2021 (8) TMI 1196 - Tri - Companies Law

Sanction of Scheme of Amalgamation - Sections 230 and 232 of the Companies Act, 2013 - HELD THAT - There is no impediment in the approval of the 'Scheme'. The Scheme (Annexure P-1) 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 in respect of any permission/compliance with any other requirement which may be specifically required under any law. With the sanction of the 'Scheme', the Transferor Companies shall stand dissolved without undergoing the process of winding up resulting in increase in the share capital of the Transferee Company. The scheme is approved - application allowed.

Issues Involved:
1. Maintainability of the joint petition under Sections 230 and 232 of the Companies Act, 2013.
2. Compliance with procedural requirements for convening meetings of creditors and shareholders.
3. Adequacy of notices served to authorities and stakeholders.
4. Objections raised by the Regional Director and other authorities.
5. Compliance with accounting standards and statutory requirements.
6. Share exchange ratio determination.
7. Impact on employees and ongoing legal proceedings.
8. Approval of the Scheme of Amalgamation and related orders.

Issue-wise Detailed Analysis:

1. Maintainability of the Joint Petition:
The joint Second Motion Petition under Sections 230 and 232 of the Companies Act, 2013, filed by the Petitioner Companies, is maintainable as per Rule 3(2) of the Companies (Compromises, Arrangements and Amalgamations) Rules, 2016.

2. Compliance with Procedural Requirements:
The Petitioner Companies filed the First Motion Application seeking directions for convening meetings of secured and unsecured creditors of certain Applicant Companies and dispensing with the meetings of Equity Shareholders and other creditors. Necessary directions were issued on 09.10.2020. Meetings of secured and unsecured creditors of Applicant Company Nos. 3 and 6 were convened on 28.11.2020.

3. Adequacy of Notices Served:
Notices of the hearing were advertised in "Financial Express" (English) and "Jansatta" (Hindi). Notices were also served upon relevant authorities, including the Central Government, Registrar of Companies, Income Tax Department, and the Official Liquidator. The Petitioner Companies filed affidavits of service and compliance, and no objections were received from stakeholders or authorities.

4. Objections Raised by the Regional Director and Other Authorities:
The Regional Director raised concerns about the Scheme involving three Appointed Dates, which was not in line with Section 230 of the Companies Act, 2013. The Petitioner Companies responded by adopting a common Appointed Date of 30.09.2019. The Regional Director also noted that some Transferor Companies did not have similar objects to the Transferee Company and that certain financial statements were not filed. The Income Tax Department had no objections, except for outstanding dues of Transferor Company 3, which were subsequently settled.

5. Compliance with Accounting Standards and Statutory Requirements:
Certificates from Statutory Auditors confirmed that the accounting treatment proposed in the Scheme complies with Section 133 of the Companies Act, 2013, and other Generally Accepted Accounting Principles. The audited financials for the year ended 31.03.2020 and provisional statements as of 30.06.2020 were attached.

6. Share Exchange Ratio Determination:
The share exchange ratio was determined based on a valuation report by an IBBI Registered Valuer. The ratios for each Transferor Company were specified in detail, ensuring fair and equitable treatment of shareholders.

7. Impact on Employees and Ongoing Legal Proceedings:
The Scheme ensured that the service conditions of employees would not be adversely affected. Ongoing legal proceedings involving the Transferor Companies would continue against the Transferee Company.

8. Approval of the Scheme of Amalgamation and Related Orders:
The Scheme of Amalgamation was approved, with the Transferor Companies being dissolved without winding up. All property, rights, liabilities, and duties of the Transferor Companies were transferred to the Transferee Company. The Transferee Company was ordered to comply with procedural requirements for changing its name and to deposit specified amounts with the Regional Director and the Company Law Bar Association. The Appointed Date of 30.09.2019 was approved, and the name of the Transferee Company was changed to "Century Metal Recycling Limited."

Conclusion:
The Tribunal approved the Scheme of Amalgamation, ensuring compliance with all relevant legal provisions, protecting the interests of stakeholders, and addressing objections raised by authorities. The detailed orders included provisions for the transfer of assets, liabilities, and employees, as well as procedural requirements for name change and compliance with statutory obligations.

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