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2020 (9) TMI 1118 - Tri - Companies LawSanction of Scheme of Amalgamation - Sections 230 to 232 of the Companies Act, 2013 - HELD THAT - From the material on record, the Scheme of Amalgamation appears to be fair and reasonable and is not violative of any provisions of law and is not contrary to public policy - Since all the requisite statutory compliances have been fulfilled, the Company Scheme Petitions are made absolute in terms of prayer clauses (a) to (c) of Company Scheme Petition No. 4003 of 2019 and prayer clauses (a) to (c) of Company Scheme Petition No. 3946 of 2019. The Scheme is sanctioned and Appointed date is fixed as 1st April, 2018.
Issues involved:
1. Sanction of Scheme of Amalgamation under Sections 230 to 232 of the Companies Act, 2013. 2. Compliance with statutory requirements and directions of the Tribunal. 3. Observations and representations by the Regional Director. 4. Fairness, legality, and public policy compliance of the Scheme. 5. Directions for filing and payment of costs to regulatory authorities. Issue 1: Sanction of Scheme of Amalgamation The Tribunal considered the Scheme of Amalgamation between two companies, Transferor and Transferee, which was unanimously approved by their respective Board meetings. The Transferor Company, dealing in goods, had ceased operations in 2018, while the Transferee Company was in the retail business. The rationale for the merger included cost reduction, avoidance of duplication, and enhancement of shareholder value through business synergies. The Tribunal noted the share capital details of both companies and the extinguishment of Transferor Company shares post-amalgamation. The authorized share capital of the Transferee Company was to be increased upon sanction of the Scheme. The Petitioner Companies affirmed compliance with Tribunal directions and filed necessary affidavits. Issue 2: Compliance with Statutory Requirements The Petitioner Companies assured compliance with all directions of the Tribunal and submitted necessary affidavits. The Official Liquidator confirmed proper conduct of the Transferor Company's affairs. The Regional Director raised observations related to accounting entries, appointed date, fee set-off provisions, serving notices to concerned authorities, and confirming the Scheme's consistency. In response, the Petitioner Companies filed a Rejoinder Affidavit addressing each observation satisfactorily, ensuring compliance with accounting standards, appointed date clarification, fee set-off, serving notices, and confirming Scheme consistency. Issue 3: Observations by the Regional Director The Regional Director's Representation highlighted compliance requirements related to accounting standards, appointed date, fee set-off provisions, serving notices, and confirming Scheme consistency. The Petitioner Companies responded to each observation in their Affidavit in Rejoinder, providing clarifications and assurances of compliance. The Regional Director, in a Supplementary Report, found the replies satisfactory and recommended the Tribunal to pass appropriate orders. Issue 4: Fairness and Legality of the Scheme After reviewing the material on record, the Tribunal found the Scheme of Amalgamation fair, reasonable, compliant with the law, and not against public policy. All statutory compliances were fulfilled, leading to the Company Scheme Petitions being made absolute. The Tribunal sanctioned the Scheme, fixing the Appointed date as 1st April 2018. Issue 5: Directions and Costs The Tribunal directed the filing of the Order and Scheme with the concerned authorities, payment of costs to the Regional Director, Official Liquidator, and filing of certified copies with regulatory authorities. It further instructed all concerned authorities to act on the certified Order and allowed any affected person to apply for necessary directions or modifications. This detailed analysis covers the issues involved in the Tribunal's judgment regarding the Scheme of Amalgamation between the two companies, compliance with statutory requirements, observations by the Regional Director, fairness and legality of the Scheme, and the Tribunal's directions and costs associated with the process.
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