Scheme of arrangement and amalgamation sanctioned subject to RBI, FDI and statutory compliance safeguards.

A scheme of arrangement and amalgamation involving demerger and merger was found fit for sanction under the Companies Act, 1956 because the requisite approvals of equity shareholders and unsecured creditors had been obtained, the secured creditors' meeting had earlier been dispensed with, and no substantive objection remained from the Regional Director apart from compliance with RBI approval, FDI norms and other statutory requirements. The Court held that the scheme was supported by the material on record and by the procedure contemplated under Sections 391 to 394, and it sanctioned the scheme subject to the stated safeguards and compliance conditions.

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Issues: Whether the proposed scheme of arrangement and amalgamation, involving demerger and amalgamation of the transferor and transferee companies, deserved sanction under the Companies Act, 1956.

Analysis: The requisite approvals of the equity shareholders and unsecured creditors were obtained, the secured creditors' meeting had been dispensed with earlier, and the Regional Director raised no substantive objection to the scheme apart from requiring compliance with RBI approval, FDI norms, and other statutory requirements. The Court found the scheme to be supported by the material on record and by the statutory process contemplated under Sections 391 to 394 of the Companies Act, 1956. Subject to the stated safeguards and compliance conditions, sanction to the scheme was warranted.

Conclusion: The proposed scheme was sanctioned, subject to compliance with the stipulated conditions.

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