2020 (10) TMI 172 - Tri - Companies Law

Sanction of Amalgamation Scheme - Sections 230 to 232 and other applicable provisions of the Companies Act, 2013 read with The Companies (Compromises, Arrangements and Amalgamations) Rules, 2016 - HELD THAT - In compliance of sub-section (5) of Section 230 of the Act and Rule 8 of the Companies (CAA) Rules, the Applicant Companies shall send a Notice of meeting in Form No. CAA 3 with a copy of the Scheme of Arrangement, the Explanatory Statement and the disclosures mentioned under Rule 6 to (1) Central Government through the Regional Director, North Western Region, (2) the Registrar of Companies, Gujarat; and (3) the Income Tax Authorities, (4) Reserve Bank of India;(5) BSE Limited (6) National Stock Exchange Limited as well as (7) Securities and Exchange Board of India; stating that representations, if any, to be made by them shall be made within a period of 30 (Thirty) days from the date of receipt of such notice, failing which it will be deemed that they have no objection to make on the proposed Scheme of Arrangement. The said notices shall be sent forthwith after the notice for the meetings are sent to the concerned Equity Shareholders, Secured and unsecured creditors of the Applicant Transferor Company, either by Registered Post or by Speed Post or by Courier or by Hand Delivery at the offices of the authorities as required by sub-rule (2) of Rule 8 of the Companies (CAA) Rules, 2016. The aforesaid authorities, who desire to make any representation under sub-section (5) of Section 230 shall send the same to this Tribunal with a copy of the same to be supplied to the Applicant Company. Application disposed off.

Issues Involved:
1. Jurisdiction and applicability of the Companies Act, 2013.
2. Approval of the Scheme of Arrangement.
3. Valuation and fairness of the proposed slump sale.
4. Reliefs and exemptions sought by the Applicant Companies.
5. Compliance with statutory requirements and procedural directions.

Issue-wise Detailed Analysis:

1. Jurisdiction and Applicability of the Companies Act, 2013:
The joint application was filed under Sections 230 to 232 and other applicable provisions of the Companies Act, 2013, read with The Companies (Compromises, Arrangements and Amalgamations) Rules, 2016. Both companies involved have their registered offices in Gujarat, placing them under the jurisdiction of the National Company Law Tribunal (NCLT) Ahmedabad Bench. The Memorandum of Associations of both companies empowered them to enter into the Scheme of Arrangement.

2. Approval of the Scheme of Arrangement:
The Scheme involves the transfer and vesting of the Cable Business Undertaking from Torrent Power Limited (Transferor Company) to TCL Cables Private Limited (Transferee Company). The rationale provided includes enhanced business focus on electricity generation, transmission, and distribution, unlocking the value of the Cable business, and achieving independent growth and expansion of business verticals. The Scheme was approved by the stock exchanges, BSE Limited and National Stock Exchange of India Limited, as evidenced by their observation letters.

3. Valuation and Fairness of the Proposed Slump Sale:
The Valuation Report by Mr. Sujal A. Shah, an Independent Chartered Accountant, and the Fairness Opinion by Kotak Mahindra Capital Company Limited confirmed the valuation of the Cable Business Undertaking. The Scheme was placed before the Audit Committee and the Board of Directors of both companies, where resolutions were passed to submit the Scheme to the NCLT for sanction.

4. Reliefs and Exemptions Sought by the Applicant Companies:
The Applicant Companies sought various reliefs, including:
- Convening separate meetings of Equity Shareholders and Secured Creditors of Torrent Power Limited.
- Convening a meeting of Unsecured Creditors of Torrent Power Limited.
- Exemption from sending meeting notices to small unsecured creditors.
- Dispensation of the meeting of Equity Shareholders of TCL Cables Private Limited.
- No requirement for meetings of Secured and Unsecured Creditors of TCL Cables Private Limited.

The Tribunal granted these reliefs, directing that meetings be conducted through video conferencing due to recent circulars from the Ministry of Corporate Affairs. Remote e-voting was mandated for all Equity Shareholders, Secured Creditors, and Unsecured Creditors.

5. Compliance with Statutory Requirements and Procedural Directions:
The Tribunal ordered the Applicant Companies to send notices of meetings to relevant stakeholders and authorities, including the Central Government, Registrar of Companies, Income Tax Authorities, Reserve Bank of India, BSE Limited, National Stock Exchange Limited, and Securities and Exchange Board of India. These authorities were given 30 days to make any representations regarding the Scheme. The Tribunal also appointed a Chairman and a Scrutinizer for the meetings and set quorum requirements for these meetings.

The Tribunal concluded by directing the Applicant Companies to report the results of the meetings and comply with all procedural requirements, including issuing advertisements and sending notices as per the Companies (CAA) Rules, 2016. The application was disposed of accordingly.

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