2022 (2) TMI 69 - Tri - Companies Law

Sanction of scheme of Amalgamation - Sections 230-232 of the Companies Act, the Companies (Compromises Arrangements and Amalgamations) Rules, 2016 - HELD THAT - Various directions with regard to holding, convening and dispensing with various meetings issued - direction with regard to issuance of various notices also issued. Application allowed - the scheme is approved.

Issues Involved:

1. Jurisdiction and sanction of the scheme by NCLT, Kolkata.
2. Approval of the scheme by the Board of Directors.
3. Convening and approval of meetings of creditors.
4. Details and justification of the amalgamation scheme.
5. Compliance with statutory requirements and absence of objections.
6. Protection of employees' interests and share exchange ratio.
7. Reports from statutory authorities and compliance with the Companies Act.
8. Income Tax Department's stance and pending demands.
9. Official Liquidator's report and RBI's no-objection certificate.
10. Binding effect of the scheme and transfer of properties and liabilities.

Detailed Analysis:

1. Jurisdiction and Sanction of the Scheme by NCLT, Kolkata:
The petition under Sections 230-232 of the Companies Act, 2013, pertains to the amalgamation of Givetake Trade & Credit Pvt. Ltd. (Transferor Company) with Indian Compressors Limited (Transferee Company). The Transferor Company falls under the jurisdiction of NCLT, Kolkata, which sanctioned the scheme on 18th March 2021, making it binding from 01.04.2018. All properties, rights, and liabilities of the Transferor Company are transferred to the Transferee Company.

2. Approval of the Scheme by the Board of Directors:
The Board of Directors of both companies approved the proposed scheme unanimously on 03.01.2019. NCLT, New Delhi, dispensed with the requirement of convening meetings of Equity Shareholders and Unsecured Debenture Holders of the Transferee Company and directed the convening of separate meetings for Secured and Unsecured Creditors.

3. Convening and Approval of Meetings of Creditors:
Separate meetings of Secured and Unsecured Creditors were held on 23.11.2019, under the supervision of the Tribunal. The scheme was unanimously approved by the creditors, with 95.46% of Secured Creditors and 25.31% of Unsecured Creditors voting in favor.

4. Details and Justification of the Amalgamation Scheme:
The Transferee Company, incorporated on 26.08.1943, is engaged in manufacturing and trading compressors, pumps, and spares. The scheme aims to consolidate assets, reduce overhead expenses, and establish a larger company with more resources and capital. The scheme includes the transfer of all assets and liabilities, protection of employees' terms, and a share exchange ratio of 1:1.

5. Compliance with Statutory Requirements and Absence of Objections:
Notices of the petition were published and served to statutory authorities, including the Central Government, RoC, OL, and Income Tax Department. No objections or representations were filed against the proposed scheme.

6. Protection of Employees' Interests and Share Exchange Ratio:
Clause 8 of the scheme protects employees' interests, ensuring no interruption in service. Clause 10 specifies the share exchange ratio, with one equity share of ?10 in the Transferee Company for every one equity share of ?10 in the Transferor Company. The valuation report by M/s. Santinath & Associates was accepted by both Boards.

7. Reports from Statutory Authorities and Compliance with the Companies Act:
The Regional Director's report confirmed that the scheme does not violate Sections 230-232 of the Companies Act. The RoC reported no complaints from stakeholders regarding the swap ratio or scheme contents.

8. Income Tax Department's Stance and Pending Demands:
The Income Tax Department requested that the scheme's approval should not affect their rights to initiate or continue proceedings and safeguard revenue interests. The Transferee Company had submitted all required Income Tax Returns up to the Assessment Year 2019-20.

9. Official Liquidator's Report and RBI's No-Objection Certificate:
The OL confirmed that the Transferor Company's business and properties would transfer to the Transferee Company without disrupting employees' terms. The OL received no complaints against the scheme. The Transferor Company obtained an NOC from RBI, valid for six months from the issue date, with conditions to be fulfilled post-sanction.

10. Binding Effect of the Scheme and Transfer of Properties and Liabilities:
The scheme is approved and binding from 01.04.2018. All properties, rights, and liabilities of the Transferor Company are transferred to the Transferee Company. The Transferee Company will issue shares to the Transferor Company's shareholders and may increase authorized share capital if necessary. Both companies must deliver the order to the RoC within 30 days.

Conclusion:
The second motion petition is allowed, and the scheme of amalgamation is approved in the aforementioned terms. Any interested person may apply to the Tribunal for necessary directions.

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