2017 (10) TMI 1195 - Tri - Companies Law

Scheme of amalgamation - whether a registered partnership firm, being a body corporate, can be treated as a company for the purpose of Sections 230-232 of the Companies Act, 2013? - Held that - Here it is necessary to refer to Section 394(4)(b) of the Companies Act, 1956. The said Act specifically says that a transferee company does not include any company other than a company within the meaning of the said Act, but a transferor company includes any body corporate, whether a company within the meaning of the Act or not. Therefore, as per the said proviso, even in the old Act, a transferee company must be a company registered under the Companies Act, but a transferor company includes any body corporate. In view of the said proviso in the old Act, a transferor company need not be a company registered under the Companies Act, 1956. It is sufficient if it is a body corporate. There is no dispute about the fact that a partnership firm is a body corporate. Therefore, in view of Section 394(4)(b) of the Companies Act, 1956, there can be a scheme of amalgamation between a transferor company registered as a partnership firm and a transferee company registered under the Companies Act, 1956 but not vice-versa. Applicant, being a registered partnership firm and a body corporate, is not a company within the meaning of the Companies Act, 2013 and, therefore, it cannot participate in the amalgamation proceedings that are initiated under the provisions of sections 230 to 232 of the Companies Act, 2013

Issues Involved:
1. Whether a partnership firm, being a body corporate, is entitled to maintain an application under Sections 230-232 of the Companies Act, 2013.

Detailed Analysis:

1. Definition and Eligibility of Partnership Firm as a Body Corporate:
The applicant, a registered partnership firm, sought a determination on whether it qualifies as a "body corporate" under Sections 230-232 of the Companies Act, 2013. The applicant argued that both companies and partnerships are body corporates and should be treated as synonyms for presenting a scheme of arrangement. The Tribunal examined the definition of "body corporate" under Section 2(11) of the Companies Act, 2013, which includes companies incorporated outside India but excludes co-operative societies and other bodies corporate specified by the Central Government. The Tribunal found no notification excluding registered partnership firms from the definition of "body corporate."

2. Interpretation of "Company" under the Companies Act, 2013:
The Tribunal analyzed whether a partnership firm could be considered a "company" under Sections 230-232. Section 2(20) defines a "company" as one incorporated under the Companies Act, 2013, or any previous company law. The Tribunal noted that the applicant was not incorporated under any such law and thus did not qualify as a "company" per Section 2(20). The Tribunal also referenced Section 366, which allows certain entities, including partnership firms, to register as a company under the Companies Act, indicating that unregistered firms cannot be considered companies unless they undergo this process.

3. Applicability of Definitions from Other Acts:
The applicant cited definitions from the SEBI Act, the Depositories Act, and the Securities Contracts (Regulation) Act, which include firms within the definition of "company." However, the Tribunal clarified that Section 2(95) of the Companies Act, 2013, applies only to terms not defined within the Act itself. Since "company" is defined in Section 2(20), the Tribunal dismissed the relevance of definitions from other Acts.

4. Previous Legal Precedents:
The Tribunal reviewed relevant case law, including decisions from the Bombay High Court, Kerala High Court, and Calcutta High Court. These cases addressed the status of partnership firms under different contexts and provisions of the Companies Act, 1956. However, the Tribunal emphasized that the Companies Act, 2013, lacks a provision similar to Section 394(4)(b) of the 1956 Act, which allowed a body corporate to be a transferor company in amalgamation schemes.

5. Legislative Intent and Provisions of the Companies Act, 2013:
The Tribunal highlighted that Sections 230-232 of the Companies Act, 2013, are intended for companies registered under the Act or any previous company law. The absence of provisions allowing other body corporates to participate in amalgamation schemes under these sections indicated legislative intent to restrict these provisions to registered companies. The Tribunal also noted that Section 234, dealing with foreign companies, explicitly includes body corporates, but this does not extend to domestic entities.

Conclusion:
The Tribunal concluded that the applicant, being a registered partnership firm and a body corporate, is not a "company" within the meaning of the Companies Act, 2013. Consequently, it cannot participate in amalgamation proceedings under Sections 230-232 of the Act. The application was disposed of accordingly.

← Previous Next →