2020 (5) TMI 67 - Tri - Companies Law

Sanction of scheme of amalgamation - sections 230 to 232 of the Companies Act, 2013 - in the entire undertakings of the transferor companies as a going concern together with all the assets and liabilities relating thereto is proposed to be transferred to and be vested in the transferee company on the terms and conditions and in the manner fully stated therein - HELD THAT - The scheme of amalgamation mentioned in paragraph 1 of this petition being annexure A1 hereto be sanctioned by this hon'ble Tribunal to be binding with effect from the April 1, 2017 or from such other date as this hon'ble court may fix on transferor companies and transferee company. All the properties, rights and interest of transferor companies be transferred to and be vested without further act or deed in transferee company and accordingly the same shall pursuant to sections 230 to 232 of the Companies Act, 2013 be transferred to and be vested in transferee company for all the estate and interest of transferor companies subject never the less to all charges now affecting the same. Petition disposed off.

Issues Involved:
1. Sanctioning of the scheme of amalgamation.
2. Dispensation of meetings of equity shareholders and creditors.
3. Grounds necessitating the scheme of amalgamation.
4. Approval of the scheme by the board of directors.
5. Compliance with accounting standards.
6. Adequacy of assets to meet liabilities.
7. Pending proceedings under specific sections of the Companies Act, 2013.
8. Service of notice to statutory authorities.
9. Observations by the Regional Director, Eastern Region, Ministry of Corporate Affairs.
10. Compliance with Income-tax Department requirements.
11. Report of the Official Liquidator.
12. Final order and directions by the Tribunal.

Detailed Analysis:

1. Sanctioning of the Scheme of Amalgamation:
The petition sought the Tribunal's sanction for the scheme of amalgamation of M/s. Swadha Properties P. Ltd. and M/s. Bluejay Airlines P. Ltd. (transferor companies) with M/s. Saharsh Yarn P. Ltd. (transferee company) under sections 230 to 232 of the Companies Act, 2013. The scheme aimed to transfer all undertakings, assets, and liabilities of the transferor companies to the transferee company.

2. Dispensation of Meetings of Equity Shareholders and Creditors:
The Tribunal, in its order dated April 12, 2018, dispensed with the meetings of equity shareholders and creditors of the petitioner companies, directing them to file the petition for the order.

3. Grounds Necessitating the Scheme of Amalgamation:
The petition outlined several reasons for the amalgamation, including benefits of economy of scale, strategic reorganization of manpower, better coordination of group activities, pooling of resources, reduction in overheads, and the ability to participate more vigorously in a competitive market.

4. Approval of the Scheme by the Board of Directors:
The board of directors of all petitioner companies unanimously approved the scheme of amalgamation in their respective board meetings. Photostat copies of these resolutions were annexed to the petition.

5. Compliance with Accounting Standards:
The petitioner companies received certificates from their auditors confirming that the accounting treatment proposed in the scheme was in accordance with the accounting standards prescribed under section 133 of the Companies Act, 2013.

6. Adequacy of Assets to Meet Liabilities:
The petition stated that the assets of the petitioner companies were sufficient to meet all their liabilities and that the scheme of amalgamation would not adversely affect them in any manner.

7. Pending Proceedings Under Specific Sections of the Companies Act, 2013:
There were no proceedings pending under sections 210, 213, 216, 219, 220, 222 to 225 of the Companies Act, 2013 against any of the petitioner companies.

8. Service of Notice to Statutory Authorities:
The petitioner companies filed an affidavit of service in proof of publication and service of notice to statutory authorities as directed by the Tribunal.

9. Observations by the Regional Director, Eastern Region, Ministry of Corporate Affairs:
The Regional Director raised several observations, including the need for responses to queries, compliance with section 230(10) regarding fractional share entitlements, accounting treatment clarity, compliance with section 232(3)(i), and issues with financial statements and NBFC registration. The petitioner companies addressed these observations through supplementary affidavits, agreeing to modify the scheme and comply with the necessary provisions.

10. Compliance with Income-tax Department Requirements:
The Income-tax Department objected to the scheme due to outstanding tax demands against the transferee company. The petitioner companies subsequently paid the outstanding demands and provided evidence of payment.

11. Report of the Official Liquidator:
The Official Liquidator's report stated that the affairs of the petitioner companies did not appear to have been conducted in a manner prejudicial to the interest of their members or the public.

12. Final Order and Directions by the Tribunal:
The Tribunal sanctioned the scheme of amalgamation to be binding with effect from April 1, 2017. It ordered the transfer of all properties, rights, liabilities, and duties of the transferor companies to the transferee company. The transferor companies were to be dissolved without winding up upon filing the certified copy of the order with the Registrar of Companies. The Tribunal also granted leave to file the schedule of assets and allowed any interested person to apply for necessary directions.

Conclusion:
The Company Petition No. C. P. (CAA) No. 725/KB/2018 connected with C. A. (CAA) No. 197/KB/2018 was disposed of accordingly, with the scheme of amalgamation being sanctioned by the Tribunal. Urgent certified copies of the order were to be issued upon compliance with requisite formalities.

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