2021 (11) TMI 123 - Tri - Companies Law

Sanction of the Scheme of Amalgamation - Sections 230 and 232 of the Companies Act, 2013 read with Rule 16 of the Companies (Compromises, Arrangements and Amalgamations) - HELD THAT - There are no objections to the Scheme and hence there is no impediment in the sanction of the Scheme. Therefore, the Scheme (Annexure-A) 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 Companies No. 1 to 3, shall stand transferred to and vested in the Transferee Company. Application allowed.

Issues Involved:
1. Sanction of the Scheme of Amalgamation under Sections 230 and 232 of the Companies Act, 2013.
2. Dispensation of meetings for equity shareholders, preference shareholders, and creditors.
3. Compliance with Accounting Standards and other procedural requirements.
4. Handling of objections and compliance with notices.
5. Reports from the Registrar of Companies, Regional Director, Official Liquidator, and Income Tax Department.
6. Valuation of shares and handling of accumulated tax losses.
7. Treatment of employees and legal proceedings post-amalgamation.
8. Approval and final orders of the Tribunal.

Issue-wise Detailed Analysis:

1. Sanction of the Scheme of Amalgamation:
The petition was filed under Sections 230 and 232 of the Companies Act, 2013, seeking the sanction of a Scheme of Amalgamation involving DSYN Technologies Private Limited (Transferor Company No. 2) and other entities with Instakart Service Private Limited (Transferee Company). The Tribunal approved the Scheme, ensuring compliance with all statutory requirements.

2. Dispensation of Meetings:
The First Motion application requested the dispensation of meetings for equity shareholders, preference shareholders, and creditors. The Tribunal, considering the consent affidavits obtained, dispensed with these meetings as per the order dated 23.05.2018, noting there were no secured creditors to convene a meeting for.

3. Compliance with Accounting Standards and Procedural Requirements:
A certificate from M/s. S.R. Batliboi LLP confirmed that the accounting treatment in the Scheme complied with the Accounting Standards under Section 133 of the Companies Act, 2013. The Tribunal ensured that all procedural requirements, including the submission of audited financial statements and compliance affidavits, were met.

4. Handling of Objections and Compliance with Notices:
The Tribunal directed the publication of hearing notices in specified newspapers and service of notices to relevant authorities. Compliance affidavits confirmed that notices were duly served, and no objections were received from the public or authorities, as reported by the Registry.

5. Reports from Authorities:
- Registrar of Companies (RoC): Confirmed no pending proceedings against the Petitioner Company and compliance with statutory returns.
- Regional Director (RD): Reiterated the RoC's report and raised no adverse observations.
- Official Liquidator (OL): Discussed the Scheme’s contents and raised no adverse observations.
- Income Tax Department: Objected to the carry-forward of tax losses and questioned the valuation of equity shares, which was addressed by the Petitioner Company through an affidavit explaining the valuation method and confirming that tax losses would not be carried forward.

6. Valuation of Shares and Handling of Accumulated Tax Losses:
The valuation report proposed specific share exchange ratios for the amalgamating companies. The Tribunal accepted the valuation method and share exchange ratios, referencing the Supreme Court judgment in "Miheer H Mafatlal v. Mafatlal Industries Ltd," which upheld the commercial wisdom of shareholders in determining the share exchange ratio.

7. Treatment of Employees and Legal Proceedings Post-Amalgamation:
The Scheme ensured that all employees of the Transferor Companies would become employees of the Transferee Company without any break in service and on no less favorable terms. All ongoing legal proceedings involving the Transferor Companies would continue under the Transferee Company.

8. Approval and Final Orders of the Tribunal:
The Tribunal approved the Scheme, clarifying that the order did not exempt the companies from paying stamp duty, taxes, or other charges. The properties, rights, liabilities, and duties of the Transferor Companies were transferred to the Transferee Company. The Tribunal directed the Petitioner Companies to deliver a certified copy of the order to the Registrar of Companies and comply with all procedural requirements, including depositing specified amounts with the Regional Director and the Company Law Tribunal Bar Association.

Conclusion:
The Scheme of Amalgamation was sanctioned, transferring all assets, liabilities, and employees of the Transferor Companies to the Transferee Company, subject to compliance with all statutory requirements and payment of applicable fees and charges. The Tribunal retained the liberty for any interested party to apply for further directions if necessary.

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