2020 (1) TMI 1269 - Tri - Companies Law

Approval of the Scheme of Amalgamation of both the transferor companies with the transferee company - Sections 230 to 232 of the Companies Act, 2013 read with the Companies (Compromises, Arrangements and Amalgamations) Rules, 2016 and the National Company Law Tribunal Rules, 2016 - HELD THAT - The shareholders of the applicant companies are the best Judges of their interest, fully conversant with market trends, and therefore, their decision should not be interfered with by the Tribunal for the reason that it is not a part of judicial function to examine entrepreneurial activities and their commercial decisions. It is well settled that the Tribunal evaluating the Scheme of which sanction is sought under Section 230-232 of the Companies Act of 2013 will not ordinarily interfere with the corporate decisions of companies approved by shareholders and creditors. Right to apply for the sanction of the Scheme has been statutorily provided under Section 230-234 of the Companies Act, 2013 and therefore, it is open to the applicant companies to avail the benefits extended by statutory provisions and the Rules - It has also been affirmed in the petition that Scheme is in the interest of Transferor Companies and the transferee company including their shareholders, creditors, employees and all concerned. Thus, upon considering the approval accorded by the members and creditors of the Petitioner companies to the proposed Scheme, and the report filed by the Regional Director, Northern Region, Ministry of Corporate Affairs, official liquidator and the report filed by Income Tax Department and in the absence of any objection against the Scheme; there appears to be no impediment in sanctioning the present Scheme - sanction is hereby granted to the Scheme under Section 230 to 232 of the Companies Act, 2013. Petition allowed.

Summary

Issues:
Approval of Scheme of Amalgamation under Sections 230 to 232 of the Companies Act, 2013.

Detailed Analysis:
The joint petition filed by the Petitioner Companies sought approval of the Scheme of Amalgamation under Sections 230 to 232 of the Companies Act, 2013. The Scheme involved the amalgamation of two transferor companies with a transferee company. The transferor companies were incorporated under the Companies Act, 1956, while the transferee company was incorporated under the same Act. The petitioners initially sought dispensation from convening meetings of equity shareholders, secured creditors, and unsecured creditors, which was granted by the Tribunal. Subsequently, the petitioners complied with publication requirements and served notices to relevant authorities as directed by the Tribunal.

The Regional Director, Official Liquidator, and Department of Income Tax submitted reports regarding the Scheme. The Regional Director confirmed compliance with annual return filings, and the Official Liquidator raised no objections to the Scheme. The Department of Income Tax reported no outstanding demands against the transferee company. However, the Department did not respond regarding the transferor companies within the stipulated time, leading to the presumption of no objections. The Tribunal clarified that the Income Tax Department retained the power to recover pending dues from the petitioner companies.

The petition affirmed no pending proceedings against the petitioner companies under the Companies Act, 2013 or 1956. Statutory auditors' certificates confirmed the accounting treatment in the Scheme complied with relevant standards. The Tribunal emphasized that shareholders' decisions should not be interfered with unless necessary, as evaluating the Scheme's fairness, justness, and reasonableness was within its jurisdiction. Referring to legal precedents, the Tribunal highlighted its role in ensuring the Scheme's compliance with the law and public interest.

Considering the approval from members and creditors, along with the reports filed by relevant authorities and the absence of objections, the Tribunal granted sanction to the Scheme under Sections 230 to 232 of the Companies Act, 2013. The petitioners were directed to comply with statutory requirements, and any deficiencies or violations would not impede legal actions against responsible parties. The Tribunal clarified that its order did not exempt the Scheme from stamp duty, taxes, or other charges, emphasizing compliance with legal obligations.

The Tribunal ordered the dissolution of the transferor companies without winding-up procedures and the transfer of their assets, rights, liabilities, and duties to the transferee company. Employees of the transferor companies were to become employees of the transferee company without interruption in service. The petitioners were instructed to deliver a certified copy of the order to the Registrar of Companies for registration within thirty days. Interested parties were granted liberty to seek necessary directions from the Tribunal.

In conclusion, the Tribunal disposed of the petition by approving the Scheme of Amalgamation and issuing detailed orders for the implementation and compliance of the Scheme.