2021 (12) TMI 193 - Tri - Companies Law

Sanction of the Scheme of Amalgamation - Section 230(6) read with Section 232(3) of the Companies Act, 2013 - HELD THAT - Various directions with regard to holding, convening and dispensation with various meetings issued - directions with regard to issuance of notices also issued. The scheme is approved - application allowed.

Issues Involved:
1. Justification and benefits of the Scheme of Amalgamation.
2. Compliance with statutory requirements and accounting standards.
3. Observations and representations by the Official Liquidator and Regional Director.
4. Pending legal cases and statutory filings.
5. Approval and procedural compliance for the Scheme of Amalgamation.

Detailed Analysis:

1. Justification and Benefits of the Scheme of Amalgamation:
The Scheme of Amalgamation involves the merger of AUXINITE MARKETING LIMITED (Transferor Company) with BAJAJ POLYBLENDS PRIVATE LIMITED (Transferee Company) effective from 1st April 2020. The primary justifications and benefits cited include:
- Combining and adjusting business operations for efficient management and utilization of resources.
- Consolidation and reorganization of business activities and capital structure.
- Economies of scale, reduction in overhead expenses, and better utilization of resources.
- Establishment of a larger company with a larger resource and capital base for further development.
- Rationalization and streamlining of management, business, and finances.
- Enhanced profitability and growth opportunities.
- Beneficial results for shareholders, employees, and other stakeholders.

2. Compliance with Statutory Requirements and Accounting Standards:
The statutory auditors confirmed that the accounting treatment in the Scheme conforms with the accounting standards prescribed under Section 133 of the Companies Act, 2013. The exchange ratio of shares was determined based on a fair and reasonable basis. Meetings of shareholders and creditors were dispensed with due to consents obtained in affidavit form. Notices were duly served to regulatory authorities, and advertisements were published as required.

3. Observations and Representations by the Official Liquidator and Regional Director:
The Official Liquidator reported no complaints against the Scheme and found the affairs of the Transferor Company to be conducted in a manner not prejudicial to its members or public interest. The Regional Director's affidavit highlighted several points, including:
- No complaints or representations regarding the Scheme.
- Compliance with Section 232(3)(i) of the Companies Act, 2013.
- Payment of applicable stamp duty on the transfer of immovable properties.
- Compliance with Accounting Standards.
- Approval of the Scheme by the requisite majority of members and creditors.
- No discrepancies between the Scheme enclosed to the Company Application and Company Petition.
- Binding decisions of authorities post-sanctioning.

4. Pending Legal Cases and Statutory Filings:
The Regional Director noted pending cases against the Transferee Company, which can continue post-amalgamation. The Transferor Company had omitted filing Form MGT-14 for the years 2016-17 and 2017-18. The responsibility for this omission lies with the directors, not the company, and the MCA is free to proceed according to the law.

5. Approval and Procedural Compliance for the Scheme of Amalgamation:
The Tribunal accepted the undertakings and clarifications provided by the Petitioners. The Scheme was sanctioned to be binding from 1st April 2020, with the following orders:
- Transfer of all properties, rights, and liabilities of the Transferor Company to the Transferee Company.
- Continuation of all pending proceedings by or against the Transferor Company by the Transferee Company.
- Issuance and allotment of shares by the Transferee Company to the shareholders of the Transferor Company.
- Filing of the schedule of assets within 60 days.
- Dissolution of the Transferor Company from the appointed date.
- Delivery of certified copies of the order to the Registrar of Companies within 30 days.

The Tribunal emphasized that technical violations should not hinder the sanctioning of the Scheme, and relevant authorities may take appropriate actions against the companies as per the law.

Conclusion:
The Tribunal sanctioned the Scheme of Amalgamation, ensuring compliance with statutory requirements, addressing observations by regulatory authorities, and allowing for the continuation of pending legal cases. The Scheme was deemed beneficial for all concerned parties, and the order was made binding from 1st April 2020.

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