2016 (2) TMI 280 - HC - Companies Law

Scheme of Amalgamation - Scheme of arrangement is in the interest of the shareholders and creditors of all the companies as well as in the public interest, therefore, the same deserves to be sanctioned. It is, however, directed that the petitioners shall preserve their books of Accounts, papers and records and shall not dispose of the records without the prior permission of the Central Government under Section 396A of the Companies Act, 1956. The petitioner shall further ensure statutory compliance of all applicable laws. On the sanctioning of the Scheme of Amalgamation, the petitioner Companies shall not be absolved of any of their statutory liabilities.

Summary

Issues:
1. Sanction of Scheme of Amalgamation under Sections 391 to 394 of the Companies Act, 1956.
2. Compliance with Accounting Standard 14 and Income Tax Act requirements.
3. Preservation of books of accounts, papers, and records.
4. Lodging of necessary documents with concerned authorities.
5. Statutory liabilities of petitioner Companies post-Amalgamation.

Analysis:

Issue 1: The High Court considered petitions under Sections 391 to 394 of the Companies Act, 1956, for the sanction of a Scheme of Amalgamation involving three companies. Previous orders had dispensed with the requirement of meetings for Equity Shareholders, Secured Creditors, and Unsecured Creditors based on written consents.

Issue 2: The Regional Director raised concerns about compliance with Accounting Standard 14 and the Income Tax Act. The petitioner explained that deviations from Accounting Standard 14 were permissible under Section 129(5) of the Companies Act, 2013, and undertook to comply with necessary disclosures post-sanction. Regarding Income Tax compliance, the petitioner assured to undertake necessary actions.

Issue 3: The Official Liquidator confirmed that the affairs of the Transferor Companies were not prejudicial. However, preservation of books, papers, and records was requested, subject to Central Government permission under Section 396A of the Companies Act, 1956.

Issue 4: The Court sanctioned the Scheme of Amalgamation, directing the preservation of records, statutory compliance, and lodging of necessary documents with authorities. The petitioner Companies were instructed to file copies of the order and Scheme with relevant authorities within sixty days.

Issue 5: The Court emphasized that post-Amalgamation, the petitioner Companies would not be absolved of their statutory liabilities. The cost of the petitions was determined, and the petitions were disposed of accordingly, with dispensation of filing and issuance of drawn-up orders.

This detailed analysis highlights the Court's considerations, responses to concerns raised by authorities, and the directives issued regarding the Scheme of Amalgamation and post-merger obligations of the petitioner Companies.