COMP.A/235/2024 of Bharani Pictures Pvt. Ltd. Vs The Regional Director on 16 October 2026

COMMON ORDER

Company Applications filed to recall the common order dated 07.08.2015 in C.P.Nos.263 to 266 of 2015, sanctioning the Scheme of Arrangement (Demerger) between Bharani Pictures Private Limited and Bhanumathi and Ramakrishna Properties Private Limited and Bharani Studios Private Limited and Bharani Warehousing Private Limited.

2. Heard Mr.P.H.Arvind Pandian, learned Senior Counsel appearing for Mr.Pawan Jhabakh learned counsel for the applicant(s) and Mr.A.R.L.Sundaresan, learned Additional Solictor General assisted by Mr. K.Ramanamoorthy, learned Senior Panel Counsel appearing for the respondents.

3. Mr.P.H.Arvind Pandian, learned Senior Counsel appearing for the applicant would submit that originally the Company by name Bharani Pictures Private Limited had approached this Court for sanctioning a Scheme of arrangement for demerger of the said Company and by order dated 07.08.2025, the Scheme of arrangement was approved whereby three resulting Companies came into being. On the Scheme being sanctioned by the Court, necessary Forms were also filed with the Registrar of Companies. Allotment of shares and the undertaking in the Scheme were all given effect to and recorded in the Books of Accounts of the respective entity under the Scheme. He would further submit that two of the resulting Companies were also converted into a Limited Liability Partnership under the Limited Liability Partnership Act, 2008 in the year 2020.

4. He would further submit, while that being so, the State of Tamil Nadu under a Government order issued in G.O(Ms).No.29 dated 01st March 2019 and a Government order in G.O.(Ms).No.47 dated 19.02.2020 had introduced Stamp Duty and registration charges payable upon a Scheme of sanction. The Government order in G.O.(Ms).No.47 stipulates an amount of 2% value of the immoveable property or .6% of the aggregate market value of the share as mandatory in respect of the transfer of assets under the sanctioned Scheme. In that regard, a significant liability had been cast upon the Companies which

would have serious financial implications in the running of the Company. Therefore, a decision was taken by the Board of the respective Companies for recalling the Scheme of Merger, particularly taking into consideration the commercial unviability which would be for the benefit and the welfare of the Companies.

5. He would submit that all necessary consent affidavits of the respective shareholders and the designated partners of the resulting companies have been placed on record which could also be taken into consideration by this Court. He would further submit that when there is no prejudice caused to anyone or there is no malafidies, fraud and illegality shown, the Court exercising its power could also recall the order which would only be in the interest of the company. Taking through a decision of the Division Bench of this Court made in OSA.Nos.152 & 153 of 1996, he would submit that the Hon’ble Division Bench of this Court had interfered with the order rejecting the recall of the order which is an inherent power vested with the Court to recall its order. Since, it has been unanimously decided by the Board/ partners to fall back to the earlier arrangement, it would be only in the interest of the Company and the shareholders who have given their consent to recall the order of demerger. Hence, he prays this Court to pass necessary orders recalling the order of this Court.

6. Countering his arguments, the learned Additional Solicitor General would submit that an order of demerger was made in the year 2015 which was also acted upon resulting in formation of three resulting Companies. He would submit that it had also been admitted to by the applicant that two of the resulting Companies had converted themselves into a Limited Liability Partnership as early as in the year 2020. In that regard, he would submit that the two resulting Companies which had converted themselves as a Limited Liability Partnerships are governed by the Limited Liability Partnership Act, 2008 and therefore, they are not required to comply with the Provisions of the Companies Act relating to accounting standards which is a mandatory requirement for a Private Limited Company. If the request of the applicants are accepted, then the said two resulting Companies which are converted into a Limited Liability Partnership will be required to altered their structure again into a Private Limited Company and align itself with the statutory compliances which in practical cannot be complied with.

7. He would further submit that in view of the change of law casting a liability on the Company in respect of transfer of its assets/ shares would itself indicate that the attempt is to avoid payment of statutory dues and in that regard, he would submit that the Court should not be a party for a litigant to avoid payment of statutory dues which had come into being by change of law.

8. He would further distinguish the Division Bench judgment of this Court relied upon by the learned Senior Counsel for the applicant by pointing out that there was a concession made by the Registrar of Companies that there would be no prejudice that could be caused or any public interest would be affected. In the present case, he would submit that such confession is not extended by the respondent and that apart, he would submit that the Scheme of demerger was granted by this Court after giving wide publication about the demerger and inviting objections and if the order is recalled, the sanctity given to such procedure would be defeated. Hence, he prays this Court to dismiss the application.

9. I have considered the submissions made by the learned counsels appearing on either side and perused the materials available on record before this Court.

10. An application had been taken out by a Private Limited Company namely Bharani Pictures Private Limited for demerger of the said Company which had resulted in three resulting Companies. Of the said three Companies, two Companies voluntarily shred out the character of the company and had taken a decision to convert itself into a Limited Liability Partnership governed under the Limited Liability Partnership Act. The present applications have been taken out on an admitted fact of the change of law that had come to live

pursuant to the Government Order issued by the Government of Tamil Nadu introducing Stamp and Registration charges payable in respect of a Scheme of amalgamation/ demerger. The purpose of the Scheme was to demerge the Company namely Bharani Pictures Private Limited into three resulting entities. After the Scheme of arrangement of demerger, the resulting Companies have also been registered with the Registrar of Companies and two of the resulting companies have voluntarily decided themselves to keep them away from the Provisions of the Companies Act by converting themselves into a Limited Liability which is governed under the Provisions of Limited Liability Partnership Act. This would indicate that the sanction of demerger had been fully given effect to.

11. The judgment of the Division Bench relied upon by the applicant, in the view of the Court cannot be made applicable to the facts of the present case. In the said case, immediately after the order of amalgamation, a decision had been taken up by the Board not to give effect to the amalgamation and to continue as individual Companies and in that regard, the effect of amalgamation had not been come into being or given effect to. Further, as rightly pointed out by the learned Additional Solicitor General, a concession had been given by the respondents therein, who are also the respondents herein for recalling of the order of amalgamation and there was no public interest that was involved. In the present case, much water had flown after the Scheme of arrangement of

demerger had been sanctioned.

12. It is an admitted case that only to avoid a statutory liability, a decision had been taken to take steps to recall the order. This Court would have appreciated if the Scheme of arrangement had not been given effect to and an application for recall in the Scheme of arrangement had been made. On contrary, having enjoyed the benefits of Scheme of demerger and only to avoid a liability, the present applications are made and in that regard, this Court is of the view that the Court cannot be made a fait accompli to a litigant to avoid payment of its statutory liability.

13. It is a well established principle that a Scheme need not be accepted if it is found that there is an illegality or a fraud involved in the Scheme. In the present case, this Court is of the view, the attempt that is being made for recalling the order is to absolve themselves of a liability that had been casted upon them by a change of law that came into being much after the Scheme of arrangement had been acted by the parties. In that regard, if the Court allows the recall of the order, it will be unlawful as it would enable the applicant to circumvent their statutory liability.

14. For the aforesaid reasons, this Court does not find any merits in the applications and accordingly, the applications stand dismissed. However, there shall be no order as to costs. 16.10.2026 Index: Yes/No Speaking/Non-speaking order Neutral Citation: Yes/No GBA

K.KUMARESH BABU J. GBA COMP.A Nos. 235 to 238 of 2024 in C.P.Nos.263 to 266 of 2024 16.10.2026