2015 (9) TMI 1589 - HC - Companies Law

Scheme of Arrangement in the nature of De-merger - Held that - There are no Secured Creditors of the Applicant Company. In support of the above submission the Certificates from the Chartered Accountant are collectively annexed as Annexure F confirming the status of the Equity Shareholders and Creditors of the Company as well as confirming the receipt of the consent letters from all the Equity Shareholders as well as the Creditors. It is accordingly prayed that the meetings of the Equity Shareholders and Unsecured Creditors is not essential for the consideration and approval of the said scheme as required to be held under the provisions of Section 391(2) of the Companies Act 1956. Considering the above submissions it is hereby held that meeting of the Equity Shareholders and Unsecured Creditors of the Applicant Company for considering and approving the proposed scheme are not necessary and are not required to be held under the provisions of Section 391(2) of the Companies Act 1956. The same are hereby dispensed with.

Summary

Issues:
Application under Sections 391 and 394 of the Companies Act, 1956 for Scheme of Arrangement involving De-merger and Transfer of Processing and Windmill Divisions, and Capital Restructure.

Analysis:
The judgment pertains to an application filed by Zenitex Mill Private Limited (Resulting Company) under Sections 391 and 394 of the Companies Act, 1956 for a proposed Scheme of Arrangement involving the De-merger and Transfer of Processing and Windmill Divisions of Zenith Silk Mills Private Limited to Zenitex Mill Private Limited, along with the Restructure of Capital of both companies. The application sought dispensation of meetings of Equity Shareholders and Creditors of the Applicant Company. The Applicant Company submitted that all Equity Shareholders and Unsecured Creditors had given their approval to the Scheme through consent letters, supported by Certificates from a Chartered Accountant confirming the status and consent of the Equity Shareholders and Creditors. The Applicant prayed that meetings of Equity Shareholders and Unsecured Creditors were not essential for the Scheme's consideration and approval as required under Section 391(2) of the Companies Act, 1956.

The Court, after considering the submissions, held that meetings of Equity Shareholders and Unsecured Creditors of the Applicant Company for considering and approving the proposed scheme were not necessary and dispensed with under Section 391(2) of the Companies Act, 1956. Consequently, the Company Application was disposed of accordingly. The judgment exemplifies the Court's authority to dispense with meetings of stakeholders in certain circumstances where their consent and approval are adequately demonstrated, ensuring efficiency in the corporate restructuring process while upholding legal requirements and safeguards under the Companies Act, 1956.