2020 (11) TMI 517 - Tri - Companies Law

Sanction of Scheme of Amalgamation - sections 230 to 232 and other applicable provisions of the Companies Act 2013 - HELD THAT - From the material on record the scheme appears to be fair and reasonable and does not violate of any provisions of law and is not contrary to public policy. Since all the requisite statutory compliances have been fulfilled Petition is made absolute in terms of prayer made in the petition. Hence ordered. The scheme with the appointed date fixed as August 1 2018 placed at page Nos. 196 to 211 annexure F to the company scheme petition is hereby sanctioned. It shall be binding on the petitioner and the companies involved in the scheme and all concerned including their respective shareholders secured creditors unsecured creditors/trade creditors and employees - application allowed.

Issues Involved:
1. Sanction of the scheme of amalgamation under sections 230 to 232 of the Companies Act, 2013.
2. Compliance with statutory requirements and undertakings.
3. Observations and compliance with the report of the Regional Director.
4. Filing of revised returns under the Income-tax Act, 1961.
5. Fairness and reasonableness of the scheme.

Detailed Analysis:

1. Sanction of the Scheme of Amalgamation:
The Tribunal was convened through video conference to hear the petition for the sanction of the scheme of amalgamation between two petitioner companies. The scheme was approved by the board of directors of both companies on November 16, 2018, with an appointed date of August 1, 2018. The rationale for the scheme includes the integration of business activities, achieving synergies of operations, cost savings, and enhanced competitiveness. The Tribunal noted that no objections were raised against the scheme.

2. Compliance with Statutory Requirements and Undertakings:
The petitioner companies complied with all Tribunal directions and filed necessary affidavits of compliance. They undertook to comply with all statutory requirements under the Companies Act, 2013, and the Rules made thereunder. The Tribunal accepted these undertakings.

3. Observations and Compliance with the Report of the Regional Director:
The Regional Director's report dated August 24, 2020, stated that the scheme was not prejudicial to the interest of shareholders and the public, subject to certain observations. The petitioner companies provided necessary undertakings and clarifications in response to these observations, which included:
- Compliance with applicable Accounting Standards (AS-14, AS-5).
- Clear indication of the appointed date as August 1, 2018, in accordance with section 232(6) of the Companies Act.
- Dispensation of meetings of equity shareholders and unsecured creditors based on consent affidavits.
- Compliance with section 232(3)(i) regarding set-off of fees on authorized capital.
- Confirmation that the scheme enclosed in the company application and petition were identical.
- Service of notices to concerned authorities under section 230(5).
- Compliance with sections 13 and 61 of the Companies Act regarding the combination of authorized capital.

The Tribunal accepted the explanations and undertakings provided by the petitioner companies.

4. Filing of Revised Returns under the Income-tax Act, 1961:
The petitioner companies sought leave to file revised financial statements and returns due to the long gap between the filing of the company scheme application and its hearing. They relied on the Supreme Court judgment in Dalmia Power Ltd. v. Assistant CIT, which allowed the filing of revised returns beyond the prescribed time limit due to delays in obtaining scheme sanctions. The Tribunal permitted the petitioner companies to file revised returns and claim refunds or credits for taxes paid.

5. Fairness and Reasonableness of the Scheme:
The Tribunal found the scheme to be fair and reasonable, not violating any provisions of law or public policy. Since all statutory compliances were fulfilled, the Tribunal sanctioned the scheme with the appointed date of August 1, 2018. The transferor company was ordered to be dissolved without winding up, and the petitioner companies were directed to comply with various procedural requirements, including filing the order with the Registrar of Companies and issuing newspaper publications.

Order:
The petition was allowed with the following directives:
- The scheme with the appointed date of August 1, 2018, was sanctioned.
- The transferor company to be dissolved without winding up.
- Certified copies of the order to be issued and filed with the Registrar of Companies.
- Petitioner companies to file revised returns with the Income-tax Departments.
- Compliance with undertakings given by the petitioner companies.
- Issuance of newspaper publications regarding the approval of the scheme.
- Taking all consequential and statutory steps required under the Act.
- Liberty for any interested person to apply to the Tribunal for necessary directions.

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