2019 (3) TMI 1629 - Tri - Companies Law

Sanction of the Tribunal to the Scheme of Amalgamation - merger/amalgamation - no reduction of capital - proceedings pending under Section 235 to 251 of the Companies Act, 1956 and Section 217, 219, 221, 224 and 225 of the Companies Act, 2013 against any of the applicant companies - HELD THAT - If no response is received by the Tribunal from the above authorities within 30 days of date of receipt of the notice it will be presumed that such authorities have no objection to the proposed Scheme as per Rule 8 of the Companies (Compromises, Arrangements and Amalgamations) Rules, 2016 - That the Transferee Company and Transferor Company shall affirm by way of affidavit that no investigation or proceedings under the Companies Act 1956 or Companies Act, 2013 have been instituted or are pending in relation to the amalgamating and amalgamated companies. If consent affidavits of the members and unsecured creditors annexed with the application are found to be false/dubious at any stage then necessary action for committing fraud under Section 447 and 448 of the Companies Act, 2013 shall be initiated against the Transferee Company and Transferor Company and and all its directors for punishment under Section 449 of the Companies Act, 2013. Application disposed off.

Summary

Issues:
1. Approval of Scheme of Amalgamation by the Tribunal

Analysis:
The judgment pertains to an application seeking the Tribunal's sanction for a Scheme of Amalgamation where a Transferor Company is to be merged with a Transferee Company, with the appointed date set as 1st April, 2018. The application outlines various justifications for the amalgamation, including combining business activities, restructuring for better efficiency, achieving economies of scale, and enhancing profitability. It is highlighted that the Board of Directors of both companies have approved the scheme, believing it to be beneficial for shareholders, creditors, employees, and the public.

The application further details that the scheme does not involve Corporate Debt Restructuring or compromise with creditors. Both companies have ensured provisions for liabilities and have no pending proceedings under relevant sections of the Companies Act. Reports on share exchange ratios, shareholder consents, and creditor approvals have been prepared and submitted. The statutory auditors have certified the accounting treatment's compliance with prescribed standards.

The Tribunal, after considering the application and absence of objections, passes an order dispensing with separate shareholder and creditor meetings due to unanimous consents. Notices are to be served on relevant authorities for representations, and compliance affidavits are required. The judgment also emphasizes that false or dubious affidavits may lead to fraud charges against the companies and directors. The case is disposed of with no costs awarded, allowing for urgent certified copies upon fulfillment of formalities.