2020 (9) TMI 1001 - Tri - Companies Law

Sanction of Scheme of Merger by Absorption - sections 230 to 232 and other applicable provisions 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 with any provision of law and is not contrary to public policy - Since all requisite statutory compliances have been fulfilled, petition is made absolute in terms of prayer clause (a) to (c) thereof. The Scheme of Merger by Absorption is sanctioned hereby, and the Appointed Date of the Scheme of Merger by Absorption is 1stApril 2019. The Transferor Companies be dissolved without winding up - application allowed.

Summary

Issues:
Sanction of Tribunal sought under sections 230 to 232 of the Companies Act, 2013 for Scheme of Merger by Absorption involving multiple companies.

Analysis:
The judgment involves the sanctioning of a Scheme of Merger by Absorption of several companies under sections 230 to 232 of the Companies Act, 2013. The Petitioner Companies sought approval for the merger involving Sound Investment Company Private Limited, Kanvai Investment Company Private Limited, Horizon Investment Company Private Limited, Sparkk Organics Private Limited, Temple Garment Manufacturing Company Private Limited, and Kaabil Traders Private Limited with New India Exports Private Limited. The rationale behind the merger included consolidating business activities, creating synergies, enhancing operational efficiency, reducing administrative efforts, and achieving cost savings. The Petitioners had passed Board Resolutions approving the Scheme, and the Regional Director (Western Region) found the Scheme not prejudicial to shareholders' interests. The Petitioners complied with all requirements and filed necessary affidavits of compliance as directed by the Tribunal.

The Regional Director highlighted various aspects that needed attention, such as compliance with accounting standards, appointed date, effective date, record date, approval by members and creditors, changes in Memorandum and Articles of Association, protection of creditors' interests, and statutory compliances. The Petitioner Companies provided undertakings and clarifications addressing each concern raised by the Regional Director, ensuring compliance with accounting standards, effective date, approval processes, and protection of creditors' interests. The Tribunal accepted the clarifications and undertakings given by the Petitioner Companies, finding the Scheme fair, reasonable, compliant with the law, and not against public policy.

The Official Liquidator's report confirmed proper conduct of affairs by the Transferor Companies, recommending their dissolution without winding up. With all statutory compliances fulfilled, the Tribunal made the Company Petition absolute, sanctioning the Scheme of Merger by Absorption with an Appointed Date of 1st April 2019. The Transferor Companies were directed to be dissolved without winding up, and the Petitioners were instructed to file necessary documents with the Registrar of Companies and Superintendent of Stamps within specified timelines. Regulatory authorities were directed to act upon the certified order, and interested parties were granted liberty to apply for necessary directions.

In conclusion, the Tribunal sanctioned the Scheme of Merger by Absorption, ensuring compliance with legal requirements, protecting stakeholders' interests, and facilitating the dissolution of Transferor Companies without winding up. The judgment emphasized adherence to statutory compliances, accounting standards, and regulatory procedures, thereby validating the merger as fair, reasonable, and in accordance with the law.