Companies Act Scheme of Arrangement Sanctioned for Merger and Demerger

The Court sanctioned the Composite Scheme of Arrangement under sections 391 and 394 of the Companies Act, 1956. The Scheme involves merging and demerging of companies, with benefits including focused management and attracting strategic investors. The Court granted dissolution of the transferor company without winding up, subject to compliance and payment of costs. The petitioners are directed to deposit a sum of Rs. 50,000 as costs with the Official Liquidator.

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Issues Involved:
1. Jurisdiction and Incorporation Details
2. Share Capital and Financial Details
3. Pending Proceedings
4. Approval of the Scheme by Board of Directors
5. Salient Features and Benefits of the Scheme
6. Share Exchange Ratio
7. Notice and Publication Compliance
8. Official Liquidator’s Report
9. Regional Director’s Report
10. Objections and Compliance
11. Sanction of the Scheme
12. Costs and Compliance

Issue-wise Detailed Analysis:

1. Jurisdiction and Incorporation Details:
The registered offices of the Petitioners are situated in the National Capital Territory of Delhi, granting the Court necessary jurisdiction to adjudicate the petition. The details of the incorporation dates for the Petitioners are provided, with ECPL incorporated on 25th April 2008, CMDCL on 4th November 1965, UPPL on 2nd December 2009, and TCPL on 9th August 2012.

2. Share Capital and Financial Details:
The authorized and paid-up share capital for each company is detailed. ECPL has an authorized share capital of Rs. 25,00,000 and a paid-up share capital of Rs. 16,00,000. CMDCL’s authorized share capital is Rs. 1,00,00,000 with a paid-up share capital of Rs. 8,09,400. UPPL and TCPL both have an authorized and paid-up share capital of Rs. 1,00,000 each.

3. Pending Proceedings:
It is averred that there are no proceedings pending against the Petitioners under Sections 235 to 251 of the Companies Act, 1956.

4. Approval of the Scheme by Board of Directors:
The Scheme has been approved by the respective Board of Directors of the Petitioners, with resolutions dated 28.01.2016, 27.01.2016, 29.01.2016, and 29.01.2016 for Petitioner No.1, 2, 3, and 4 respectively.

5. Salient Features and Benefits of the Scheme:
The Scheme involves ECPL merging with CMDCL, followed by CMDCL demerging its Industrial Undertaking into UPPL and its Investment Undertaking into TCPL. The benefits include focused management, removal of unnecessary layers of shareholding, and attraction of strategic investors and collaborators.

6. Share Exchange Ratio:
Clause 1.2(c) of Part-B and Clause 1.1 of Part-E of the Scheme provide that CMDCL will issue 100 equity shares of Rs. 100 each to shareholders of ECPL, and both UPPL and TCPL will issue 100 fully paid-up equity shares of Rs. 10 each to the ultimate beneficial shareholders of CMDCL in the same proportion as their shareholding in ECPL.

7. Notice and Publication Compliance:
Notice was issued by the Court on 19.04.2016, and citations were published on 3rd September 2016 in ‘Business Standard’ and ‘Jansatta’. An affidavit dated 09.09.2016 demonstrated service of the petition on the Official Liquidator, Registrar of Companies, and the Regional Director.

8. Official Liquidator’s Report:
The Official Liquidator filed a report stating no complaints were received against the proposed Scheme, and the affairs of the Transferor Company do not appear to have been conducted in a manner prejudicial to the interest of its members or public interest.

9. Regional Director’s Report:
The Regional Director’s report noted a pending Income Tax liability of Rs. 12,331,179 for CMDCL for the A.Y. 2006-07 & 2007-08. The discrepancy in the appointed date was clarified, with the Chartered Accountants stating it was inadvertently typed as 01.04.2015 instead of 01.04.2016.

10. Objections and Compliance:
No objections were received to the Scheme from any party. An affidavit confirmed no objections were received pursuant to the citations published.

11. Sanction of the Scheme:
The Court granted sanction to the Scheme under sections 391 and 394 of the Companies Act, 1956, subject to compliance with statutory requirements. The transferor company shall stand dissolved without being wound up.

12. Costs and Compliance:
The petitioners are directed to deposit a sum of Rs. 50,000 by way of costs with the Official Liquidator, Delhi. The petition is allowed and disposed of in the aforesaid terms.

Conclusion:
The Court sanctioned the Composite Scheme of Arrangement, subject to compliance with statutory requirements and payment of costs. The transferor company will be dissolved without being wound up, and the Scheme will proceed as detailed in the judgment.

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