2021 (3) TMI 347 - Tri - Companies Law

Sanction of Scheme of Arrangement - Sections 230-232 read with Section 66 of the Companies Act, 2013 - HELD THAT - The authorized representative has placed on record the summary of Composite Scheme of Arrangement (Annexure A), Diagrammatic Representation of Pre and Post shareholding pattern of Petitioner Companies after Composite Scheme of Arrangement is effective (Annexure B) and Provisional Financials of Petitioner Companies as on 30.06.2020. These annexures have been filed vide Diary No. 00868/1 dated 29.09.2020. There are no objections to the Scheme and hence there is no impediment in the sanction of the Scheme. Therefore, the Scheme (Annexure-4) is hereby approved. While approving the Scheme, it is clarified that this order should not be construed as an order in any way granting exemption from payment of any stamp duty, taxes, or any other charges, if any, and payment in accordance with law or granting permission in respect of any compliance with any other requirement which may be specifically required under any law. With the sanction of the Scheme, the Transferor Company shall be transferred to and vested in the Transferee Company and the Demerged Undertaking 1 of the Demerged Company 1 and Demerged Undertaking 2 of Demerged Company 2 stand demerged and transferred to, and vested in, the Resulting Company. Application disposed off.

Summary

Issues Involved:
1. Maintainability of the joint Second Motion Petition under Sections 230-232 read with Section 66 of the Companies Act, 2013.
2. Compliance with procedural requirements for the Scheme of Arrangement.
3. Objections and reports from statutory authorities.
4. Share exchange ratio and reduction of share capital.
5. Protection of employees' interests.
6. Final approval and conditions for the Scheme of Arrangement.

Issue-wise Detailed Analysis:

1. Maintainability of the Joint Second Motion Petition:
The joint Second Motion Petition was filed under Sections 230-232 read with Section 66 of the Companies Act, 2013, by the Petitioner Companies for the sanction of the Scheme of Arrangement between Impulse Holdings Private Limited, Impulse (India) Private Limited, Impulse Overseas Private Limited, and Impulse International Private Limited. The petition was maintainable in terms of Rule 3(2) of the Companies (Compromises, Arrangements and Amalgamations) Rules, 2016.

2. Compliance with Procedural Requirements:
The Petitioner Companies had filed a First Motion Application seeking directions for dispensing with the meetings of the Shareholders, Secured, and Unsecured Creditors, which was disposed of with a direction to dispense with the meetings of the Shareholders and Unsecured Creditors. The statutory auditors certified the accounting treatment in compliance with the Accounting Standards prescribed under Section 133 of the Companies Act, 2013. Audited financial statements as of 31.03.2018 and provisional statements as of 31.03.2019 were annexed. Notices of hearing were advertised in "Times of India" and "Veer Arjun" and served upon relevant authorities.

3. Objections and Reports from Statutory Authorities:
No objections were received from shareholders, creditors, or other stakeholders regarding the proposed Swap Ratio. Reports from the Regional Director, Official Liquidator, and Income Tax Department were filed. The Regional Director reported no complaints or objections and confirmed compliance with filing requirements. The Official Liquidator confirmed no pending litigation or long-term contracts impacting financial positions. The Income Tax Department reported outstanding demands and clarified the treatment of tax liabilities and losses.

4. Share Exchange Ratio and Reduction of Share Capital:
The Valuation Report proposed a Share Exchange Ratio for the merger and demerger. For the merger, "4 equity shares of IIPL to be issued against 7 equity shares of IHPL." For the demerger, IINT to issue shares as per specified ratios. The scheme included provisions for the reduction of share capital in accordance with Sections 66 and 52 of the Act.

5. Protection of Employees' Interests:
The Scheme ensured that all employees of the Transferor Company and Demerged Undertakings would be transferred to the Transferee Company and Resulting Company, respectively, without any break, discontinuance, or interruption in their service. The terms and conditions of their employment would remain favorable.

6. Final Approval and Conditions for the Scheme of Arrangement:
The Tribunal concluded that there were no objections to the Scheme and sanctioned it. The order clarified that it did not grant exemptions from stamp duty, taxes, or other charges and emphasized compliance with all legal requirements. The Transferor Company would be transferred to and vested in the Transferee Company, and the Demerged Undertakings would be transferred to the Resulting Company. The Transferor Company would be dissolved without winding up upon delivery of the certified order to the Registrar of Companies.

Final Orders:
- All properties, rights, and liabilities of the Transferor Company were transferred to the Transferee Company.
- All pending proceedings against the Transferor Company would continue against the Transferee Company.
- Employees of the Transferor Company would be transferred to the Transferee Company.
- The Transferee Company would allot shares to the existing members of the Transferor Company.
- The Transferor Company was required to deposit specified amounts with the Regional Director and Company Law Tribunal Bar Association.
- The Demerged Undertakings were transferred to the Resulting Company, with all related properties, rights, liabilities, and employees.
- The Resulting Company was required to deposit specified amounts with the Regional Director and Company Law Tribunal Bar Association.
- The Petitioner Companies were to deliver certified copies of the order to the Registrar of Companies for registration, leading to the dissolution of the Transferor Company.

The Tribunal also allowed for any interested person to apply for necessary directions and required the filing of the schedule of properties by affidavit.