2014 (4) TMI 1190 - HC - Companies Law

Scheme of amalgamation - Held that - In view of the approval accorded by the shareholders of the Petitioner Companies, the Report filed by the Official Liquidator, Affidavit filed by the Regional Director and the Replies of the Petitioner Companies to the Reports of the Official Liquidator and the Regional Director, there appears to be no impediment to the grant of sanction to the Scheme. Consequently, sanction is hereby granted to the Scheme of Amalgamation under Sections 391-394 of the Companies Act, 1956. The Petitioner Companies will comply with the statutory requirements in accordance with law. The certified copy of the formal order sanctioning the Scheme be filed with the Registrar of Companies, NCT of Delhi and Haryana within 90 days from the sanction of the scheme. It is observed that the scheme provides that the same will be effective only on the requisite approvals from the DoT. If the approvals from the DoT are not be obtained within the specified period the same would result in the scheme not being effective. The petitioner shall take expeditious steps to obtain the approvals within the specified period of 90 days as specified above. And, the DoT shall take the necessary decision within 45 days of the petitioner complying with all necessary formalities. The sanction order of this Court shall be binding on the shareholders and creditors of the Petitioner Companies. The Scheme has already been sanctioned by the High Court at Calcutta and High Court at Madras by orders dated 22 March 2013 and 05 June 2013 respectively. Upon the Scheme becoming effective, the Petitioner/Transferor Company No.1 and the Petitioner/Transferor Company No.2 shall stand dissolved without the process of winding up.

Summary

Issues:
1. Approval of the Scheme of Amalgamation among multiple companies under Sections 391-394 of the Companies Act, 1956.
2. Compliance with regulatory requirements and approvals for the amalgamation.
3. Observations and objections raised by the Official Liquidator and the Regional Director.
4. Resolution of objections related to tax liabilities and compliance with tax laws.
5. Grant of sanction to the Scheme of Amalgamation and its implications.

Analysis:

Issue 1: Approval of the Scheme of Amalgamation
The petition was filed seeking sanction and approval of the Scheme of Amalgamation among various companies and their respective shareholders under Sections 391-394 of the Companies Act, 1956. The Registered Offices of the companies were situated in New Delhi, and the scheme involved the merger of undertakings of transferor companies with the transferee company, leading to dissolution of the transferor companies.

Issue 2: Compliance with Regulatory Requirements
The petitioners had complied with the statutory requirements, including service of notices to concerned authorities, publication in newspapers, and dispatch of notices to creditors. The Official Liquidator's report highlighted a previous scheme rejection by the Department of Telecommunication (DoT) and objections raised by the Income Tax Department (ITD), emphasizing the need for compliance with regulations and policies.

Issue 3: Observations and Objections
The Official Liquidator and the Regional Director raised observations regarding approvals, compliance with the Companies Act, and specific transactions. Responses from the petitioners clarified the status of previous schemes, conversion of shares, and financial transactions, ensuring compliance with legal provisions and addressing concerns raised by the authorities.

Issue 4: Tax Liabilities and Compliance
The Income Tax Department raised objections concerning tax laws and liabilities. The court clarified that all liabilities of transferor companies would transfer to the transferee company, including tax liabilities and benefits. The scheme included provisions for tax matters, and any tax assessments would be independently conducted by the Income Tax Authorities.

Issue 5: Grant of Sanction and Implications
After considering the shareholders' approval, reports from authorities, and replies from the petitioners, the court granted sanction to the Scheme of Amalgamation under Sections 391-394 of the Companies Act, 1956. The order specified compliance with statutory requirements, filing of formal orders, and obtaining approvals from DoT within a specified period for the scheme to be effective. The order would bind shareholders and creditors, leading to dissolution of certain companies upon the scheme becoming effective.

This comprehensive analysis of the judgment highlights the legal proceedings, compliance requirements, observations, objections, and the final grant of sanction to the Scheme of Amalgamation, ensuring clarity on the implications and obligations of the parties involved.