2021 (11) TMI 911 - Tri - Companies Law

Sanction of the Scheme of Amalgamation - Sections 230 to 232 of the Companies Act, 2013 ( The Act ) read with the Companies (Compromises, Arrangements Amalgamations) Rules, 2016 - HELD THAT - There appears to be no impediment in sanctioning the Scheme, which appears to be fair and reasonable and not contrary to public policy or violative of any provisions of law. All the statutory requirements of Sections 230-232 of the Act appear to have been complied with. Taking into consideration the facts, the Company Petition is allowed and the Scheme annexed with the Petition is hereby sanctioned, with the Appointed date fixed as April 1, 2019. The Petitioner Company-1/Transferor Company be dissolved without winding up. The scheme is approved - application allowed.

Issues Involved:
1. Approval of the Scheme of Amalgamation under Sections 230 to 232 of the Companies Act, 2013.
2. Objections raised by the Income Tax Department.
3. Objections raised by the Regional Director regarding ongoing investigations.
4. Compliance with statutory requirements and accounting standards.

Issue-wise Detailed Analysis:

1. Approval of the Scheme of Amalgamation:
The Company Petition CAA-27(PB)/2018 was filed under Sections 230 to 232 of the Companies Act, 2013, seeking sanction for the Scheme of Amalgamation involving multiple Transferor Companies and a single Transferee Company, M/S. Rock Land Private Limited. The Scheme aimed to pool financial, commercial, and other resources, achieve synergy of operations, and enhance capabilities and resources for better financial and business prospects. The Board of Directors of the Petitioner Companies approved the Scheme in their respective Board Resolutions.

2. Objections Raised by the Income Tax Department:
The Income Tax Department filed a Status Report on 11.09.2018, raising a standard objection that dues against the companies, if any, will persist even after the sanction of the Scheme. The Petitioner Companies replied that they would remain bound by any pending demands as per the provisions of the Income Tax Act, 1961. Subsequently, the Income Tax Department gave its No-Objection to the merger, as recorded in the Order dated 25.02.2021.

3. Objections Raised by the Regional Director:
The Regional Director objected to the Merger, citing an ongoing investigation involving M/S. Rockland Hospitals Ltd. and the transferee companies. The Petitioner Companies responded with an Additional Affidavit dated 23.06.2020, stating that the investigation had been completed, and none of the Transferor/Transferee Companies were arrayed as accused in the final Complaint filed before the Special Court. The Regional Director did not file any further objections, and it was confirmed that the investigation stood completed.

4. Compliance with Statutory Requirements and Accounting Standards:
The Petitioner Companies undertook to comply with all statutory requirements under the Companies Act, 2013, and the Rules made thereunder. The Statutory Auditors' Certificates confirmed that the accounting treatment provided in the Scheme was in conformity with applicable accounting standards. The Tribunal found no impediment in sanctioning the Scheme, which appeared fair, reasonable, and not contrary to public policy or any provisions of law.

Final Judgment:
The Scheme of Amalgamation was sanctioned with the Appointed date fixed as April 1, 2019. The Transferor Companies were ordered to be dissolved without winding up. The Tribunal clarified that the order should not be construed as granting exemption from payment of stamp duty, taxes, or other charges. The property, rights, powers, liabilities, and duties of the Transferor Companies were transferred to the Transferee Company. The Transferee Company was directed to allot shares to the members of the Transferor Companies and ensure the continuity of employment for the employees of the Transferor Companies. The Transferor Companies were required to deliver a certified copy of the order to the Registrar of Companies for registration, leading to their dissolution. The Tribunal allowed the Petitioner Companies and concerned authorities to apply for any necessary directions or clarifications post-sanctioning of the Scheme.

Conclusion:
The Scheme of Amalgamation was approved, and the Company Petition was allowed, with all statutory requirements and objections addressed satisfactorily. The Tribunal's order ensured compliance with legal provisions and facilitated the merger process, benefiting the stakeholders involved.

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