2020 (10) TMI 119 - Tri - Companies Law

Approval of the scheme of arrangement - Sections 230 to 232 and other applicable provisions of the Companies Act, 2013 read with Companies (Compromises, Arrangements and Amalgamations) Rules, 2016 - HELD THAT - 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 objection which was raised by Regional Director whereby, the resulting Company is required to increase its Authorized Share Capital to enable it to issue shares in terms of the Scheme of Arrangement. Learned Counsel of the Petitioner Companies confirmed that the Resulting Company has already increased its Authorized Share Capital by paying the requisite fee to the ROC. The Petitioners have also filed Affidavits confirming the same on 4th June, 2019. Hence, there appears no impediment to grant sanction to the Scheme. However, the Companies shall remain bound by the undertaking filed by either of them. Consequently, sanction is hereby granted under Sections 230-232 of the Companies Act, 2013. The Petitioners shall however remain bound to comply with the statutory requirements in accordance with law. Scheme is approved - petition allowed.

Issues Involved:

1. Approval of the Scheme of Arrangement.
2. Convening and holding of meetings of Shareholders, Secured Creditors, and Unsecured Creditors.
3. Compliance with statutory requirements and notices.
4. Objection by Mr. Gopal Krishan.
5. Increase in Authorized Share Capital of the Resulting Company.
6. Accounting treatment conformity with the Companies Act, 2013.
7. Absence of comments from the Income Tax Department.
8. Final sanction of the Scheme of Arrangement.

Detailed Analysis:

1. Approval of the Scheme of Arrangement:
The petition was filed for the approval of the Scheme of Arrangement under Sections 230 to 232 of the Companies Act, 2013, involving the demerger of Super Cassettes Industries Pvt. Ltd. into Vijarshan Ventures Pvt. Ltd. The Scheme was proposed amongst the companies and its shareholders and creditors.

2. Convening and Holding of Meetings:
The Tribunal directed the convening of separate meetings of Shareholders, Secured Creditors, and Unsecured Creditors of the Demerged Company and the Shareholders of the Resulting Company. These meetings were held on 25th August 2018, to consider and approve the proposed Scheme of Arrangement.

3. Compliance with Statutory Requirements and Notices:
The Tribunal ordered the issuance of notices to statutory authorities and publication in newspapers. The Petitioner Companies confirmed compliance by filing affidavits of service and publication. Notices were served to the Central Government, Registrar of Companies, and the Income Tax Department. Since neither company was subject to dissolution, notice to the Official Liquidator was not required.

4. Objection by Mr. Gopal Krishan:
An objection was raised by Mr. Gopal Krishan, citing an ongoing appeal related to a previous merger involving the Demerged Company. The Tribunal noted that the objection was based on previously rejected allegations and that the Objector had no shareholding or outstanding debt in either company, thus lacking locus standi. The Tribunal rejected the objection, emphasizing the finality of prior judgments and the Objector's habitual litigation history.

5. Increase in Authorized Share Capital of the Resulting Company:
The Regional Director pointed out the need for the Resulting Company to increase its Authorized Share Capital. The Petitioners confirmed compliance by increasing the Authorized Share Capital and filing affidavits.

6. Accounting Treatment Conformity:
The Petitioners confirmed that the accounting treatment proposed in the Scheme was in conformity with the accounting standards prescribed under Section 133 of the Companies Act, 2013, supported by certificates from the statutory auditors.

7. Absence of Comments from the Income Tax Department:
Despite several opportunities, the Income Tax Department did not file any comments. The Tribunal presumed no objections from the department, noting that the interests of the Income Tax Department were not adversely affected as the companies would remain in existence post-sanction.

8. Final Sanction of the Scheme of Arrangement:
The Tribunal sanctioned the Scheme of Arrangement, noting compliance with statutory requirements and the absence of valid objections. The companies were directed to remain bound by their undertakings and comply with statutory requirements. The order clarified that it did not exempt payment of stamp duty, taxes, or other charges, and any deficiencies or violations would be subject to legal action.

Conclusion:
The Tribunal allowed the Company Petition, granting sanction to the Scheme of Arrangement under Sections 230-232 of the Companies Act, 2013, subject to compliance with statutory requirements and without exemption from applicable duties and charges.

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