2008 (1) TMI 619 - HC - Companies Law

Compromise and arrangement - Held that - It cannot be said that the scheme of arrangement is unfair unreasonable or fraudulent to its shareholders. Thus no reason to interfere with the decision of the shareholders of the companies and objections raised by the Central Government are not sustainable. Leave is granted to the petitioner to file computerized print out of the scheme and the schedule relating thereto in acceptable form. In the event the same is filed the Department will append such print out to the certified copy of the order sanctioning the scheme without insisting or a handwritten copy. The petitioner is directed to pay costs assessed at 200 GMs to the Central Government.

Summary

Issues:
1. Sanctioning the scheme of arrangement between transferor and transferee-companies.
2. Objections raised by the Central Government regarding payment considerations and licensing terms.
3. Compliance with sections 391, 392, and 394 of the Companies Act, 1956.

Analysis:
1. The judgment deals with an application seeking approval for a scheme of arrangement between two companies. Meetings were held, and the schemes were unanimously passed without modifications. However, objections were raised by the Central Government after a second round of advertisements.

2. The objections raised by the Central Government primarily focused on the lack of a fixed time limit for payment considerations and the unspecified terms of licensing rights between the companies. The petitioner argued that all statutory requirements were met, and shareholders, being knowledgeable businessmen, should decide on commercial matters like capital gains.

3. The court emphasized compliance with sections 391, 392, and 394 of the Companies Act, ensuring that meetings were conducted, and the scheme was approved without challenge from any shareholder. The court highlighted that shareholders are well-informed and capable of evaluating business decisions, and thus, the approved scheme should be considered fair, reasonable, and in the best interest of the companies.

4. The judgment concluded that objections raised by the Central Government were not sustainable. The court upheld the decision of the shareholders and granted leave for filing a computerized printout of the scheme. Costs were imposed on the petitioner, and the application was disposed of, with the appointed date specified for the scheme.

This detailed analysis of the judgment showcases the court's considerations regarding the scheme of arrangement, objections raised by the Central Government, and the overall compliance with relevant provisions of the Companies Act, 1956.