2023 (5) TMI 1423 - Tri - IBC

Sanction of scheme of Composite Scheme of Amalgamation - Sections 230 to 232 and other applicable provisions of the Companies Act 2013 - HELD THAT - From the material on record the Scheme annexed as Exhibit A-1 to the Company Scheme Petition appears to be fair and reasonable and is not violative of any provisions of law and is not contrary to public policy. Since all the requisite statutory compliances have been fulfilled the said Company Scheme Petition is made absolute in terms of the prayer - the scheme is sanctioned - petition allowed.

2024 (6) TMI 308 - HC

ISSUES PRESENTED and CONSIDERED

The Tribunal considered the following core legal questions:

Whether the Composite Scheme of Amalgamation of Reliance Infratel Limited and Reliance SMSL Limited with Reliance Projects & Property Management Services Limited complies with the provisions of Sections 230 to 232 of the Companies Act, 2013.
Whether the Scheme is fair, reasonable, and not violative of any provisions of law or public policy.
Whether all statutory compliances have been fulfilled by the Petitioner Companies.
Whether the interests of creditors and stakeholders are adequately protected under the Scheme.
Whether the pending complaints and regulatory observations affect the approval of the Scheme.

ISSUE-WISE DETAILED ANALYSIS

1. Compliance with Sections 230 to 232 of the Companies Act, 2013

Legal Framework and Precedents: Sections 230 to 232 of the Companies Act, 2013 govern the procedure for amalgamation and arrangement of companies. The Tribunal must ensure compliance with these provisions before sanctioning any scheme.
Court's Interpretation and Reasoning: The Tribunal examined the Scheme and found that it complied with the statutory requirements, including the filing of necessary applications, notices to stakeholders, and obtaining consent affidavits from equity shareholders and unsecured creditors.
Key Evidence and Findings: The Petitioner Companies provided evidence of compliance through affidavits, notices, and reports from regulatory authorities.
Application of Law to Facts: The Tribunal noted that the Scheme was duly filed and processed in accordance with the applicable legal framework.
Treatment of Competing Arguments: No objections were raised by any parties, and the Tribunal considered the observations from the Regional Director and Official Liquidator.
Conclusions: The Tribunal concluded that the Scheme complied with the provisions of the Companies Act, 2013.

2. Fairness and Reasonableness of the Scheme

Legal Framework and Precedents: The Tribunal must ensure that the Scheme is fair, reasonable, and not contrary to public policy.
Court's Interpretation and Reasoning: The Tribunal evaluated the rationale and benefits of the Scheme, including operational synergies, cost savings, and a stronger financial structure.
Key Evidence and Findings: The Scheme aimed to consolidate businesses for efficiency and was supported by consent from major stakeholders.
Application of Law to Facts: The Tribunal found the Scheme to be beneficial for the companies and their stakeholders.
Treatment of Competing Arguments: The Tribunal considered the absence of objections and the positive reports from regulatory authorities.
Conclusions: The Scheme was deemed fair and reasonable.

3. Statutory Compliances

Legal Framework and Precedents: Compliance with statutory requirements is essential for the approval of any scheme of amalgamation.
Court's Interpretation and Reasoning: The Tribunal reviewed the compliance reports and affidavits submitted by the Petitioner Companies.
Key Evidence and Findings: The Petitioner Companies demonstrated compliance with all statutory directions, including publication of notices and service of documents to relevant authorities.
Application of Law to Facts: The Tribunal verified that all procedural requirements were met.
Treatment of Competing Arguments: The Tribunal noted the absence of objections from regulatory authorities.
Conclusions: All statutory compliances were fulfilled.

4. Protection of Creditors and Stakeholders

Legal Framework and Precedents: The interests of creditors and stakeholders must be protected in any scheme of amalgamation.
Court's Interpretation and Reasoning: The Tribunal assessed the provisions in the Scheme for the protection of creditors and stakeholders.
Key Evidence and Findings: The Scheme included mechanisms to address outstanding liabilities and protect creditor interests.
Application of Law to Facts: The Tribunal found that the Scheme adequately protected the interests of creditors and stakeholders.
Treatment of Competing Arguments: The Tribunal considered the responses from the Petitioner Companies to observations made by the Regional Director and Official Liquidator.
Conclusions: The interests of creditors and stakeholders were adequately protected.

5. Impact of Pending Complaints and Regulatory Observations

Legal Framework and Precedents: The Tribunal must consider any pending complaints or regulatory observations before approving a scheme.
Court's Interpretation and Reasoning: The Tribunal reviewed the observations from the Regional Director and Official Liquidator along with the responses from the Petitioner Companies.
Key Evidence and Findings: The Petitioner Companies addressed all observations and confirmed compliance with applicable laws.
Application of Law to Facts: The Tribunal determined that the pending complaints and observations did not impede the approval of the Scheme.
Treatment of Competing Arguments: The Tribunal considered the explanations and undertakings provided by the Petitioner Companies.
Conclusions: The pending complaints and regulatory observations did not affect the approval of the Scheme.

SIGNIFICANT HOLDINGS

Core Principles Established: The Tribunal reaffirmed the importance of compliance with statutory provisions, protection of creditor interests, and the necessity for a scheme to be fair, reasonable, and not contrary to public policy.
Final Determinations on Each Issue: The Tribunal sanctioned the Scheme with the Appointed Date 1 fixed as December 22, 2022, and the Appointed Date 2 fixed as close of business hours of March 31, 2023. The First and Second Petitioner Companies were ordered to be dissolved without winding up.
Verbatim Quotes of Crucial Legal Reasoning: "The Scheme annexed as Exhibit 'A-1' to the Company Scheme Petition appears to be fair and reasonable and is not violative of any provisions of law and is not contrary to public policy."

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