2018 (8) TMI 2113 - Tri - Insolvency and Bankruptcy

Sanction of scheme of amalgamation - Section 230-232 of the Companies Act, 2013 - HELD THAT - Upon considering the approval accorded by the members and creditors of the Petitioner Companies to the Scheme, and the report filed by the Regional Director, there appears no impediment to grant sanction to the Scheme. Consequently, sanction is hereby granted to the Scheme under Section 230-232 of the Companies Act, 2013. The sanctioned Scheme shall be binding on the Petitioner Companies and on all their respective shareholders and creditors, and all other concerned persons, with effect from the Appointed Date, i.e. April 01, 2018. The Petitioner Companies shall, however, remain bound to comply with the statutory requirements by law. Petition allowed.

Summary

Issues Involved:
1. Sanctioning of the Scheme of Amalgamation.
2. Compliance with the Accounting Standards.
3. Interest of Shareholders and Creditors.
4. Directors' Interest in the Scheme.
5. Sufficiency of Assets to Meet Liabilities.
6. Absence of Investigations or Proceedings.
7. Valuation and Share Exchange Ratio.
8. Dispensation of Meetings.
9. Compliance with Statutory Notices and Regulations.
10. Non-requirement of Notification to the Competition Commission of India (CCI).
11. No Objection from Statutory Authorities.
12. Final Sanction and Binding Nature of the Scheme.

Issue-wise Detailed Analysis:

1. Sanctioning of the Scheme of Amalgamation:
The petition was filed jointly by Honda Motor India Private Limited (Transferor Company) and Honda Cars India Limited (Transferee Company) to sanction a Scheme of Amalgamation. The entire undertaking of the Transferor Company, including all assets and liabilities, was to be transferred to the Transferee Company effective from April 01, 2018. The scheme was approved by the shareholders and creditors of both companies through board resolutions dated December 18, 2017.

2. Compliance with the Accounting Standards:
The accounting treatment proposed in the Scheme conforms with the accounting standards prescribed under Section 133 of the Companies Act, 2013. An auditor’s certificate confirming this compliance was annexed as Annexure P-20 to the Petition.

3. Interest of Shareholders and Creditors:
The Scheme was stated to be beneficial to the Petitioner Companies and their respective shareholders, creditors, employees, and all other concerned parties. It was confirmed that the Scheme is not prejudicial to the interests of the equity shareholders and creditors.

4. Directors' Interest in the Scheme:
None of the Directors of the Petitioner Companies had any material interest in the Scheme, except in their capacity as Directors and shareholders.

5. Sufficiency of Assets to Meet Liabilities:
The assets of the Petitioner Companies were sufficient to meet all liabilities. The Scheme did not adversely affect the rights of any creditors, and the Transferee Company made provisions for the payment of all liabilities of the Transferor Company as they fall due.

6. Absence of Investigations or Proceedings:
There were no investigations or proceedings pending against either of the Petitioner Companies under Chapter XIV of the Companies Act, 2013, or the provisions of Sections 235 to 251 of the Companies Act, 1956.

7. Valuation and Share Exchange Ratio:
The valuation of the Petitioner Companies for the Scheme was undertaken by Ernst & Young Merchant Banking Services Private Limited. The Valuation Report, which determined the Share Exchange Ratio, was based on settled principles of valuation. The unaudited financials as of December 31, 2017, were also submitted.

8. Dispensation of Meetings:
Meetings of the unsecured creditors and equity shareholders of the Transferor Company and the meetings of secured creditors, unsecured creditors, and equity shareholders of the Transferee Company were dispensed with by the Tribunal's order dated March 16, 2018, due to the consent given by the shareholders and creditors.

9. Compliance with Statutory Notices and Regulations:
Notices were served on statutory authorities, including the Central Government, Registrar of Companies, Income-tax Department, Official Liquidator, and the Competition Commission of India. An affidavit of compliance was filed by the Petitioner Companies.

10. Non-requirement of Notification to the Competition Commission of India (CCI):
The Petitioner Companies conducted a self-assessment and concluded that the proposed amalgamation was exempt from being notified to the CCI under Item 9 of Schedule I read with Regulation 4 of the Combination Regulations. The CCI requested an undertaking from the Petitioner Companies confirming that no approval was required.

11. No Objection from Statutory Authorities:
The Office of the Deputy Commissioner, Income Tax, and the Official Liquidator (UP) provided their 'No Objection' to the Scheme. The Regional Director, Northern Region, Ministry of Corporate Affairs, confirmed no adverse observations.

12. Final Sanction and Binding Nature of the Scheme:
The Tribunal, after considering the approval from members and creditors and the report from the Regional Director, found no impediment to grant sanction to the Scheme under Sections 230-232 of the Companies Act, 2013. The Scheme was sanctioned, binding on the Petitioner Companies and all their respective shareholders and creditors, with effect from April 01, 2018. The order included directions for the transfer of assets and liabilities, continuation of pending suits, dissolution of the Transferor Company without winding up, and compliance with statutory requirements.

The Company Petition No. 189/ALD/2018 was disposed of accordingly, with certified copies of the order to be delivered to the Registrar of Companies within 30 days.