2021 (6) TMI 319 - Tri - Companies Law

Approval of scheme of Arrangement - Section 230 to 232 and other applicable provisions of the Companies Act, 2013 read with Companies (Compromises, Arrangements and Amalgamations) Rules, 2016 - HELD THAT - This Tribunal is of the considered view that the scheme as contemplated amongst the petitioner companies seems to be prima facie in compliance with the provisions of the Companies Act, 2013. Further there seems to be no objection on the part of the shareholders that the Scheme is in any way detrimental to the interest of the shareholders of the Company. In view of absence of any other objections having been placed on record before this Tribunal and since all the requisite statutory compliances having been fulfilled, this Tribunal sanctions the Scheme of Amalgamation appended as Annexure A4 along with Company Petition as well as the prayer made therein. The scheme is approved - application allowed.

Issues Involved:
1. Approval of the Composite Scheme of Arrangement and Amalgamation.
2. Compliance with statutory requirements and observations by the Regional Director.
3. Verification of the affairs of Transferor Companies by the Official Liquidator.
4. Response from the Income Tax Department.
5. Valuation and Accounting Treatment.

Issue-wise Detailed Analysis:

1. Approval of the Composite Scheme of Arrangement and Amalgamation:
The Petitioner Companies sought approval for a Composite Scheme of Arrangement and Amalgamation involving three steps: capital reduction of Transferor Company-2, amalgamation of Transferor Companies 1, 2, and 3 into the Transferee Company, and demerger of the Real Estate Business of the Transferee Company into the Resulting Company. The scheme aims to consolidate business operations, achieve synergy benefits, and optimize resource utilization.

2. Compliance with Statutory Requirements and Observations by the Regional Director:
The Regional Director (RD) made several observations regarding the scheme, including the appointed date for capital reduction and amalgamation, accounting treatment, and compliance with the Companies Act, 2013. The Petitioner Companies addressed these observations through an Affidavit of Undertaking, agreeing to make necessary disclosures and comply with the specified requirements. The RD did not object to the scheme, provided the observations were addressed.

3. Verification of the Affairs of Transferor Companies by the Official Liquidator:
The Official Liquidator (OL) appointed a Chartered Accountant to verify the affairs of the Transferor Companies. The Chartered Accountant confirmed that the companies maintained proper books of accounts, filed all statutory returns, and had no pending cases. The OL sought to take the Chartered Accountant's report on record and requested payment of fees for the auditor. The Tribunal directed the Transferor Companies to jointly pay a sum of ?60,000 to the OL for the auditor's fees.

4. Response from the Income Tax Department:
Despite being served notice, the Income Tax Department did not file any representation or report. The Tribunal presumed that the department had no objection to the scheme. The Tribunal referenced a previous NCLT order to protect the interest of the revenue, allowing the department to take appropriate recovery proceedings if necessary.

5. Valuation and Accounting Treatment:
The Petitioner Companies submitted a Valuation Report and certified that the scheme's accounting treatment complied with applicable Indian Accounting Standards. The Tribunal found the valuation and accounting treatment satisfactory and in compliance with the Companies Act, 2013.

Observations of the Tribunal:
The Tribunal found the scheme compliant with the Companies Act, 2013, and noted no objections from shareholders or statutory authorities. The Tribunal sanctioned the scheme, clarifying that the order does not exempt the companies from paying stamp duty, taxes, or other charges.

Final Order of the Tribunal:
The Tribunal ordered the reduction of share capital for Transferor Company-2, transfer of properties and liabilities to the Transferee Company, continuation of pending proceedings, and transfer of employees without interruption. The appointed dates for the scheme were set as April 1, 2017, for capital reduction and amalgamation, and May 23, 2019, for demerger. The Transferee Company was directed to allot shares to the shareholders of Transferor Company-1 and the Resulting Company to allot shares to the shareholders of the Demerged Company. The companies were instructed to file revised Memorandums and Articles of Association with the Registrar of Companies and make requisite payments for enhanced authorized capital. The Transferor Companies would be dissolved, and any interested person could apply to the Tribunal for further directions. The Company Petitions were allowed on these terms.

← Previous Next →