2019 (8) TMI 390 - AT - Companies Law

Scheme of amalgamation - Convention of meeting of Equity shareholders - non-filing of the Consent Letters given by the shareholders by way of affidavit before the Tribunal - HELD THAT - Further from the perusal of the Consent Letters of the Transferee Company, the shareholders have given their no objection and consent for merger of the Transferor Companies with the Transferee Company - From the Consent Letters, it is un-equivocal that the equity shareholders of the Transferor and the Transferee Companies do not have any objection to the Scheme of Arrangement by way amalgamation of the Transferor Companies with the Transferee Company. The Tribunal had already dispensed with convening and holding meeting of secured and unsecured creditors taking into consideration the Consent Affidavits filed by them expressing their no objection for amalgamation of Transferor Companies with the Transferee Company. The Appellant (Transferor and Transferee) Companies have complied with the requirements to consider and approve the Scheme of amalgamation and having satisfied with the documents filed by the Appellants, we dispense with the convening of meetings of the equity shareholders of the Transferor and Transferee Companies as directed by the Tribunal in the impugned order dated 07.06.2019. The impugned order of the Tribunal dated 07.06.2019 whereby it directed to the Transferor and Transferee Companies to convene and hold meeting of the equity shareholders is hereby set aside - appeal allowed.

Summary

Issues:
- Compliance with the requirements for amalgamation approval under the Companies Act, 2013
- Consideration of individual consent affidavits of equity shareholders
- Dispensing with the convening of meetings of shareholders
- Discrepancy in the Tribunal's consideration of consent letters of shareholders
- Setting aside the Tribunal's order and directing expedited disposal of the case

Compliance with Amalgamation Approval Requirements:
The appeal was filed seeking approval for the amalgamation of Transferor Companies with the Transferee Company under the Companies Act, 2013. The purpose was to enhance administrative convenience and value creation for the Transferee Company. The Appellants had filed necessary documents, including Memorandum of Association, Articles of Association, and Consent Letters of shareholders and creditors, to comply with the Act and NCLT Rules.

Consideration of Individual Consent Affidavits:
The Tribunal directed the Appellants to convene meetings of equity shareholders due to the alleged non-filing of individual consent affidavits by shareholders. However, the Appellants contended that they had filed the necessary documents, including Consent Letters of more than 90% equity shareholders of both Transferor and Transferee Companies. These Consent Letters expressed no objection to the amalgamation scheme.

Dispensing with Shareholders' Meetings:
Despite the Tribunal's directive to convene shareholder meetings, the Appellants argued that the majority of shareholders had provided Consent Letters supporting the amalgamation. The Tribunal had already dispensed with the need for meetings of secured and unsecured creditors based on their Consent Affidavits expressing no objection to the scheme.

Discrepancy in Tribunal's Consideration of Consent Letters:
The Tribunal's order highlighted the failure to file individual consent affidavits of all equity shareholders as the basis for directing meetings. However, the Appellants had filed Consent Letters from a significant majority of shareholders, indicating their approval of the amalgamation scheme. The Tribunal's decision was challenged based on this discrepancy.

Setting Aside Tribunal's Order and Expedited Disposal:
Upon review, the Appellate Tribunal set aside the order directing the convening of shareholder meetings. The Appellants' compliance with the requirements and the submission of Consent Letters from a substantial majority of shareholders led to the modification of the order. The Tribunal was directed to expedite the disposal of the case, allowing for further consideration of the amalgamation approval application.

This detailed analysis of the judgment addresses the issues of compliance with legal requirements, consideration of consent affidavits, dispensing with shareholder meetings, discrepancies in the Tribunal's decision, and the final directive to set aside the order and expedite case disposal.