2014 (5) TMI 1201 - HC - Companies Law

Sanction of scheme of Amalgamation - HELD THAT - The Official Liquidator sought information from the Petitioner Companies. Based on the information received, learned Official Liquidator has filed his report dated 15th April, 2014, wherein he has stated that he has not received any complaint against the proposed Scheme from any person/party interested in the Scheme in any manner and that the affairs of the Transferor Companies, which is subject matter of dissolution, do not appear to have been conducted in a manner prejudicial to the interest of its members, creditors or to public interest as per 2nd proviso of Section 394(1) of the Act - In response to the notice issued in the Petition, learned Regional Director, Northern Region, Ministry of Corporate Affairs has filed his Affidavit/Report dated 22nd May, 2014. Relying on the Scheme of Amalgamation, he has stated that, upon sanction of the Scheme, all the employees of the Transferor Companies shall become the employees of the Transferee Company without any break or interruption in their services. Despite notice, the Income Tax Authorities have not raised any objection with regard to the scheme. It is directed that in case it is found that the transferor companies has violated any provision of the Reserve Bank of India Act then the Directors of the Transferor Company guilty of breaching the applicable provisions of the Reserve Bank of India Act shall continue to be liable irrespective of the sanction of the Scheme - No issue with regard to the above issuance of shares on premium or transfer of funds by way of investment or granting of loan or advance is raised by the Income Tax Authorities. The Income Tax Authorities has further not raised any issue with regard to the share application money pending in the petitioner company. It is directed that the Income Tax Authorities shall be permitted to proceed against the Transferee Company in respect of any liability that may arise on account of sanction of the Scheme. In view of the approval accorded by the Shareholders and Creditors of the Petitioner Companies; representation/reports filed by the Regional Director, Northern Region and the Official Liquidator, attached with this Court to the proposed Scheme of Amalgamation, there appears to be no impediment to the grant of sanction to the Scheme of Amalgamation. Consequently, sanction is hereby granted to the Scheme of Amalgamation under sections 391 and 394 of the Companies Act, 1956. The Petitioner Companies will comply with the statutory requirements in accordance with law. Petition allowed.

Summary

Issues:
1. Sanction to the Scheme of Amalgamation under sections 391 to 394 of the Companies Act, 1956.
2. Compliance with statutory requirements for amalgamation.
3. Transfer of property, rights, and liabilities to the Transferee Company.
4. Clarification on RBI regulations for NBFCs in the context of amalgamation.
5. Confirmation of approval by Shareholders and Creditors for the scheme.

Analysis:
Issue 1: The judgment involves a second motion joint Petition filed seeking sanction to the Scheme of Amalgamation of multiple Transferor Companies with a Transferee Company under sections 391 to 394 of the Companies Act, 1956. The Petitioner Companies had previously filed for dispensation of meetings, which was allowed by the Court. The Official Liquidator and Regional Director provided reports in favor of the scheme, indicating no objections or complaints against it.

Issue 2: The Court granted sanction to the Scheme of Amalgamation after considering the reports of the Official Liquidator and Regional Director, along with the absence of objections from any party. The Petitioner Companies were directed to comply with statutory requirements within 30 days, and upon the scheme coming into effect, the Transferor Companies would stand dissolved without winding up.

Issue 3: It was clarified that the order did not exempt the scheme from payment of stamp duty or any other charges. All property, rights, and liabilities of the Transferor Companies were to be transferred to the Transferee Company without the need for further action, in accordance with sections 391 and 394 of the Companies Act, 1956.

Issue 4: The judgment addressed concerns regarding RBI regulations for NBFCs, stating that obtaining "No Objection" from the RBI for the proposed Scheme of Amalgamation was not required for the involved companies. The Court directed that if any violation of RBI provisions was found, the Directors of the Transferor Company would be liable, irrespective of the scheme's sanction.

Issue 5: The judgment confirmed that no objections were received from any party regarding the amalgamation scheme. The approval of Shareholders and Creditors, along with the reports from the Official Liquidator and Regional Director, supported the grant of sanction to the scheme. The Petitioner Companies agreed to deposit a sum in the Common Pool fund of the Official Liquidator voluntarily.