2020 (9) TMI 1119 - Tri - Companies Law

Approval of the Scheme of Amalgamation - Section 230 to 232 of the Companies Act, 2013 read with the Companies (Compromise, Arrangement and Amalgamations) Rules, 2016 and the National Company Law Tribunal Rules, 2016 - HELD THAT - Upon considering the approval accorded by the members and creditors of the petitioner Companies to the proposed Scheme, and the affidavit by the Regional Director, Northern Region, Ministry of Corporate Affairs reply submitted by the Transferee Company and the report of the Official Liquidator and, there appears to be no impediment in sanctioning the present Scheme. Consequently, sanction is hereby granted to the Scheme under Section 230 to 232 of the Companies Act, 2013. The petitioner shall however remain to bound to comply with the statutory requirements in accordance with the law. The scheme is hereby granted to the scheme under section 230 to 232 of the Companies Act, 2013 - Petition allowed.

Summary

Issues Involved:
1. Approval of the Scheme of Amalgamation under Sections 230-232 of the Companies Act, 2013.
2. Compliance with procedural requirements and statutory obligations.
3. Observations and objections raised by the Regional Director, MCA.
4. Approval and consent from shareholders and debenture holders.
5. Jurisdiction and role of the Tribunal in scrutinizing the Scheme.
6. Objections and reports from the Official Liquidator and other regulatory authorities.
7. Compliance with Income Tax and other statutory dues.
8. Conformity with Accounting Standards.

Issue-wise Analysis:

1. Approval of the Scheme of Amalgamation:
The petitioner companies sought approval for the Scheme of Amalgamation under Sections 230-232 of the Companies Act, 2013, along with relevant rules. The Scheme was placed on record and subsequent procedural steps were followed, including the filing of a second motion petition and compliance affidavits.

2. Compliance with Procedural Requirements and Statutory Obligations:
The petitioners complied with the Tribunal's orders, including newspaper publications and serving copies of the petition to relevant authorities. Affidavits affirming compliance were filed, and acknowledgments from the respective offices were placed on record.

3. Observations and Objections Raised by the Regional Director, MCA:
The Regional Director's report highlighted that the order might alter the composition of shareholders and the assets and liabilities of M/s. Osiatic Consultants and Investments Pvt. Ltd. The Transferee Company responded that all stakeholders had approved the Scheme unanimously, and the necessary NOCs were obtained. The Tribunal noted that the approval of the Scheme by stakeholders reflects their commercial wisdom, which the Court should not second-guess.

4. Approval and Consent from Shareholders and Debenture Holders:
Meetings were held for stakeholders of the respective companies, and the Scheme was unanimously approved. The consent of shareholders and debenture holders was obtained at the initial stage, and the Tribunal emphasized that the commercial decision of the stakeholders should be respected.

5. Jurisdiction and Role of the Tribunal in Scrutinizing the Scheme:
The Tribunal referenced the Supreme Court judgment in Miheer H. Mafatlal vs. Mafatlal Industries Ltd., stating that the Court's jurisdiction is peripheral and supervisory, not appellate. The commercial wisdom of the stakeholders should be respected, and the Court should not delve into the merits of the Scheme unless there is evidence of unfairness or unreasonableness.

6. Objections and Reports from the Official Liquidator and Other Regulatory Authorities:
The Official Liquidator's report raised no specific objections and confirmed that no complaints were received against the proposed Scheme. The affairs of the petitioner companies did not appear to be conducted prejudicially to the interests of members, creditors, or public interest.

7. Compliance with Income Tax and Other Statutory Dues:
The petitioner companies assured that the dues of the Income Tax Department were fully secured, and any liabilities would be borne by the Transferee Company. The Tribunal emphasized that the approval does not exempt the companies from paying any statutory dues.

8. Conformity with Accounting Standards:
Certificates from statutory auditors confirmed that the Accounting Treatment proposed in the Scheme of Amalgamation conforms to the Accounting Standards notified by the Central Government.

Conclusion:
The Tribunal, considering the approval by members and creditors, the Regional Director's affidavit, the Official Liquidator's report, and compliance with statutory requirements, found no impediment in sanctioning the Scheme. The Scheme was approved under Sections 230-232 of the Companies Act, 2013, with the petitioner companies bound to comply with statutory requirements. The order does not exempt the companies from paying any statutory dues or complying with other legal requirements. The Transferor Companies were dissolved without winding up, and all properties, rights, liabilities, and duties were transferred to the Transferee Company. The petition was allowed in these terms.