2018 (5) TMI 1846 - Tri - Companies Law

Approval of the scheme of amalagamation - prior approval of RBI is a must for proceeding further with the consideration of the Scheme which was not taken - companies involved in the scheme are carrying NBFC activities, the approval of the RBI are mandatory - HELD THAT - In the matter of Avenir Finvest and Leasing P. Ltd., In re 2017 (8) TMI 1324 - NATIONAL COMPANY LAW TRIBUNAL, NEW DELHI rejected the scheme in view of non-approval by the RBI to the scheme. Where the financial assets of a company constitute more than 50 per cent. of their total asset and income from the financial assets constitute more than 50 per cent. of the gross total income in view of RBI s approval not in place, the scheme is liable to be rejected. In the instant case also as per the report of the Regional Director all the above companies meets the above criteria and therefore falls within the scheme of a company carrying NBFC activity and if that were so, requiring the RBI approval and since the same is not in place, this Tribunal is constrained to dismiss the present petition

Summary

Issues:
1. Approval of the scheme of arrangement for amalgamation.
2. Dispensation of meetings of equity shareholders, secured and unsecured creditors.
3. Transfer of records from High Court to National Company Law Tribunal.
4. Compliance with RBI regulations for companies engaged in NBFC activities.

Analysis:
1. The petition was filed for the approval of a scheme of arrangement for the amalgamation of multiple companies. The High Court initially dispensed with the requirement of convening meetings of shareholders and creditors due to consents obtained. The matter was subsequently transferred to the National Company Law Tribunal for consideration.

2. The Regional Director raised concerns regarding companies engaged in NBFC activities, emphasizing the need for RBI approval. The Regional Director's objection was based on the companies' financial activities and the lack of RBI approval for the proposed amalgamation scheme. The Tribunal noted a similar case where non-approval by the RBI led to the rejection of the scheme.

3. The petitioners responded by stating that all investments were in unlisted companies, and shareholders were closely related. They argued that the shares to be allotted were within the family, and the companies did not fall under the NBFC definition. The Registrar of Companies issued penalties for non-compliance, which were later partly reduced by the Regional Director on appeal.

4. The Tribunal considered the objections raised by the Regional Director and official liquidator. It highlighted the importance of RBI approval for companies involved in NBFC activities. Citing a previous case, the Tribunal emphasized the necessity of RBI approval for schemes involving companies meeting specific financial criteria. As the petitioners failed to provide evidence of RBI approval, the Tribunal dismissed the petition without costs.