2020 (9) TMI 805 - Tri - Companies Law

Approval of the Scheme of Amalgamation - Section 230 to 232 of the Companies Act, 2013 read with the Companies (Compromises, Arrangements and Amalgamations) Rules, 2016 and the National Company Law Tribunal Rules, 2016 - HELD THAT - It is seen that the scheme is not detrimental to the applicant companies, its shareholders and creditors. The applicants, its members and creditors are the best judge to protect their interest. In the absence that the scheme is not fair, just and reasonable or that it is in contravention of statutory portions and for public interest, the decision of the shareholders and creditors, who have overwhelmingly voted in the favour of the scheme should be up held - upon considering the approval accorded by the members and creditors of the Petitioner companies to the proposed Scheme, and the affidavits filed by the Regional Director, Northern Region, Ministry of Corporate Affairs, the report of official liquidator and Department of Income Tax, there appears to be no impediment in sanctioning the present Scheme. Consequently, sanction is hereby granted to the 'Scheme undersection 230 232 of the Companies Act, 2013. The scheme is approved - petition disposed off.

Summary

Issues involved:
1. Approval of Scheme of Amalgamation under Sections 230-232 of the Companies Act, 2013.
2. Compliance with statutory requirements for the approval of the Scheme.
3. Reports and representations from Regional Director, Official Liquidator, and Income Tax Department.
4. Treatment of tax liabilities and obligations post-Amalgamation.
5. Dissolution and transfer of assets, liabilities, and employees from the Transferor Company to the Transferee Company.

Issue 1: Approval of Scheme of Amalgamation under Sections 230-232 of the Companies Act, 2013:
The Joint application sought approval for the Scheme of Amalgamation of the Transferor Company with the Transferee Company under Sections 230-232 of the Companies Act, 2013. The Tribunal had earlier dispensed with the meetings of shareholders and creditors as their consent had been obtained. The Petitioners complied with the publication and service requirements as directed by the Tribunal. The Regional Director, Official Liquidator, and Income Tax Department did not raise significant objections to the proposed Scheme.

Issue 2: Compliance with statutory requirements for the approval of the Scheme:
The Petitioners affirmed compliance with all orders and directions of the Tribunal, including publication in newspapers and service to relevant authorities. The statutory auditors confirmed that the Accounting Treatment in the Scheme of Amalgamation adhered to the Accounting Standards specified under the Companies Act, 2013. The Scheme ensured the fair treatment of shareholders and creditors, with no pending proceedings under Sections 210-227 of the Companies Act, 2013.

Issue 3: Reports and representations from Regional Director, Official Liquidator, and Income Tax Department:
The Regional Director, Official Liquidator, and Income Tax Department submitted reports without significant objections to the Scheme. The Income Tax Department raised concerns regarding tax implications, which were addressed by the Transferee Company's undertaking to handle losses and tax liabilities as per applicable provisions. The Scheme aimed to transfer tax liabilities and obligations to the Transferee Company post-Amalgamation.

Issue 4: Treatment of tax liabilities and obligations post-Amalgamation:
The Income Tax Department's observations regarding tax implications were duly considered, and the Transferee Company undertook to handle tax liabilities in accordance with the Income Tax Act, 1961. The Scheme specified that upon becoming effective, the Transferee Company would bear the tax liability of the Transferor Company. The Scheme ensured no limitation on the Income Tax Department's power for recovery of pending Income Tax dues.

Issue 5: Dissolution and transfer of assets, liabilities, and employees from the Transferor Company to the Transferee Company:
The Tribunal granted sanction to the Scheme under Sections 230-232 of the Companies Act, 2013, based on the approval of members and creditors. The Scheme outlined the dissolution of the Transferor Company without winding-up and the transfer of all assets, liabilities, powers, and employees to the Transferee Company. The Petitioners were directed to comply with statutory requirements, and any deficiency or violation would not impede legal action against concerned persons.

This detailed analysis of the judgment highlights the key issues addressed by the Tribunal concerning the approval of the Scheme of Amalgamation and the compliance with statutory requirements, ensuring a thorough understanding of the legal proceedings and decisions made.