2017 (4) TMI 1257 - Tri - Companies Law

Scheme of Amalgamation - Held that - Objectors did not participate in the meeting when the scheme was considered and approved, so to raise any such objection at the court stage is afterthought, and do not merit consideration, because the commercial decisions of the entities cannot be interfered by the court. Therefore, the objections of the objectors stand rejected, being devoid of merits. Perusal of the scheme shows that the accounting treatment seems to be in conformity with the established accounting standards. In short, there is no apprehension that any creditors would lose or be prejudiced if the proposed scheme is sanctioned. The said Scheme of amalgamation will not cost any additional burden on the stakeholders and also it will not prejudicially affect the interests of any class of the creditors in any manner. The Appointed date of the said Scheme is 1st January, 2014. We do not feel that any modification is required in the said Scheme of amalgamation as the same appears to be fair and reasonable, not contrary to public policy and also not violative of any provisions of law. All the statutory compliances have been fulfilled. Taking into consideration all the above, the Company Petitions are allowed and the scheme of amalgamation annexed with the petition is hereby sanctioned which shall be binding on the Transferor Companies, the Transferee Company and secured & unsecured creditors both.

Summary

Issues Involved:
Sanction of Scheme of Amalgamation involving three Company Petitions transferred to National Company Law Tribunal, Chennai.

Detailed Analysis:
1. Background and Statutory Compliance: The petitions involved three Company Petitions transferred from the Madras High Court to the National Company Law Tribunal. The petitions sought sanction for the Scheme of Amalgamation involving three companies. All statutory requirements under the law were fulfilled, including meetings directed by the High Court for equity shareholders, preference shareholders, and debenture holders of the companies involved.

2. Salient Features of the Scheme: The Scheme of Amalgamation included various parts dealing with definitions, share capitals, amalgamation of companies, transfer of assets, debts, and liabilities, dissolution of transferor companies, and general terms and conditions. The Scheme aimed at merging the companies to operate as a composite unit efficiently, leading to operational synergy, expansion of trading activities, cost savings, and growth opportunities.

3. Approval and Objections: The Board of Directors of the companies approved the Scheme in their meetings, highlighting their engagement in the business of cement, manufacturing, and related activities. While objections were raised by minority shareholders of the Transferor Company, the Counsel for the Petitioner Companies argued against the objections, stating they were mischievous and unsustainable. The objections were deemed devoid of merit and rejected.

4. Compliance and Sanction: The Scheme was revised based on SEBI instructions and approved by the Board of Directors. The Tribunal found the Scheme fair, reasonable, and compliant with accounting standards. It was concluded that the Scheme would not burden stakeholders or prejudice any creditors. Consequently, the Tribunal allowed the Company Petitions and sanctioned the Scheme, binding all parties involved.

5. Final Directions: The Tribunal clarified that the order did not exempt payment of stamp duty, taxes, or other charges, and parties could seek necessary directions for the Scheme's implementation. The Petitioner Companies were directed to file the order copy with the Registrar of Companies within 30 days. The order of sanction was to be prepared as per the Companies (Compromises, Arrangements, and Amalgamations) Rules, 2016.

In conclusion, the Tribunal thoroughly analyzed the Scheme of Amalgamation, considered objections, and found the Scheme compliant, fair, and beneficial without prejudicing any stakeholders. The detailed legal scrutiny and compliance with statutory requirements led to the Tribunal's decision to sanction the Scheme, ensuring its binding effect on all parties involved.