2022 (4) TMI 1113 - Tri - Companies Law

Sanction of scheme of amalgamation - Section 232(3) and other applicable provisions of the Companies Act, 2013 - HELD THAT - Various directions with regard to holding, convening and dispensing with various meetings issued - directions with regard to issuance of notices also issued. The scheme is approved - application allowed.

Issues Involved:
1. Sanction of the Scheme of Amalgamation under Section 232(3) of the Companies Act, 2013.
2. Compliance with statutory requirements.
3. Observations and objections from the Regional Director and Official Liquidator.
4. Status of the Transferor Companies regarding NBFC registration.
5. Compliance with the Income Tax Act and other statutory obligations.

Detailed Analysis:

1. Sanction of the Scheme of Amalgamation:
The petition was filed for the sanction of the Scheme of Amalgamation of Proctor Tradecon Private Limited and Shambhudeo Securities Private Limited with ETC Electric Private Limited, with the Appointed Date being 1st April 2019. The Scheme was approved unanimously by the respective Boards of Directors on 15/12/2019. The benefits of the Scheme include simplification of corporate structure, reduction in legal and regulatory compliance, cost savings, and focused business growth. The statutory auditors confirmed that the accounting treatment in the Scheme conforms to the accounting standards prescribed under Section 133 of the Companies Act, 2013.

2. Compliance with Statutory Requirements:
The Tribunal made directions regarding meetings of shareholders and creditors, which were dispensed with as all shareholders and creditors had given their consent to the Scheme. Notices were duly served to the Regional Director, MCA, Registrar of Companies, Official Liquidator, and Income Tax officer, and advertisements were published in compliance with the Tribunal's order. The Petitioners complied with all statutory formalities requisite for obtaining the sanction of the Scheme.

3. Observations and Objections from the Regional Director and Official Liquidator:
The Official Liquidator concluded that the affairs of the Transferor Companies do not appear to have been conducted in a manner prejudicial to the interest of its members or public interest. The Regional Director's affidavit raised several points, which were addressed by the Petitioners in their rejoinder and supplementary rejoinder affidavits. The Petitioners undertook to comply with all statutory requirements, including filing annual returns, paying applicable stamp duty, and adhering to accounting standards.

4. Status of the Transferor Companies Regarding NBFC Registration:
The Regional Director noted that both Transferor Companies appeared to function as Non-Banking Financial Companies (NBFCs) without the necessary registration from the Reserve Bank of India. The Petitioners contended that neither company was an NBFC and that temporary surplus funds were given as loans, which was not prejudicial to public interest. The statutory auditors also stated that the companies were not required to be registered as NBFCs.

5. Compliance with the Income Tax Act and Other Statutory Obligations:
The Tribunal directed that any default in respect of the Transferor Companies' obligations, including provisions of the Income Tax Act, would allow the Income Tax Department and other statutory authorities to initiate appropriate proceedings against the Transferee Company. The Directors of the Transferor Companies would remain liable for any violations of the Reserve Bank of India Act.

Final Orders:
The Tribunal sanctioned the Scheme of Amalgamation with the Appointed Date fixed as 1st April 2019. All properties, rights, liabilities, and obligations of the Transferor Companies were transferred to the Transferee Company. The employees of the Transferor Companies were to be engaged by the Transferee Company. The Transferee Company was to issue and allot shares to the shareholders of the Transferor Companies as per the Scheme. The Transferor Companies were to be dissolved without winding up upon filing certified copies of the order with the Registrar of Companies. The Tribunal allowed any interested person to apply for necessary directions and directed the Petitioners to supply legible printouts of the Scheme and schedule of assets to the Registry.

Conclusion:
The Company Petition was disposed of accordingly, and urgent certified copies of the order were to be supplied to the parties upon compliance with requisite formalities.

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