2020 (10) TMI 336 - Tri - Companies Law

Sanction the scheme of amalgamation - sections 230 to 232 of the Companies Act, 2013 read with Companies (Compromises, Arrangements and Amalgamations) Rules, 2016 - HELD THAT - It appears that the scheme will result in economies of scale, reduction in overheads, administrative, managerial and other expenditure and increase in operational rationalization, organizational efficiency, and optimal utilization of various resources, etc. On a consideration of the facts of the case as mentioned in the preceding paragraphs, which are not elaborated here again to avoid duplication and repetition, we are satisfied that the procedure specified in sub-sections (1) and (2) of section 232 of the Companies Act, 2013 has been complied with, and hence the scheme of amalgamation, as approved by the boards of both the transferor and transferee companies, can be sanctioned. The scheme of amalgamation, as contained in the present petition, is hereby sanctioned and the appointed date shall be April 1, 2018 - application allowed.

Summary

Issues Involved:
1. Sanctioning of the scheme of amalgamation between the transferor and transferee companies.
2. Compliance with statutory requirements and observations raised by regulatory authorities.
3. Consideration of objections and responses from the Registrar of Companies and Regional Director.
4. Examination of the official liquidator's report.
5. Compliance with the Companies Act, 2013, and other relevant laws.

Issue-wise Detailed Analysis:

1. Sanctioning of the Scheme of Amalgamation:
The petitioners filed a joint petition under sections 230 to 232 of the Companies Act, 2013, seeking the Tribunal's sanction for the scheme of amalgamation between HHV Center for Advanced Photovoltaic Technologies P. Ltd. (transferor company) and Hind High Vacuum Co. P. Ltd. (transferee company). The scheme aimed to bind the petitioners, shareholders, and creditors, and included the dissolution of the transferor company without winding up. The board of directors of both companies approved the scheme on December 28, 2018, highlighting benefits such as economies of scale, reduction in overheads, and increased operational efficiency.

2. Compliance with Statutory Requirements and Observations Raised by Regulatory Authorities:
The Tribunal directed the petitioners to issue notices to relevant authorities, including the Regional Director, Registrar of Companies, Official Liquidator, Principal Chief Commissioner of Income-tax, and Reserve Bank of India. The Registrar of Companies raised several observations, including the status of the transferor company as a wholly owned subsidiary, compliance with sections 185 and 186 of the Companies Act, 2013, and related party transactions. The petitioners responded with detailed explanations and undertakings, addressing each observation.

3. Consideration of Objections and Responses from the Registrar of Companies and Regional Director:
The Regional Director made similar observations as the Registrar of Companies, to which the petitioners provided consistent replies. The Regional Director's additional affidavit acknowledged the petitioners' responses and noted that the scheme appeared fair, reasonable, and not detrimental to members or creditors. The petitioners reiterated their compliance with accounting standards and statutory requirements, denying any violations of sections 185 and 186 of the Companies Act, 2013.

4. Examination of the Official Liquidator's Report:
The official liquidator engaged M/s. T. S. Shiva Shankar and Co., chartered accountants, to scrutinize the transferor company's books of account. The report concluded that the company maintained proper records, filed necessary statutory returns, and complied with tax obligations. The official liquidator requested the Tribunal to pass orders on the merits of the case, subject to objections from other regulators.

5. Compliance with the Companies Act, 2013, and Other Relevant Laws:
The Tribunal considered the facts, reports, and replies, concluding that the scheme complied with the procedures specified in section 232 of the Companies Act, 2013. The Tribunal sanctioned the scheme with conditions, including the transfer of assets and liabilities to the transferee company, compliance with tax implications, and examination of defaults related to sections 185 and 186 by the Registrar of Companies. The Tribunal emphasized that the scheme's acceptance did not exempt the companies from complying with other legal requirements.

Order:
1. The scheme of amalgamation is sanctioned with an appointed date of April 1, 2018.
2. Sanctioning the scheme does not grant exemption from payment of stamp duty, taxes, or other charges.
3. The transferor company is transferred to the transferee company, subject to existing charges.
4. All liabilities of the transferor company are transferred to the transferee company.
5. Tax implications are subject to the final decision of tax authorities.
6. The Registrar of Companies will examine defaults related to sections 185 and 186.
7. The transferee company must approach the Regional Director for adjudication of defaults within 30 days.
8. Pending proceedings by or against the transferor company continue against the transferee company.
9. The petitioner-companies must deliver a certified copy of the order to the Registrar of Companies within 30 days.
10. Compliance with statutory returns and provisions of the Companies Act, 2013, is required.
11. The transferor company must hand over books of account to the transferee company.
12. The order does not prevent authorities from taking action for other violations.
13. Non-compliance with section 232 provisions will result in fines.
14. Any person may apply to the Tribunal for necessary directions.
15. C. P. (CAA) No. 39/BB/2019 is disposed of, along with all pending applications.