The court confirmed the validity of the Composite Scheme of Arrangement under the Companies Act, ensuring compliance with statutory obligations and stakeholder interests.

ORDER

[Per: SANJIV DUTT, MEMBER (TECHNICAL)]

1. Heard the Learned PCS for the Petitioner Companies.

2. The sanction of the Tribunal is sought under Sections 230 to 232, Section 66 and other applicable provisions of the Companies Act, 2013 (the Act) to the Composite Scheme of Arrangement of Genext Students Private Limited (“the Transferor Company” or “Genext Students”), Navneet Futuretech Limited (“the Demerged Company” or “NFL”) and Navneet Education Limited (“the Resulting Company” or “the Transferee Company” or “NEL”) and their respective shareholders (‘the Scheme’).

3. It is observed that the Board of Directors of the Petitioner Companies in their respective Board meetings held on 31.08.2023 have approved the Scheme and the relevant Board Resolutions are annexed to the Company Scheme Application.

4. The Petitioner Companies submit that the Transferor Company is a wholly owned subsidiary of the Demerged Company and step-down subsidiary of the Transferee/Resulting Company. The Demerged Company is a wholly owned subsidiary of the Transferee/Resulting Company.

5. The Petitioner Companies submit that since the Scheme provides for amalgamation of step-down wholly owned subsidiary company (Transferor Company) with its holding company (Transferee/Resulting Company) and demerger of Demerged Undertaking (Edtech Business) of the Demerged Company into its holding Company (Transferee/Resulting Company), no shares would be issued or allotted as consideration pursuant to the arrangement.

6. The Petitioner Companies while clarifying the rationale for the Scheme state that over the past decades, Navneet Education Limited (NEL) has emerged as the pioneer of providing educational curricula designed especially for the K-12 segment and beyond. Over the past few years, NEL through its subsidiaries has increased its focus over digital platforms. NEL is embarking on a strategic growth agenda and the proposed Scheme is aimed to ensure:

(a) seamless blend of traditional print and progressive digital platforms,

(b) establishment and reinforcement of its brand’s essence within the educational landscape,

(c) a simplified group structure and operational footprint and

(d) market aligned logical organization of resources. It is submitted that the proposed Scheme is commercially and economically viable, feasible, fair and reasonable and in the best interest of all the stakeholders and the persons connected with the aforesaid companies.

7. Capital reduction of the Demerged Company

i. The Demerged Company has a debit balance in its reserves of INR 1,21,35,47,168 as on 31.03.2023 and has an equity share capital of INR 2,74,88,35,000 divided into 27,48,83,500 equity shares having face value of INR 10 each as on 15.08.2023. It is considered necessary that the Demerged Company undertakes financial restructuring in order to right size its balance sheet and reduce its equity share capital by eliminating the debit balance in reserves to the extent of INR 1,21,35,47,160.

ii. The proposed reduction of equity share capital is in the interest of the Demerged Company, its shareholders, creditors and all concerned stakeholders. On such reduction, the books of the Demerged Company would present a fair representation of its financial position.

8. The Company Petition is filed in consonance with Sections 230 to 232 and Section 66 of the Act along with the order dated 18.12.2023 passed in CA ( A) No.218/(MB)/2023 by this Tribunal.

9. It is submitted that the Petitioner Companies have complied with all requirements as per directions of this Tribunal and have fil