking under Sections 391 to 394 and Sections 100 to 104 read ... Scheme of arrangement of demerger - Held that:- It is seen that approval is accorded by share holders and creditors of the companies, reports are filed by the Regional Director aforesaid and OL before this Court. In view of these reports, it appears that in absence of any objection, there is no impediment to grant sanction to the scheme of arrangement. Resultantly, sanction is hereby granted to the scheme of arrangement under Section 391 to 394 and 100 to 103 of Companies Act, 1956 and Section 52 of Companies Act, 2013. The said scheme shall be read as part of this order. In the aforesaid factual backdrop, reduction of issued, subscribed and paid up share capital of the Demerged Company, the use of the words “and reduced” in the Demerged Companies name is dispensed with. The Demerged Companies may utilize the security premium account and reduce its issued, subscribed and paid up share capital in accordance with the said scheme. In addition, the petitioner companies shall comply with all statutory requirements in accordance with law. Certified copy of this order shall be filed before the Registrar of Companies as per the requirement of the said Companies Act and Rules made thereunder. The Resulting Company is further directed to file the copy of this order along with copy of the scheme of appointment and other relevant documents with concerned Collector of Stamp/Superintendent of Stamp for the purpose of adjudication and payment of appropriate stamp duty in accordance with law. Issues:1. Jurisdiction of the court to entertain the petition under Sections 391 to 394 and Sections 100 to 104 read with Section 52 of the Companies Act.2. Compliance with formalities and requirements of law by the petitioner companies.3. Approval of the scheme of arrangement by shareholders, creditors, Regional Director, and Official Liquidator.4. Grant of sanction to the scheme of arrangement under relevant sections of the Companies Act.5. Directions regarding reduction of share capital, compliance with statutory requirements, and filing of necessary documents.Jurisdiction of the Court:The petition was filed under Sections 391 to 394 and Sections 100 to 104 read with Section 52 of the Companies Act, seeking sanction for a scheme of arrangement involving the demerger of an undertaking. The petitioner contended that both companies' registered offices were in Bhopal, establishing the court's jurisdiction to entertain the petition.Compliance with Formalities:The petitioner provided necessary details of incorporation, capital structure, and financial statements of the companies. Resolutions approving the scheme were passed by the respective Boards of Directors. No pending proceedings under relevant sections of the Companies Act were reported, ensuring compliance with legal requirements.Approval of the Scheme:Previous directions were sought and granted to dispense with the requirement of convening meetings of shareholders and creditors. Reports were filed by the Regional Director and Official Liquidator, indicating no objections to the scheme. Shareholders and creditors approved the scheme, leading to the grant of sanction by the court under the applicable provisions of the Companies Act.Grant of Sanction:Considering the absence of objections and the compliance with procedural formalities, the court granted sanction to the scheme of arrangement under Sections 391 to 394 and 100 to 103 of the Companies Act, 1956, along with Section 52 of the Companies Act, 2013. The approved scheme became a part of the court's order.Directions and Compliance:The court directed the Demerged Company to reduce its share capital as per the scheme, allowing the use of the security premium account for this purpose. Both petitioner companies were instructed to comply with statutory requirements and file necessary documents with the Registrar of Companies and Stamp authorities. Additionally, a specified sum was to be paid to the counsels for the Regional Director and Official Liquidator.This detailed analysis of the judgment highlights the key legal aspects, procedural steps, and compliance requirements involved in the approval and sanctioning of the scheme of arrangement by the court.