2020 (10) TMI 697 - Tri - Companies Law

Approval of Composite Scheme of Amalgamation and Arrangement - Sections 230 to 232 of the Companies Act, 2013 and other applicable provisions of the Companies Act, 2013 R/w the Companies (Compromises, Arrangements and Amalgamations) Rules, 2016 - HELD THAT - It has been stated by the Regional Director that, on a consideration of the materials on record, the Scheme appears to be fair, reasonable and is not detrimental against the Members or Creditors or contrary to public policy and the same can be approved - In his report the Regional Director, MCA has concluded that the Scheme appears to be fair, reasonable and not detrimental against the Members or Creditors or contrary to public policy and the same can be approved. The procedure specified in sub-sections (1) and (2) of section 232 of the Companies Act, 2013 has been complied with. It appears that the amalgamation will enable the Transferee Company to consolidate its business operations, promote growth of the Transferee Company, result in economy of scales and reduction in overheads, help in optimal utilization of various resources, and the increased asset base of the Transferee Company would benefit the Transferor Companies and the Transferee Company, and be in the interest of all the creditors including the creditors of the Transferor Companies. Hence the Composite Scheme of Amalgamation and Arrangement, as approved by the Boards of the Petitioner Companies, can be sanctioned, as prayed. The scheme is approved.

Summary

Issues Involved:
1. Approval of Composite Scheme of Amalgamation and Arrangement under Sections 230 to 232 of the Companies Act, 2013.
2. Compliance with statutory requirements and addressing objections raised by the Registrar of Companies (ROC) and Regional Director (RD).
3. Compounding of offences related to the non-appointment of a whole-time Company Secretary.

Detailed Analysis:

1. Approval of Composite Scheme of Amalgamation and Arrangement:
The petition was filed under Sections 230 to 232 of the Companies Act, 2013, seeking approval for a Composite Scheme of Amalgamation and Arrangement among the Petitioner Companies, effective from April 1, 2018. The scheme aimed to consolidate business operations, achieve economies of scale, reduce overheads, and optimize resource utilization. The increased asset base and revenue inflow were expected to benefit all creditors and stakeholders.

2. Compliance with Statutory Requirements and Addressing Objections:
- ROC and RD Observations: The ROC raised concerns regarding compliance with Section 232(6) of the Companies Act, related party transactions, filing of GNL-1, appointment of a whole-time Company Secretary, and securing consent from secured creditors. The RD echoed these observations.
- Petitioner Companies' Response: The Petitioner Companies addressed these concerns through affidavits, confirming compliance with the effective date definition, absence of reportable related party transactions, filing of GNL-1, and subsequent appointment of whole-time Company Secretaries. They also filed a compounding application for the delay in appointing a Company Secretary.
- Official Liquidator's Report: The Official Liquidator, after scrutinizing the books and records, concluded that the affairs of the Transferor Companies were not conducted in a manner prejudicial to the members or public interest.

3. Compounding of Offences Related to Non-Appointment of a Whole-Time Company Secretary:
The Transferor Company sought compounding for the offence of not appointing a Company Secretary within the prescribed period, citing diligent search for suitable candidates and financial difficulties. The Tribunal acknowledged the non-deliberate nature of the offence and imposed a lump sum fee of ?1,00,000 on the Transferor Company and ?10,000 on each Director for the period of default.

Conclusion and Order:
The Tribunal concluded that the scheme was fair, reasonable, and not detrimental to members, creditors, or public policy. The Composite Scheme of Amalgamation and Arrangement was sanctioned with the following key directives:
1. The scheme is sanctioned as prayed.
2. Sanction does not exempt payment of Stamp Duty, taxes, or other charges.
3. Transfer of assets and liabilities to the Transferee Company.
4. Continuation of pending proceedings by or against the Transferor Companies.
5. Compliance with tax implications subject to the decision of concerned authorities.
6. Delivery of certified copies of the order and scheme to the Registrar of Companies within 30 days.
7. Quarterly/annual compliance status to be submitted by the Petitioner Companies.
8. The appointed date for the scheme is April 1, 2018.
9. Transfer of books and documents to the Transferee Company.
10. Payment of compounding fees by the Transferor Company and its Directors.
11. The order does not preclude actions for other violations.
12. Liberty to apply for necessary directions.
13. Disposal of CP (CAA) No. 70/BB/2018 and pending IAs.

The judgment ensures compliance with legal provisions while facilitating the amalgamation and addressing statutory violations appropriately.