2020 (10) TMI 702 - Tri - Companies Law

Approval of the Scheme of Amalgamation - Sections 230 to 232 of the Companies Act, 2013 - HELD THAT - This Company Petition is allowed, and the Scheme of Amalgamation annexed with the Petitions is hereby sanctioned. The Scheme approved shall be binding on the Shareholders, Creditors and employees of the Companies involved in this Scheme. The Appointed date of the Scheme is 1st April, 2019. Scheme approved.

Issues Involved:

1. Approval of the Scheme of Amalgamation under Sections 230 to 232 of the Companies Act, 2013.
2. Compliance with statutory requirements and procedural aspects.
3. Observations and reports from the Regional Director and Official Liquidator.
4. Impact on employees and accounting adjustments.
5. Effective date and dissolution of Transferor Companies.

Issue-Wise Detailed Analysis:

1. Approval of the Scheme of Amalgamation:
The case under consideration involves the Joint Company application No. CAA-128/PB/2019 filed for the approval of the Scheme of Amalgamation under Sections 230 to 232 of the Companies Act, 2013. The Scheme proposes the amalgamation of six Transferor Companies with the Transferee Company, Eros Agro & Farms Private Limited, as a going concern. The Board of Directors of both the Transferor and Transferee companies approved the Scheme on 10th June 2019.

2. Compliance with Statutory Requirements and Procedural Aspects:
The Tribunal noted that the requirement of convening meetings of shareholders, secured and unsecured creditors of the Applicant Companies had been dispensed with by an order dated 9th August 2019. The Tribunal also confirmed that all statutory compliances under Sections 230 to 232 of the Companies Act, 2013, had been made. The Scheme was found to be fair, reasonable, and not contrary to public policy or violative of any provisions of law.

3. Observations and Reports from the Regional Director and Official Liquidator:
The Regional Director (RD), Northern Region, MCA, filed a report on 18th November 2019, stating no adverse observations or remarks against the Scheme, and confirmed that there were no pending prosecutions, inspections, or investigations against the Applicant Companies. The RD noted a typographical error in the Scheme regarding the Authorized capital of the Transferee Company, which was acknowledged and agreed to be rectified by the Applicant Companies. The Official Liquidator also filed a report stating that the affairs of the Transferor Companies were not conducted in a manner prejudicial to the interest of its members or the public interest.

4. Impact on Employees and Accounting Adjustments:
Clause 8 of Part II of the Scheme ensures that all permanent employees of the Transferor Companies will become permanent employees of the Transferee Company without any break or interruption in service and on terms not less favorable than their current terms. Clause 11 of Part IV specifies that the Transferee Company shall make adjustments in the books of accounts as per the 'Pooling of Interest Method' specified in Accounting Standard 14, and any differences in accounting policies will be adjusted in accordance with Accounting Standard 5.

5. Effective Date and Dissolution of Transferor Companies:
The Scheme's appointed date is 1st April 2019. Upon the Scheme becoming effective, the Transferor Companies will be dissolved without any further act, deed, or instrument, without going through the process of winding up, and will be succeeded by the Transferee Company. The Tribunal directed that a certified copy of the Order be filed with the concerned Registrar of Companies within 30 days of receipt. The ROC is instructed to consolidate the documents and records of the Transferor Companies with those of the Transferee Company.

Conclusion:
The Tribunal allowed the Company Petition and sanctioned the Scheme of Amalgamation, which will be binding on the shareholders, creditors, and employees of the involved companies. The Order does not exempt the companies from paying any applicable stamp duty, taxes, or other charges. The Scheme stands sanctioned, and CAA-128/PB/2019 is disposed of.

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