2020 (9) TMI 705 - Tri - Companies Law

Sanction of Scheme of Merger by Absorption - Sections 230 to 232 of the Companies Act, 2013 - HELD THAT - From the material on record, the Scheme appears to be fair and reasonable and is not in violation of any provisions of Law and is not contrary to public policy - Since all the requisite statutory compliances have been fulfilled, Joint Company Scheme Petition No. C.P. (CAA)/4311/MB/2019 filed by the Petitioner Companies are made absolute in terms of prayer clause (a) of the Joint Company Scheme Petition. Petitioner Companies are directed to lodge a certified / authenticated copy of this Order and the Scheme with the concerned Superintendent of Stamps for the purpose of adjudication of stamp duty payable, if any, on the same within 60 working days from the date of the receipt of the certified copy of the Order, for the purpose of adjudication of stamp duty payable.

Summary

Issues:
1. Sanction of Scheme of Merger by Absorption under Sections 230 to 232 of the Companies Act, 2013.
2. Compliance with statutory requirements and directions of the National Company Law Tribunal.
3. Rationale for the Scheme based on operational synergies, simplification, and efficiency.
4. Observations and recommendations by the Regional Director and responses by the Petitioner Companies.
5. Reports by the Official Liquidator and compliance with statutory obligations.
6. Fairness and reasonableness of the Scheme and fulfillment of statutory compliances.

Analysis:
1. The judgment pertains to the sanction of a Scheme of Merger by Absorption between two companies, Lombards Private Limited (Transferor Company) and Alco Company Private Limited (Transferee Company), along with their respective shareholders. The Petitioner Companies sought approval under Sections 230 to 232 of the Companies Act, 2013, for the said Scheme.

2. The Petitioner Companies, in compliance with the directions of the National Company Law Tribunal, submitted a Joint Company Scheme Petition, stating that the Board of Directors of both companies had approved the Scheme. They assured compliance with all statutory requirements under the Companies Act, 2013, and agreed to fulfill any additional obligations as necessary.

3. The rationale for the Scheme included operational synergies, simplification, and efficiency resulting from the merger. The consolidation of businesses aimed at achieving management efficiency, reducing regulatory and legal compliance obligations, and minimizing administrative costs post-merger dissolution of the Transferor Company.

4. The Regional Director's report highlighted various observations and recommendations related to accounting entries, authorized share capital, compliance with provisions of the Companies Act, 2013, and filing requirements with regulatory bodies. The Petitioner Companies responded to each observation, clarifying their compliance and commitments.

5. Reports from the Official Liquidator confirmed that the Scheme was not prejudicial to the public interest and recommended the dissolution of the Transferor Company without winding up. The Tribunal found the Scheme fair, reasonable, compliant with the law, and not against public policy.

6. Having fulfilled all statutory compliances and regulatory requirements, the Tribunal made the Joint Company Scheme Petition absolute, directing the Petitioner Companies to lodge certified copies of the Order and the Scheme for stamp duty adjudication and Registrar of Companies' records within specified timelines. Regulatory authorities were instructed to act upon the Order and authenticated Scheme accordingly.