2017 (10) TMI 759 - AT - Companies Law

Scheme of Amalgamation - Held that - There is full compliance of SEBI Circulars dated 4th February, 2013 and 21st May, 2013. Although the Appellants have raised allegation that unaudited/management accounts of the three Companies, upto 31st December, 2013 were not placed before the Tribunal, but we find that all documents required under the law as provided in the Companies Act, 1956 and Clause 24(f) of the Listing Agreement and Circulars of SEBI were placed. Mere allegation made by the minority shareholders (Appellants) that the valuation was not properly made will not hold good, till certain illegalities in the matter of valuation are highlighted. The Appellants, having failed to show any such illegality in the valuation made by the Valuer, on mere allegation it cannot be interfered with. From the record, we find that Surplus Assets of Trinetra Cement Limited have not been valued separately because the Company has to be-treated as going concern . It was in this premises, the valuation of both Trinetra Cement Limited and The India Cements Limited - the Net Asset Value method was not used. Trinetra Cement Limited and The India Cements Limited , both have power plants, mining leases etc. which are their business assets - adding the market value of business assets of the enterprise value would be grossly erroneous as the very cash flows are generated using those business assets. Reasoning given by the Tribunal is not perverse, we are not inclined to interfere with the impugned order.

Summary

Issues:
1. Rejection of modification of scheme of amalgamation by National Company Law Tribunal.
2. Challenge to valuation and compliance with SEBI Circulars.
3. Allegations of lack of transparency and non-compliance with valuation procedures.
4. Concerns regarding treatment of surplus assets and valuation methods.
5. Shareholders' objections and voting results.

Analysis:

1. The appeal was filed against the rejection of the modification of the scheme of amalgamation by the National Company Law Tribunal. The Tribunal approved the scheme of amalgamation and directed the companies involved to proceed with the Registrar of Companies for further processing as per the law.

2. The minority shareholders raised objections regarding the valuation process and compliance with SEBI Circulars. They argued that the valuation was unfair and nontransparent, and the valuation report, fairness opinion, and audit committee report were not conducted independently as required by SEBI Circulars.

3. The appellants contended that the valuer and merchant banker worked together, contrary to SEBI Circulars, and certain financial aspects, such as capital advance and unaudited balance sheets, were not appropriately considered in the valuation process. They also raised concerns about the lack of transparency in the valuation procedures.

4. The treatment of surplus assets and the valuation methods used were also questioned. The valuation of the companies involved did not separately value surplus assets, and the net asset value method was not applied due to the companies being treated as going concerns with business assets like power plants and mining leases.

5. The respondents argued that the objectors did not raise concerns during the shareholders' meeting and that their objections were belated. They highlighted the overwhelming approval of the scheme by shareholders through voting, both in the equity shareholders' meeting and the postal ballot/e-voting.

In conclusion, the Appellate Tribunal dismissed the appeal, stating that there was no merit in the objections raised. The Tribunal found no illegality in the valuation process and compliance with SEBI Circulars. The decision of the National Company Law Tribunal was upheld, and no costs were awarded in this case.