2021 (7) TMI 707 - Tri - Companies Law

Approval of scheme of arrangement - Sections 230 to 232 and other applicable provisions of the Companies Act, 2013 - HELD THAT - The Regional Director has filed a Supplementary Report dated 16th December, 2020 with this Tribunal, accepting the response of the Petitioner Companies as satisfactory. The Transferee Company shall ensure compliance of Section 186(7) of the Companies Act 2013. The Petitioner Companies also undertake to comply with all the statutory requirements if any, as required under the Companies Act, 2013 and the Rules made thereunder, whichever is applicable. Accordingly, the clarifications and undertakings given by the Petitioner Companies are hereby accepted. The Scheme appears to be fair and reasonable and is not violative of any provisions of law and is not contrary to public policy. Since all the requisite statutory compliances have been fulfilled, the Scheme of Arrangement is hereby sanctioned and declared the same to be binding on the Transferor sompanies and Transferee Company and their respective shareholders. Application allowed.

Issues Involved:
1. Sanction of the Scheme under Sections 230 to 232 of the Companies Act, 2013.
2. Compliance with the Tribunal's directions and statutory requirements.
3. Financial and operational benefits of the Scheme.
4. Observations and compliance with the Regional Director's Report.
5. Compliance with Section 186(7) of the Companies Act, 2013.
6. Dissolution of Transferor Companies without winding up.

Issue-wise Detailed Analysis:

1. Sanction of the Scheme under Sections 230 to 232 of the Companies Act, 2013:
The Tribunal was approached for the sanction of the Scheme under Sections 230 to 232 and other applicable provisions of the Companies Act, 2013. The Petitioner Companies had approved the Scheme through Board Resolutions dated 5th September 2019. The Scheme was also unanimously approved by the shareholders in Extra Ordinary General Meetings held on 11th September 2020 via Video Conferencing.

2. Compliance with the Tribunal's directions and statutory requirements:
The Petitioner Companies complied with all the requirements as per the Tribunal's directions and filed necessary affidavits of compliance. The Tribunal's order dated 7th September 2020 directed the convening of meetings, and the Chairman's report confirmed that these meetings were duly convened and the Scheme was approved unanimously.

3. Financial and operational benefits of the Scheme:
The Scheme aimed to consolidate and streamline the group structure, achieve administrative efficiency, reduce expenditure, and simplify regulatory compliances. The expected benefits included economies of scale, operational synergies, cost savings, improved organizational capability, and a stronger capital base for future expansion.

4. Observations and compliance with the Regional Director's Report:
The Regional Director's Report dated 4th December 2020 outlined several observations:
- Compliance with AS-14 (IND AS-103) and other applicable Accounting Standards.
- Definition and compliance with "Appointed Date" and "Effective Date."
- Compliance with Section 232(3)(1) regarding the set-off of fees.
- Clarification on financial assets and compliance with Section 186(7).
- Exchange ratio for issuing shares and corresponding real paid-up share capital.
- Proper accounting treatment for the difference in share capital.
- Compliance with Section 188 of the Companies Act, 2013.
- Protection of creditors' interests.

The Petitioner Companies responded satisfactorily to these observations, undertaking to comply with all statutory requirements and clarifying the nature of loans and advances, accounting treatments, and related party transactions.

5. Compliance with Section 186(7) of the Companies Act, 2013:
The Petitioner Companies clarified that loans and advances were given for commercial purposes, as stated in the notes to accounts. They also undertook to ensure compliance with Section 186(7) of the Companies Act, 2013.

6. Dissolution of Transferor Companies without winding up:
The Official Liquidator's report confirmed that the affairs of the Transferor Companies were conducted properly, recommending their dissolution. The Tribunal ordered the dissolution of the Transferor Companies without the process of winding up.

Conclusion:
The Tribunal found the Scheme to be fair, reasonable, and compliant with the law, thus sanctioning it. The Scheme was declared binding on the Transferor Companies and the Transferee Company and their respective shareholders. The appointed date was fixed as 1st April 2019, and the Transferor Companies were ordered to be dissolved without winding up. The Petitioner Companies were directed to lodge copies of the order and Scheme with the Registrar of Companies and other regulatory authorities within specified timeframes.

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