2019 (6) TMI 1553 - Tri - Companies Law

Approval of the Scheme of Amalgamation - 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 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 as 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 the Scheme is in the interest of the transferor companies and the transferee company including their shareholders, creditors, employees and all concerned - upon considering the approval accorded by the members and creditors of all the Petitioner companies to the proposed Scheme, and the affidavits filed by the Regional Director, Northern Region, Ministry of Corporate Affairs including the report of official liquidator, and also as no objection from any quarter against the Scheme has been received; 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 - Application allowed.

Summary

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

Detailed Analysis:

1. Scheme of Amalgamation:
The joint application filed by the Petitioner Companies sought approval for the Scheme of Amalgamation under Sections 230 to 232 of the Companies Act, 2013. The Scheme involved merging two Transferor Companies into a Transferee Company. The Transferor Companies were incorporated under the Companies Act, 1956, while the Transferee Company was incorporated under the same Act.

2. Compliance and Affidavits:
The Petitioners complied with the procedural requirements, including dispensation from convening meetings of shareholders and creditors, publication in newspapers, and serving notices to relevant authorities. Affidavits were filed affirming compliance with these orders. The Regional Director, Official Liquidator, and other regulatory bodies did not raise objections against the Scheme.

3. Regulatory Responses:
The Regional Director and Official Liquidator did not object to the Scheme, ensuring that the affairs of the companies were conducted in the interest of members and public interest. Despite notice, the Income Tax Department did not file any observation within the specified time frame, indicating no objection to the Scheme.

4. Statutory Compliance and Auditors' Certificates:
The petitioners affirmed compliance with statutory provisions and confirmed no pending tax liabilities. Certificates from statutory auditors confirmed that the accounting treatment proposed in the Scheme was in accordance with Accounting Standards specified under the Companies Act, 2013.

5. Judicial Precedents and Tribunal Decision:
The Tribunal referred to legal precedents emphasizing its limited role in evaluating the fairness, justness, and reasonableness of the Scheme. Approval was granted considering the consent of members and creditors, lack of objections, and compliance with statutory requirements.

6. Order and Dissolution of Companies:
The Tribunal granted sanction to the Scheme under Sections 230 to 232 of the Companies Act, 2013. The Transferor Companies were to stand dissolved without winding-up, with their assets and liabilities transferred to the Transferee Company. Employees of the Transferor Companies were to become employees of the Transferee Company without interruption in service.

7. Compliance and Further Directions:
The Petitioner Companies were directed to deliver a certified copy of the order to the Registrar of Companies for registration. Any interested party could apply to the Tribunal for necessary directions. The order clarified that it did not exempt the companies from payment of stamp duty, taxes, or other charges as per law.

Conclusion:
The Tribunal approved the Scheme of Amalgamation, ensuring compliance with legal procedures, regulatory requirements, and protection of stakeholders' interests. The detailed analysis covered various aspects of the judgment, highlighting the thorough evaluation conducted by the Tribunal before granting sanction to the Scheme.