2018 (9) TMI 1607 - Tri - Companies Law

Scheme of Amalgamation - bar to allow/sanction merger of an Indian LLP with an Indian Company - Held that - This is the clear case of casus omissus. If the intention of the parliament is to permit a foreign LLP to merge with an Indian Company, then it would be wrong to presume that the Act prohibits a merger of an Indian LLP with an Indian Company. Thus, there does not appear any express legal bar to allow/sanction merger of an Indian LLP with an Indian Company. There is no additional requirement for any modification and the said Scheme of Amalgamation appears to be fair and reasonable and is not contrary to public policy and not violative of any provisions of law. Taking into consideration the above facts, the Company Petition is allowed and the Scheme of Amalgamation annexed with the Petition is hereby sanctioned which shall be binding on the partner, shareholders, creditors and employees of the Companies. The Scheme shall become effective from the date on which the certified copy of this order sanctioning the scheme is filed with the ROC, Chennai. While approving the Scheme as above, it is clarified that this Order will not be construed as an order granting exemption from payment of stamp duty or taxes or any other charges, if payable, as per the relevant provisions of law or from any applicable permissions that may have to be obtained or, even compliances that may have to be made as per the mandate of law. The Transferee Company is directed to file the amended MoA and AoA with the RoC, Chennai, for his records. The Companies to the said Scheme or other person interested shall be at liberty to apply to this Bench for any direction that may be necessary with regard to the working of the said Scheme. A certified copy of this Order shall be filed with the concerned Registrar of Companies within 30 days of the receipt of the Order.The Order of sanction to this Scheme shall be prepared by the Registry as per the relevant format provided

Summary

Issues:
- Consideration of a Joint Company Petition under Sections 230 to 232 of the Companies Act, 2013 for the proposed Scheme of Amalgamation.
- Legality of allowing a Limited Liability Partnership (LLP) to merge with a Private Limited Company under a Scheme of Amalgamation before the National Company Law Tribunal.

Analysis:
1. The Tribunal considered a Joint Company Petition filed under Sections 230 to 232 of the Companies Act, 2013 for the proposed Scheme of Amalgamation between two entities, Transferor LLP and Transferee Company, engaged in the business of Audio and Video Laboratories. The Scheme aimed to transfer all assets, liabilities, and interests of the Transferor LLP to the Transferee Company as a going concern.

2. The Regional Director and Official Liquidator submitted reports supporting the Scheme, confirming compliance with statutory requirements, protection of employees' interests, and proper accounting treatment. The Scheme also involved the issuance of equity shares to partners of the Transferor LLP and maintained conformity with accounting standards prescribed under the Companies Act, 2013.

3. The main legal issue revolved around whether an Indian LLP could be allowed to amalgamate with an Indian Company under a Scheme of Amalgamation before the National Company Law Tribunal. The Counsel argued that while the Companies Act, 1956 did not prohibit such mergers, the Companies Act, 2013 lacked a specific provision addressing this scenario, leading to a casus omissus.

4. After thorough consideration, the Tribunal concluded that the legislative intent behind both the LLP Act, 2008, and the Companies Act, 2013 aimed to facilitate business operations and mergers for companies and LLPs. It was observed that if the intention was to permit a foreign LLP to merge with an Indian Company, there was no express legal bar preventing the merger of an Indian LLP with an Indian Company.

5. The Tribunal found the Scheme of Amalgamation fair, reasonable, and not contrary to public policy or violative of any law provisions. The Scheme was sanctioned, binding on partners, shareholders, creditors, and employees of the Companies. The Transferor LLP was directed to be dissolved without winding up upon filing the certified copy of the Order with the Registrar of Companies.

6. The Order clarified that it did not grant exemption from stamp duty, taxes, or other charges, and directed the Transferee Company to file amended Memorandum and Articles of Association with the Registrar of Companies. The Companies or interested parties were given liberty to apply for necessary directions regarding the Scheme's implementation.

7. The Tribunal emphasized compliance with relevant laws, filing requirements, and directed the Registrar of Companies to consolidate documents related to the Transferor LLP with the Transferee Company's records. The Order of sanction was to be prepared as per the Companies (Compromises, Arrangements and Amalgamations) Rules, 2016.

8. Ultimately, the Scheme of Amalgamation was sanctioned, and the Company Petition was disposed of, marking the conclusion of the legal proceedings related to the merger between the Transferor LLP and the Transferee Company.