2021 (1) TMI 147 - Tri - Companies Law

Approval of amalgamation scheme - Transfer and vesting of the Passenger Vehicles Undertaking of the Applicant Company 1 to the Applicant Company 2 as a going concern on a slump sale basis - reduction of Securities Premium Account - HELD THAT - The Applicant Company 1, pursuant to Section 230(5) of the Companies Act, 2013 read with Rule 8 of the Companies (Compromises, Arrangements and Amalgamations) Rules, 2016, is directed to serve the notice of various meetings - Applicant Companies shall obtain consent from State Government of Maharashtra and State Government of Gujarat for transfer of Incentives and Concessions availed by Applicant Company No.1 till now will also be available to Applicant Company No.2 post implementation of this Scheme. The Applicant Companies shall file proof of compliance electronically to report to this Tribunal that all the directions including issue of notices and publication of advertisement have been duly complied with.

Issues Involved:
1. Transfer and vesting of the Passenger Vehicles Undertaking.
2. Reduction of Securities Premium Account.
3. Approval of the Scheme by the Board of Directors.
4. Convening and holding meetings of Equity Shareholders and Secured Creditors.
5. Dispensation of meetings for Applicant Company 2 and Unsecured Creditors.
6. Serving notices to authorities and obtaining necessary consents.

Detailed Analysis:

Transfer and Vesting of the Passenger Vehicles Undertaking:
The proposed Scheme involves the transfer and vesting of the Passenger Vehicles Undertaking from Applicant Company 1 to Applicant Company 2 as a going concern on a slump sale basis, pursuant to Sections 230 to 232 of the Companies Act, 2013. The rationale behind this transfer is to provide differentiated focus for the passenger vehicle business and commercial vehicle business, unlocking business value, and enhancing management focus and operational flexibility.

Reduction of Securities Premium Account:
Applicant Company 1 has Accumulated Losses amounting to ?11,173.59 Crore and a balance in the Securities Premium Account amounting to ?22,194.89 Crore as of June 30, 2020. The Board of Applicant Company 1 considered it prudent to reduce its share capital by writing down a portion of its Securities Premium Account with a corresponding adjustment to the Accumulated Losses, improving the financial presentation.

Approval of the Scheme by the Board of Directors:
The Scheme was approved by the Board of Directors of both Applicant Companies on July 31, 2020. The Tribunal directed that a meeting of the equity shareholders be convened on February 15, 2021, through video conferencing, due to COVID-19 restrictions.

Convening and Holding Meetings of Equity Shareholders and Secured Creditors:
The Tribunal directed the convening of a meeting of the equity shareholders of Applicant Company 1 and the secured creditors on February 15, 2021, through video conferencing. The meeting notices will be sent via email to registered shareholders and advertised in newspapers. The Tribunal appointed Mr. N. Chandrasekaran as the Chairperson for these meetings, with Mr. P N Parikh as the scrutinizer. The quorum and procedural details for these meetings were specified, including the prohibition of proxies and the provision for e-voting.

Dispensation of Meetings for Applicant Company 2 and Unsecured Creditors:
Since Applicant Company 2 has obtained consent affidavits from all its equity shareholders, the meeting of its shareholders is dispensed with. Applicant Company 2 has no secured or unsecured creditors, so no meetings are required. For Applicant Company 1, the Tribunal dispensed with the meeting of unsecured creditors, provided consent affidavits from at least 90% of the total unsecured creditors are obtained and filed.

Serving Notices to Authorities and Obtaining Necessary Consents:
Notices of the meeting of equity shareholders must be served upon various authorities, including the Regional Director, Registrar of Companies, Income Tax Authority, SEBI, BSE, NSE, and GST Authority. Applicant Companies must obtain consent from the State Governments of Maharashtra and Gujarat for the transfer of incentives and concessions. Compliance with these directions must be reported to the Tribunal.

Conclusion:
The Tribunal has ordered the convening of meetings for equity shareholders and secured creditors of Applicant Company 1, dispensed with meetings for Applicant Company 2, and directed the serving of notices to relevant authorities. The Scheme aims to transfer the Passenger Vehicles Undertaking to Applicant Company 2, reduce the Securities Premium Account of Applicant Company 1, and achieve business reorganization and financial restructuring.

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