2021 (8) TMI 681 - Tri - Companies Law

Sanction of scheme of Amalgamation - sections 230-232 of the Companies Act, 2013 read with Companies (Compromise, Arrangement and Amalgamations) Rules, 2016 - HELD THAT - On perusal of the Scheme and the documents produced on record, it appears that the requirements of the provisions of Sections 230 and 232 of the Companies Act, 2013 are satisfied. The Scheme appears to be genuine and bonafide and in the interest of the shareholders and creditors. The Scheme of Amalgamation, which is at Annexure H to the joint petition is hereby sanctioned and it is declared that the same shall be binding on the Petitioner Companies, namely, Bhadra Textiles and Trading Private Limited and Villa Trading Company Private Limited and Gujarat Sidhee Cement Limited and their shareholders, and all concerned under the Scheme - the petition is allowed.

Summary

Issues Involved:
1. Sanctioning of the Scheme of Amalgamation.
2. Dispensation and convening of meetings.
3. Compliance with statutory requirements.
4. Representation and objections from authorities.
5. Payment of fees and costs.
6. Accounting treatment.
7. Legal proceedings and contractual obligations.
8. Employee transfer and benefits.
9. Dissolution of Transferor Companies.

Detailed Analysis:

1. Sanctioning of the Scheme of Amalgamation:
The petition was filed jointly by Bhadra Textiles and Trading Private Limited, Villa Trading Company Private Limited, and Gujarat Sidhee Cement Limited under Sections 230-232 of the Companies Act, 2013, seeking the sanctioning of a Scheme of Amalgamation. The Tribunal sanctioned the Scheme, declaring it binding on the Petitioner Companies and their shareholders and creditors, stating, "The Scheme appears to be genuine and bonafide and in the interest of the shareholders and creditors."

2. Dispensation and Convening of Meetings:
The Tribunal dispensed with the holding of meetings for the Equity Shareholders, Secured Creditors, and Unsecured Creditors of the Petitioner Transferor Companies and directed the holding of meetings for the Equity Shareholders and Unsecured Creditors of the Petitioner Transferee Company. The meetings were duly convened and held, and the Scheme was approved by 99.02% of Equity Shareholders and 100% of Unsecured Creditors present and voting.

3. Compliance with Statutory Requirements:
The Petitioner Companies complied with the Tribunal's directions to issue notices to the Central Government, Registrar of Companies, Income-tax authorities, and Official Liquidator. Affidavits confirming service of notices were filed. The Tribunal noted, "In compliance of the directions contained in the order dated 18th December 2020, it is submitted that the Petitioner Companies have served notices."

4. Representation and Objections from Authorities:
The Petitioner Companies responded to the observations of the Regional Director and Official Liquidator. They undertook to comply with provisions of Section 232(3)(i) of the Companies Act, 2013, SEBI circulars, FEMA, and RBI guidelines. The Tribunal considered these responses, noting, "The Petitioner Companies have complied with the requirements of SEBI circulars and accordingly letter dated 22.10.2020 was issued by BSE Limited."

5. Payment of Fees and Costs:
The Tribunal quantified the fees for the Regional Director and Official Liquidator, specifying, "Fees of Regional Director is quantified as ?20,000/- in respect of each of the Petitioner Companies. Fees of Official Liquidator is quantified as ?15,000/- in respect of Petitioner Transferor Companies."

6. Accounting Treatment:
The Scheme provided for the pooling of interest method for accounting in the books of the Transferee Company, as per Indian Accounting Standard 103. The Tribunal noted, "The Transferee Company shall account for the amalgamation of the Transferor Companies in its books of account using the pooling of interest method."

7. Legal Proceedings and Contractual Obligations:
The Scheme ensured that all legal proceedings and contracts involving the Transferor Companies would continue with the Transferee Company. The Tribunal stated, "If any suit, appeal or other proceeding of whatever nature by or against the Transferor Companies is pending, the same shall not abate or be discontinued."

8. Employee Transfer and Benefits:
All employees of the Transferor Companies would become employees of the Transferee Company without any break or interruption in service, on the same terms and conditions. The Tribunal noted, "On the Scheme becoming effective all the employees, if any, of the Transferor Companies shall become the employees of the Transferee Company."

9. Dissolution of Transferor Companies:
Upon the Scheme becoming effective, the Transferor Companies would stand dissolved without winding up. The Tribunal ordered, "On the Scheme becoming effective, the Transferor Company 1 shall stand dissolved automatically without winding up."

Conclusion:
The Tribunal sanctioned the Scheme of Amalgamation, ensuring compliance with statutory requirements, addressing representations and objections, and providing for the transfer of employees, legal proceedings, and contractual obligations. The Scheme was deemed to be in the interest of the shareholders and creditors, with the Tribunal concluding, "The Scheme of Amalgamation...is hereby sanctioned."