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2019 (11) TMI 1488 - Tri - Companies LawApproval of the Scheme of Amalgamation - Section 230 to 232 and other applicable provisions of the Companies Act, 2013 read with Companies (Compromises, Arrangements and Amalgamations) Rules, 2016 - HELD THAT - The Chartered Accountant appointed by the Official Liquidator verified the books of accounts of the Transferor Company and in relation to the Share Exchange Ratio - Further, the Department of Income Tax has also filed its report on 15.10.2019 and brought on record that the Transferee Company has not filed its Return of Income under Section 139(1) of the Income Tax Act, 1961 for AY's 2019 - 2020 and that the same is getting time barred on 30.11.2019 and has sought for a direction to the Transferee Company to file its return before the due date. However, on 05.11.2019, the Department of Income Tax has filed another memo stating that the earlier direction was wrongly sought for, as it would be violative of the statutory provisions to seek a direction for the Transferee Company to file the returns before the due date and requested that the Transferee Company be directed to file the returns under the IT Act prior to approval of the Scheme. The Petitioner Companies have complied with proviso to Section 230(7) /Section 232 (3) by filing the certificate of the Company's Auditor in relation to compliance with the Accounting Standards, the applicable Accounting Standards notified by the Central Government and Section 2(43) of the Companies Act, 2013 and the rules framed thereunder. Amalgamation scheme approved. In view of absence of any other objections having been placed on record before this Tribunal and since all the requisite statutory compliances having been fulfilled, this Tribunal sanctions the Scheme of Amalgamation annexed as Annexure 3 with the Company Petition as well as the prayer made therein - Scheme sanctioned.
Issues: Approval of Scheme of Amalgamation under Companies Act, 2013
Detailed Analysis: 1. Approval of Scheme of Amalgamation: The Company Petitions were filed for the approval of the Scheme of Amalgamation between two companies under Sections 230 to 232 of the Companies Act, 2013. The Tribunal had earlier dispensed with the requirement of convening meetings of Equity Shareholders, Secured, and Unsecured Creditors based on a motion application. Subsequently, the Petitioner Companies filed the petitions for the sanction of the Scheme of Amalgamation after fulfilling the necessary directions issued by the Tribunal. 2. Compliance with Directions: The Petitioner Companies complied with the directions issued by the Tribunal, including serving notices to Statutory/Regulatory Authorities and publishing in designated newspapers. Affidavits were filed confirming the compliance with the Tribunal's orders, and acknowledgments/receipts were enclosed as proof. 3. Reports and Observations: The Regional Director submitted a report highlighting certain observations regarding the Scheme, including the protection of employees' interests and the requirement for the Transferee Company to pay fees for the enhanced authorized capital post-amalgamation. The Regional Director did not raise objections to the Scheme after examination. 4. Responses to Observations: The Petitioner Company responded to the observations made by the Regional Director, ensuring compliance with the necessary provisions of the Companies Act, 2013, regarding the amended Memorandum of Association (MOA) and payment of fees for the authorized capital. 5. Official Liquidator's Report: The Official Liquidator confirmed that the affairs of the Transferor Company were not conducted in a prejudicial manner, as per the provisions of the Companies Act. The Chartered Accountant appointed by the Official Liquidator provided insights into the Share Exchange Ratio, emphasizing the valuation process and the exchange ratio of shares between the companies. 6. Income Tax Department's Reports: The Income Tax Department initially sought a direction for the Transferee Company to file its Income Tax Return before the due date. However, a subsequent memo clarified that such a direction would be violative of statutory provisions. The Department requested the filing of returns under the Income Tax Act before the Scheme's approval. 7. Statutory Compliance: The Petitioner Companies fulfilled the statutory requirements, including submitting the Auditor's certificate regarding compliance with Accounting Standards and confirming the absence of pending investigation proceedings or oppression/mismanagement cases against them. 8. Sanction of Scheme: With no other objections on record and all statutory compliances met, the Tribunal sanctioned the Scheme of Amalgamation. The order clarified that any deficiencies or violations would not be exempted from legal actions, and the approval did not grant exemption from payment of stamp duty or taxes. 9. Final Orders: The Tribunal ordered the transfer of properties, liabilities, engagements, and duties to the Transferee Company, continuation of pending proceedings, and seamless transition of employees. The dissolution of the Transferor Company and consolidation of documents with the Registrar of Companies were also directed, allowing interested parties to seek necessary directions from the Tribunal. 10. Judicial Precedent: Reference was made to a previous NCLT New Delhi judgment regarding the IT Department's rights in a Scheme of Amalgamation, emphasizing the protection granted to the Department for recovery of statutorily dues. In conclusion, the Tribunal approved the Scheme of Amalgamation between the companies, ensuring compliance with legal provisions and safeguarding the interests of stakeholders involved.
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