2020 (12) TMI 373 - Tri - Companies Law

Sanction of composite scheme of amalgamation - sections 230-232 of the Companies Act, 2013 - HELD THAT - The petitioner-companies have already assured and gave an undertaking to this effect that it shall comply with all the statutory compliance including pending Income-tax proceedings. Thus, it is made clear that sanction and approval of the present scheme shall, however, be subject to the outcome of pending IT proceedings and appeal. Therefore, the observations made by the Regional Director and official liquidator stands satisfied. Considering the entire facts and circumstances of the case and on perusal of the scheme and the proceedings, it appears that the requirements of the provisions of sections 230-232 of the Act are satisfied. The scheme is genuine and bona fide and in the interest of the shareholders and creditors. The scheme of approval is sanctioned - application allowed.

Issues Involved:
1. Sanction of the composite scheme of amalgamation under Sections 230-232 of the Companies Act, 2013.
2. Compliance with statutory procedures, including service of notices and holding of requisite meetings.
3. Observations and objections raised by the Regional Director and the Registrar of Companies.
4. Objections raised by the Income-tax Department regarding pending assessments and potential revenue loss.
5. Preservation of books and records, and compliance with statutory liabilities post-amalgamation.

Detailed Analysis:

1. Sanction of the Composite Scheme of Amalgamation:
The petitioner-companies sought the Tribunal's sanction for a composite scheme of amalgamation between M/s. Ujjain Packaging P. Ltd. (transferor) and M/s. Vyanktesh Corrugators P. Ltd. (transferee) under Sections 230-232 of the Companies Act, 2013. The rationale for the merger included synergies of operations, financial and operational resource leveraging, cost savings, administrative efficiency, and higher profitability.

2. Compliance with Statutory Procedures:
The petitioner-companies had previously filed a joint application (C.A. (CAA) No. 67/NCLT/AHM/2018) seeking dispensation of meetings of equity shareholders, secured and unsecured creditors, which was granted by the Tribunal on July 16, 2018. Notices were served to regulatory authorities, including the Central Government, Registrar of Companies, Income-tax Authorities, and Official Liquidator. Compliance affidavits were filed confirming the service of notices.

3. Observations and Objections by the Regional Director and Registrar of Companies:
The Regional Director raised several observations:
- Filing of Balance Sheet: The petitioner-companies clarified that the balance sheets were filed on the MCA portal.
- Service of Notice to Income-tax Department: Compliance with Section 230(5) of the Companies Act, 2013 was confirmed with acknowledgments of notices served.
- Pending Charges: The petitioner clarified that all liabilities would transfer to the transferee company without dilution.

The Registrar of Companies noted no complaints against the petitioner-companies or the scheme of amalgamation.

4. Objections by the Income-tax Department:
The Income-tax Department objected to the scheme, citing pending assessments and potential revenue loss. They highlighted that the companies belonged to the Bangur Group, which was under scrutiny for inter-circulation of transactions within the group. The petitioner responded that the amalgamation would not affect the pending assessments and that all liabilities, including tax liabilities, would transfer to the transferee company. The Tribunal noted that the scheme's approval would be subject to the outcome of pending IT proceedings and appeals.

5. Preservation of Books and Compliance with Statutory Liabilities:
The Tribunal directed the transferee company to preserve the books of accounts, papers, and records of the transferor company and ensure compliance with all statutory liabilities. The petitioner-companies assured compliance with all statutory requirements, including pending Income-tax proceedings.

Judgment:
The Tribunal approved the scheme of amalgamation, stating that it was genuine, bona fide, and in the interest of shareholders and creditors. The approval was subject to the following conditions:
- No exemption from payment of stamp duty, taxes, or other charges.
- Transfer of property, rights, powers, and liabilities to the transferee company.
- Continuation of pending proceedings by or against the transferee company.
- Employment continuity for employees of the transferor company.

Costs and Compliance:
The legal fees and expenses for the official liquidator and Regional Director were quantified and directed to be paid by the transferee company. The petitioner-companies were directed to file the order with the concerned authorities and comply with stamp duty adjudication and statutory filing requirements.

Conclusion:
The Tribunal disposed of C.P. (CAA) No. 128/NCLT/AHM/2018, approving the scheme of amalgamation with specified terms and conditions, ensuring compliance with statutory provisions and addressing the observations and objections raised by regulatory authorities.

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